Praesidiad vs Zaun design dispute puts Brexit IP transition under scrutiny

Without Brexit, this infringement case would have concluded long ago. But today, the UK Court of Appeal will hear whether Zaun can challenge a Community design right belonging to Praesidiad for a second time. The hearing puts the UK Parliament's transitional arrangements for IP rights following Brexit under scrutiny. 

From an IP perspective, the Brexit-related turmoil in the UK IP courts has largely subsided. The courts have established a new role, particularly in patent cases. Other geopolitical issues now dominate discussions in the UK capital.

Today, however, the Court of Appeal will hear a case between Praesidiad and Zaun that has become entangled in the Brexit saga. It may be one of the last times a UK court acts as an EU IP court (case ID: CA-2024-001795).

Wrong timing

The case began in March 2018. Betafence, later renamed Praesidiad, sued competitor Zaun for infringement of Community Design Right RCD 127204-0001.

Both companies manufacture high-security fence posts used in facilities such as Arabian oil fields. While the products are highly technical and Praesidiad holds relevant patents, this case centres on a registered Community design (RCD).

At that point, Britain had already voted for Brexit. However, the withdrawal agreement had not yet been negotiated or entered into force. The UK courts therefore still acted as Community design courts, and Zaun challenged the validity of the RCD at the EUIPO.

The UK High Court suspended the infringement case pending confirmation of the RCD.

Zaun tries again

In the meantime, the UK and EU had agreed on withdrawal terms, with the agreement entering force on 31 December 2020. This date is also known as IP Completion Day. Since then, Praesidiad has held both an RCD and a corresponding re-registered design in the UK.

The UK Parliament had made arrangements to transfer Community rights into national law, including RCDs. IP Completion Day is crucial for the transition to national law. In proceedings initiated before this date but still unresolved, like the Praesidiad and Zaun dispute, UK courts continue to apply European law.

At the time of withdrawal, Praesidiad still awaited both an infringement decision and the conclusion of the EUIPO validity case. This took considerable time. The two companies fought through various courts with mixed success until, in 2022, the General Court of the European Union finally confirmed Praesidiad’s RCD. The CJEU rejected Zaun’s subsequent appeal in June 2023 (case ID: C-780/22 P).

With Praesidiad’s RCD now finally valid, the UK High Court could resume the infringement case.

When the ruling finally came in Praesidiad’s favour, Zaun launched a second attack against the right, this time in the UK High Court. In August 2023, Zaun served a defence and counterclaim seeking to invalidate both the RCD and the equivalent re-registered UK Design.

A month later, Praesidiad applied to strike out Zaun’s counterclaim, arguing it was an impermissible attempt to relitigate an invalidity challenge that Zaun had already lost at the EUIPO. Thus the legal principle of res judicata, whereby cause of action may not be relitigated once it has been judged on the merits, lies at the heart of the proceedings.

Res judicata or not res judicata

Court documents show Praesidiad argues that Zaun cannot challenge the validity of either design right. This is either because Article 86(5) of the Community Designs Regulation still applies, or due to English law principles of res judicata.

Zaun counters that amendments to the Registered Designs Act 1949 have expressly – or at least implicitly – disapplied Article 86(5) for proceedings pending at IP Completion Day. Therefore, no statutory res judicata precludes the counterclaim.

Moreover, Zaun contends that English law principles of res judicata and abuse of process do not apply as the EUIPO is not a court of competent jurisdiction. Alternatively, if this view is wrong, Zaun argues the RDA 1949 amendments should be interpreted as disapplying these doctrines. It further claims that an EUIPO decision cannot create estoppel or abuse of process regarding the re-registered design, as this is a new UK right.

No luck in first instance

This raises questions about whether the British legislature correctly handled the transfer of European rights into national law. If Zaun prevails, it could have far-reaching implications for similar cases within the Brexit transition period.

However, in June 2024, the UK High Court under judge Antony Zacaroli ruled for Praesidiad, striking out Zaun’s counterclaim. Judge Zacaroli, who moved to the Court of Appeal in October 2024, found that Article 86(5) of the Community Designs Regulation still applies post-Brexit, preventing re-litigation of matters already decided by the EUIPO. The court confirmed that the EUIPO’s final validity decision, upheld by res judicata principles, bars Zaun from relitigating in the UK.

Zaun has appealed to the Court of Appeal. Judges Nicholas Underhill, Richard Arnold and Peter Jackson will hear the case today. The hearing, expected to last four and a half hours, will not likely address design infringement questions. Zaun maintains that only part of its product is at issue, not the entire fence, arguing a design right can only apply to a complete product. This question may remain unresolved for years.

Regardless of today’s ruling, both parties argue so intensely that the question of admitting Zaun’s second counterclaim may reach the UK Supreme Court.