Oakley Inc. v Animal Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice May,Lord Justice Jacob |
| Judgment Date | 20 October 2005 |
| Neutral Citation | [2005] EWCA Civ 1191 |
| Docket Number | Case No: A3/2005/0772, 0828, and 0651 |
| Court | Court of Appeal (Civil Division) |
| Date | 20 October 2005 |
[2005] EWCA Civ 1191
Lord Justice Waller
Lord Justice May and
Lord Justice Jacob
Case No: A3/2005/0772, 0828, and 0651
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM The Chancery Division (Patents Court)
Of the High Court
Peter Prescott QC sitting as a High Court Judge
HC 02 CO2484
Royal Courts of Justice
Strand, London, WC2A 2LL
John Howell QC and Pushpinder Saini (instructed by Bird & Bird Solicitors) for the Appellant
Fiona Clark and Josh Holmes (instructed by Reynolds Porter Chamberlain Solicitors) for the First Respondent
Lord Goldsmith QC, David Pannick QC and Simon Malynicz (instructed by the Treasury Solicitor) for the Intervener
Waller LJ:
The point raised on this appeal is an important one. As between the appellants (Oakley) and the respondents (Animal) it can be expressed quite shortly. EC Directive 98/71/EC required Member States including the United Kingdom to 'approximate' their legislation in relation to Registered Designs. But it provided by Article 11.8 an option allowing Member States to derogate and retain in force existing legislation for designs registered under that existing legislation. The Secretary of State under section 2(2) of the European Communities Act 1972 (the 1972 Act) issued the Registered Designs Regulations 2001 (the 2001 Regulations) implementing the Directive. In accordance with Article 11.8, Regulation 12 of those regulations retained in force existing legislation in relation to designs already registered under that legislation. The existing legislation was the Registered Designs Act 1949 (as amended).
Section 2(1), (2) and (4) of the 1972 Act provide as follows:—
"2(1) All such rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties, and all such remedies and procedures from time to time provided for by or under the Treaties, as in accordance with the Treaties are without further enactment to be given legal effect or used in the United Kingdom shall be recognised and available in law, and be enforced, allowed and followed accordingly; and the expression "enforceable Community right" and similar expressions shall be read as referring to one to which this subsection applies.
2(2) Subject to Schedule 2 to this Act, at any time after its passing Her Majesty may by Order in Council, and any designated Minister or department may by regulations, make provision—
(a) for the purpose of implementing any Community obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights enjoyed or to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or
(b) for the purpose of dealing with matters arising out of or related to any such obligation or rights or the coming into force, or the operation from time to time, of subsection (1) above;
and in the exercise of any statutory power or duty, including any power to give directions or to legislate by means of orders, rules, regulations or other subordinate instrument, the person entrusted with the power or duty may have regard to the objects of the Communities and to any such obligation or rights as aforesaid.
In this subsection "designated Minister or department" means such Minister of the Crown or government department as may from time to time be designated by Order in Council in relation to any matter or for any purpose, but subject to such restrictions or conditions (if any) as may be specified by the Order in Council.
2(4) The provision that may be made under subsection (2) above includes, subject to Schedule 2 of this Act, any such provision (of any such extent) as might be made by Act of Parliament, and any enactment passed or to be passed, other than one contained in this Part of the Act, shall be construed and have effect subject to the foregoing provisions of this section; but, except as may be provided by any Act passed after this Act, Schedule 2 shall have effect in connection with the powers conferred by this and the following sections of this Act to make Orders in Council and Regulations."
Peter Prescott QC sitting as a Deputy High Court Judge of the Chancery Division held, by a judgment dated 17 th February 2005, that in so far as the Secretary of State has by the 2001 Regulations exercised the option to retain existing legislation in relation to old registered designs, he has acted ultra vires. He has held that Regulation 12 was not passed "for the purpose of implementing any Community obligation of the United Kingdom" under section 2(2)(a); he has further held that it was not passed "for the purpose of dealing with matters …arising out of or related to any such obligation.." under section 2(2)(b). He held that:—
"142. The decision (whether or not to retain the old law of validity in respect of existing registrations the scope of whose monopoly was anyway going to be different) was a significant policy choice and, in my judgment, had to be implemented by primary legislation. Thus I hold that the Secretary of State did not have the power to make that decision – one way or the other – and to implement it by secondary legislation. Such a legislative act would be ultra vires."
That finding, although ostensibly only as between Oakley and Animal and limited to these regulations, has serious and very wide implications. It would mean if right at the very least that a Secretary of State could never exercise a similar option to retain existing legislation when issuing regulations implementing an obligation imposed on the United Kingdom by a Directive. It also seems to go further and hold that any exercise of a "significant policy choice" would need primary legislation. If right, that will force the Government to introduce primary legislation in every such case with obvious consequences. It has placed a narrow construction on both Section 2(2)(a) and (b) which heretofore has not been adopted by Secretaries of State. It places in jeopardy many regulations passed under section 2(2). It is these general issues which caused the Secretary of State to be invited to address the Court below, and has caused the Secretary of State to become a party for the purpose of appealing that ruling, and be represented by the Attorney General in this court. I shall call the point on which the Attorney General has appealed, and on which he was supported by Animal represented by Miss Clark, the validity point.
For the original parties to these proceedings, the impact of the ruling was in fact paradoxical. By the proceedings before the Deputy Judge, Oakley was seeking to prevent infringement by Animal of certain registered designs relating to sunglasses. Shortly before the commencement of the trial it became apparent that Oakley had published one of their designs a month before registering the same under the 1949 Act. If the 1949 Act applied without any amendment by the 2001 Regulations, that Registered Design was thus invalid. If the 2001 Regulations applied including Regulation 12, since that would maintain in force the 1949 Act the Registered Design was invalid. But Oakley argued before the judge that the result of holding Regulation 12 ultra vires should be that Regulation 12 should be excised and the 2001 Regulations otherwise held valid. On that basis Oakley would succeed in defending the validity of their registered design on the basis that the 2001 Regulations had in accordance with the Directive amended the 1949 Act to provide a 12 month grace period for prior publication i.e. prior publication by them within the 12 months prior to registration no longer invalidated the Design.
Animal argued before the judge, that it would be wrong simply to excise Regulation 12 because that would have the effect of bringing into force regulations that the Secretary of State did not intend to pass. The judge held that Animal's argument was right, and he refused to sever. In the result he held that the 2001 Regulations were invalid as a whole. He recognised that "the somewhat paradoxical consequence" was that the validity of the registered design had to be tested therefore by reference to the 1949 Act. The result for the parties was precisely as if the Regulations had been valid. Oakley has appealed this aspect of the judgment. I shall call the point on which Oakley has appealed the severability point.
Although it was Oakley who had appealed the severability point, it was accepted that, if the decision of the judge on the validity point was reversed, there would be no point in taking up time in this court at this stage in arguing the severability point, and accordingly the Attorney General opened the appeal on the validity point.
I should mention in order to put it on one side a further point, which I shall call the timing point. Under the Directive the United Kingdom had only until 28 th October 2001 to exercise the option to derogate. The Regulations were only passed on 8th December 2001. Oakley argued that on that basis the exercise of the option was in any event too late, and argued that in this context severability should be allowed. The judge ruled that the question whether the United Kingdom was too late and its effect, should be referred to the European Court, but also ruled by a supplementary judgment that if the European Court ruled that the exercise of the option to derogate was invalid, in this context it would be possible to sever. It has been accepted that it was appropriate to refer the question of validity by reference to date to the European Court and it has also...
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