23.7. Extensions of time: Protection for third parties

When a design ceases, it moves into the public domain and is available for anyone to freely use. If the owner receives an extension of time to take an action that restores the design, their monopoly rights are re-established.

This is detrimental to anyone who has taken steps to commercially use the design, or a design that is substantially similar in overall impression, while the design was in the public domain. The Designs Act therefore provides protection for third parties in this situation.

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Licence to continue using the design

If a design ceases and an extension of time is granted to restore the ceased design, a third party who took definitive steps to use the design commercially after it ceased may continue to use the design after restoration or sell the right to use the design to another person.

A third party in this situation retains the right to use the design – effectively under licence from the Registrar – after it is restored to the owner. This applies regardless of:

• the reasons justifying the extension (including whether the restoration was properly justified)
• whether the third party opposed the restoration (see Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd. [2007] ADO 3 at 43).

Section 139 of the Designs Act 2003 effectively provides a statutory licence for third parties affected by the restoration of a design. There is no need to submit an application or request to the Registrar. If there is any dispute about entitlement to the licence, it will be dealt with in infringement proceedings.

Section 139 applies when:

• the design ceased because of a failure to take a relevant action and was subsequently restored under s 138
• the restoration was enabled by an extension granted under s 137 of the 2003 Act – even if the design was filed or registered under the 1906 Act.

It does not apply when there is an extension that does not result in the design being restored.​​​​​​​

Precedent

Relevant decisions are:

• Harrison v Theo [1998] ADO 2 (licence granted)
• Pacrim Trading Co Pty Ltd v Ford Motor Company of Australia Ltd [2007] ADO 3 (licence refused)
• HRC Project Design Pty Ltd v Orford Pty Ltd [1997] APO 12; 38 IPR 121 (licence granted under the Patents Act 1990).