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Sunday, 13 March 2016

Trunki vs Kiddee

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The Manufacturer

Magmatic Limited is a bag company from Bristol, UK. They make Trunki, a popular suitcase for children. The suitcases are popular because they are shaped like an animal, and children can sit on them. Wheels help the Trunki suitcases to move. Two horns mean the child can hold on to the suitcase and steer it. Needless to say, the Trunki suitcase has become an international hit. It has been selling like hot cakes since 2006. Their website proclaims that they have racked up more than 100 awards from nursery, toy, design and business sectors since 2006.

Perhaps it was inevitable that the day would come when a competitor spotted the hot-selling Trunki and decided that certain features were worth incorporating. Imitation, after all, is the best form of flattery. The only problem was that it was not all-out copying. It was "inspired by" but distinguishable from the original Trunki.


The Competitor

That competitor was PMS International Ltd, a company from Hong Kong. They created the Kiddee Case, which looked sufficiently similar for Rob Law, founder of Magmatic, to get irked and launch a legal action.

From a Guardian UK article in 2015:
Magmatic won a high court judgment against PMS in July 2013, but this was overturned in March 2014 by the court of appeal, which ruled that the Kiddee case looked sufficiently different to the Trunki one. ... Law invented the Trunki in 1997 and has sold more than 2m of the ride-on suitcases since 2004. He was turned down by the judges on the BBC show Dragons’ Den in 2006 and left without any investment, but went on to sign a contract with John Lewis.

PMS has admitted that its discount cases were inspired by the Trunki.

The Trunki design was protected by a community registered design (CRD) that consisted of six representations of the exterior of the case from various angles and perspectives. The court of appeal said this created the impression of a horned animal, whereas the Kiddee case resembled an insect with antennae or an animal with floppy ears. Magmatic’s computer-aided design (Cad) drawings did not show any surface decoration.

About 30% of designs across the EU are registered using Cad. The court of appeal ruling meant Cad drawings would no longer be offered the same protection as line drawings, which meant third parties would be able to claim differences in surface decoration should be taken into account, according to the Anti-Copying In Design group.

Magmatic has argued that since its drawings did not show any graphical designs on the exterior of the suitcases, the designs on the surface of the Kiddee case had to be ignored. PMS disagreed and contended that they should be taken into account.

Source: The Guardian, 3rd November 2015. "Trunki v Kiddee: battle over children's luggage reaches supreme court"

The Supreme Court Decision

The UK Supreme Court decision, delivered on 9th March 2016, can be found here. According to this PDF judgment, the Supreme Court noted that there were similarities and differences between the two competing designs.
It will be noted that in each example, the Kiddee Case is a suitcase with a number of features similar to the CRD; for instance, it is designed to look like an animal, with a wheel at each of its four bottom corners, and has a clasp at the front, and a saddle-shaped top so that it can be ridden on. On the other hand, it has differences from the CRD, such as being brightly coloured (in the first example it has two main colours, namely, red and black, and in the second example it is orange), and with eyes in the front, and (in the first example) a group of large spots or circles towards the rear and (in the second example) stripes and whiskers, and having an unsculptured ridge and covered wheels. There are some aspects of the Kiddee Case which can be said to cut both ways in terms of similarity with the CRD: for instance it has two protuberances at the front, but they are antennae or ears rather than horns, and, while it has a ridge along the front, centre and rear, the ridge has a different shape from that of the CRD.
The court considered the three criticisms by the Court of Appeal against the court of first instance. (The court of first instance favoured Magmatic, while the Court of Appeal overturned the judgment.) These were:

  1. The horned animal appearance of the Trunki suitcase;
  2. The decoration of the Kiddee Case; and
  3. The two-tone colouring of the CRD.
The damning conclusion of the judgment at paragraph 55 was: "... the Court of Appeal was right to hold that the design claimed in this case was for a wheeled suitcase in the shape of a horned animal, but that it was not a claim for the shape alone, but for one with a strap, strips and wheels and spokes in a colour (or possibly colours) which contrasted with that of the remainder of the product."

Rob Law was quoted saying that Magmatic has spent more than £500,000 in pursuing the litigation. He said that Magmatic was "devastated and bewildered" by the judgment, and that "Trunki was wilfully ripped off."  (Source: Guardian UK, 9 March 2016. "Trunki trumped by Kiddee in design battle of the suitcases")

What Lawyers Said

Several lawyers were interviewed on their views. Among the most relevant (for me) were the ones that said, a single registered design is not sufficient to protect IP. When in doubt, go for more. Here are two:
Clare Jackman, an IP lawyer at global law firm Norton Rose Fulbright, said it was likely that designers would file a number of applications to protect products in future, rather than relying on just one.

(Source: Guardian UK, 9 March 2016. "Trunki trumped by Kiddee in design battle of the suitcases")

Michael Moore, partner and IP lawyer at Marks & Clerk Solicitors says that to maximise protection, where possible, layers of registered design protection should be obtained. For example, this could mean a registered design to protect the product as a whole (eg with line drawings) and a separate design or designs to protect distinctive parts or features of the product.

'Following this case, where possible, companies should in particular consider protecting variations or other embodiments of the design. Significant cost savings can be made if multiple related designs are filed at the same time,' Moore adds.

'Thomas Edison said that the value of an invention lies in putting it into effect. With a design, the value lies in protecting, so far as possible, all commercial embodiments.'

(Source: Small Business UK, 10th March 2016. What does the Trunki patent case mean for small businesses and their IP?

What the Victor Said

And what did the other side have to say about it? Here is an excerpt from Sky News:
Kiddee Case founder Paul Beverley said the ruling was a "victory for fair competition".

He said: "It upholds the right of consumers to be able to choose competitively-priced products.

"We try always to work within the law and successive courts have agreed that there is no way our popular Kiddee Case can be mistaken for any other product.

"In reality we are operating in very different markets from our rivals and we have never been competing for the same customer base."

Source: Sky News, 9th March 2016. "Trunki Loses Design Case Against Kiddee Rival"

What Next

If you are wondering whether the incident is an isolated one: it isn't. Designs, especially those aesthetically pleasing ones, are often copied. 

If you are wondering whether it could happen to your design: It could.

If you are wondering what you should do next: I recommend getting "layered IP protection", where you could apply for several registrations of the design, on a macro scale and also on a component scale. Since drawings are copyrighted work, you might also like to consider making a deposit of your copyrighted work (relevant drawings) at the MyIPO.

We can help.

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Monday, 7 March 2016

The Tax-Free Benefits of Intellectual Property

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Recently, I had the good fortune of borrowing two books called "100 Ways to Save Tax in Malaysia for Individuals" and "100 Ways to Save Tax in Malaysia for Partners and Sole Proprietors" by Richard Thornton. The books are part of a series, which address "100 Ways to Save Tax" for different target audiences.

Today, I'm interested in the tips that these books have, with regards to intellectual property.

In reading the first book (i.e. for individuals), I found that, for residents in Malaysia, the following income tax exemptions apply:

  • They will be exempted the first RM10,000.00 of income earned each year from royalties for recording discs or tapes;
  • They will be exempted the first RM20,000.00 of income earned from any musical composition (provided it is done not in the course of official duties); and
  • They will be exempted the first RM20,000.00 of income eared from publication of, or right to use, any literary works (as defined in section 3 of the Copyrights Act 1987) or original paintings.
The "literary works" defined under section 3 of the Copyright Act 1987 includes:
  1. novels,  stories,  books,  pamphlets,  manuscripts,  poetical works and other writings;  
  2. plays,  dramas,  stage  directions,  film  scenarios, broadcasting scripts, choreographic works and pantomimes; 
  3. treatises, histories, biographies, essays and articles; 
  4. encyclopedias, dictionaries and other works of reference; 
  5. letters, reports and memoranda; 
  6. lectures,  addresses,  sermons  and  other  works  of  the  same nature; 
  7. tables or compilations, whether or not expressed in words, figures or  symbols  and  whether  or  not  in  a  visible  form; and 
  8. computer programs, 
but  does  not  include  official  texts  of  the  Government  or  statutory bodies  of  a  legislative  or regulatory  nature,  or  judicial  decisions,  or political  speeches  and  political  debates,  or  speeches delivered  in  the course of legal proceedings, and the official translation thereof.

If you're planning to read (raid?) the first book for more ideas, read chapter 2 -- "Ideas for Everybody".

In reading the second book, I found that, again, for residents in Malaysia, they can claim deduction from business income for cost in investing in a venture company, provided that the shares (of the venture company) are held for 2 years or more. The shares must be issued directly to you by the venture company, not "sub-sale". The "venture company" must be incorporated under the Companies Act 1965 and make use of your funding as seed capital, start-up capital or early stage financing for one of the following:
  1. activities or products promoted under the Promotion of Investments Act 1986 (pioneer status and investment tax allowance);
  2. technology-based activities listed on the MESDAQ market of Bursa Malaysia;
  3. Industrial Research and Development Grant Scheme; or
  4. Multimedia Super Corridor Research and Development Grant Scheme.
If you're planning to read (raid!) the second book, read chapter 11 -- "Tax Incentives".

Please note, I'm not a tax consultant. Mr Richard Thornton seems quite knowledgeable. Perhaps you can contact his publisher, Sweet and Maxwell Asia, if you need more advice.

As a side note, you might ask what a venture company got to do with intellectual property? Many venture companies invest in technology. Naturally, when it comes to technology, intellectual property (IP) is involved. That's why it's included in this post.
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