Oakley Inc v Animal Ltd. & Ors

Secondary legislation made under section 2(2) of the European Communities Act 1972 may amend primary legislation where that is an appropriate method of achieving a substantive result required by a directive. It cannot be used to adopt a result contrary to the directive or to make an independent policy choice neither required by Parliament nor the directive. Where part of secondary legislation is unlawful, the court may apply substantial severability if the legislation’s principal purpose can still be achieved and the valid remainder can operate coherently. A directive’s derogation from harmonised rules may be unavailable where the Member State adopts the implementing measure after the directive’s transposition deadline, but that issue may require a preliminary ruling.

The judgment supplemented an earlier decision on a preliminary point concerning the validity of Registered Design 2,059,677. Oakley had used the design commercially in the United Kingdom before applying for registration. Under the former Registered Designs Act 1949, that use would have affected validity, whereas the new regime provided a 12-month grace period.

The issue was whether regulation 12 of the Registered Design Regulations 2001, made under section 2(2) of the European Communities Act 1972, validly preserved the former law for existing registrations. The court had referred to the European Court of Justice the question whether the United Kingdom could adopt the directive’s derogation after the transposition deadline. This supplementary judgment addressed the consequences if the answer favoured Oakley.

1. The court had previously held that section 2(2) of the European Communities Act 1972 could authorise regulations amending an Act of Parliament where the amendment was an appropriate means of achieving a substantive result required by the directive. It could not authorise regulations producing a result forbidden by Community law or making a significant policy choice not required by Parliament or the directive.

2. If the European Court of Justice ruled that the United Kingdom had lost the opportunity, after 28 October 2001, to adopt the derogation in article 11.8 of Directive 98/71/EC, regulation 12 would be ultra vires. It would purport to preserve the old national law after the time when Community law no longer permitted that course.

3. Regulation 12 would nevertheless be severable. The substantial purpose of the 2001 Regulations was to implement the directive. That purpose could be achieved by striking out regulation 12 and implementing the remainder without the derogation. Invalidating the whole instrument would itself frustrate the directive’s implementation.

4. The court rejected the alternative that the whole of the 2001 Regulations should fail. On the assumed ECJ ruling, the United Kingdom would have no option but to implement the remainder of the directive without relying on article 11.8.

5. Accordingly, if the ECJ ruled in Oakley’s favour on the referred issue, Oakley would succeed because the 12-month grace period would apply. Otherwise, Animal had succeeded on the preliminary point to that stage.

This was a supplementary first-instance judgment following an earlier decision on a preliminary point of law. Permission to appeal was given on the constitutional issue, and the European Court of Justice was asked for a preliminary ruling under article 234 of the Treaty.