Jun 2024

United Kingdom

Law Over Borders Comparative Guide:

Luxury Law

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Scroll down to read the full chapter or click on the headings below to jump to the relevant section.

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Contributing Firm

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1 . Trademark

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1.1. Sources of law

The primary source of trade mark law in the UK is the Trade Marks Act 1994 (the TMA), which is supplemented by procedural rules — The Trade Mark Rules 2008. The ultimate court of appeal, prior to Brexit, was the Court of Justice of the European Union (CJEU). Following Brexit, the UK Supreme Court is the final court of appeal. UK law has not yet diverged a great deal from EU Law.

The UK is a signatory to the Agreement on Trade-related aspects of Intellectual Property Rights, 1994 (TRIPS) and is a party to the International System for trade marks under the Madrid Protocol. A party in a member country can file an international trade mark designating the UK, and vice versa.

Unregistered rights may also be derived from use of a trade mark under the English common law action of passing-off, the closest equivalent right in the UK to unfair competition law. Whilst the UK trade mark system is based on the first to file, if a party can demonstrate ‘non-registered’ rights in a mark, it may successfully oppose the registration of an application for an identical or similar mark.

Whereas a registered trade mark provides exclusive rights by registration, common law rights need to be established through evidence. To rely on passing off it is necessary to show that:

  • there is goodwill in the business under the trade mark;
  • there has been a misrepresentation by a third party; which
  • results in damage to the goodwill.
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1.2. Substantive law

UK trade mark law does not provide superior protection for luxury brands per se, but established and publicly recognised luxury brands are more likely than commonplace brands to benefit from intangible attributes derived from use such as reputation and enhanced distinctiveness.

UK law allows the owner of a registered trade mark to prevent a third party from using a ‘sign’ where:

  • There is double identity of marks and goods/services. ‘Identity’ is drawn strictly. For luxury brands, this is the typical ground used against counterfeits.
  • There is no double identity, but marks and the goods/services are identical or similar, and there is a likelihood of public confusion. In determining a likelihood of confusion, the existence of enhanced distinctiveness for the earlier mark may compensate for a lower degree of similarity between the marks and/or the goods. The existence of enhanced distinctiveness is an advantage for its owner, and luxury goods are more likely to benefit from a finding of enhanced distinctiveness. 
  • The marks are identical or similar and the use of the later mark, without due cause, takes advantage or is detrimental to the repute or distinctiveness of the earlier mark (activities that can be referred to as free riding, blurring or tarnishment). The existence of a ‘reputation’ for the earlier mark is a necessity in such a case.

Luxury brand owners are able to restrict distributors from selling through third party websites and less desirable outlets, provided that this restriction was necessary to preserve the ‘aura of luxury’ (Coty Germany GmbH v. Parfümerie Akzente GmbH ). In order to benefit from this potentially anti-competitive arrangement, it is important that licences are carefully drafted so as not to breach competition laws by preventing, restricting or distorting competition. 

On a related and practical point, any assignments of rights must be in writing and signed by the Assignor to be valid. Assignments of registered rights should be recorded at the UK IPO within six months of the transfer.

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1.3. Enforcement

The same intellectual property rights apply across England and Wales, Scotland and Northern Ireland but the court procedure in each varies. We focus on England and Wales. 

The main forums for enforcement proceedings in the UK courts are: 

  1. the IP Enterprise Court (IPEC) for smaller claims; 
  2. the Shorter Trials Scheme (STS) for cases where tight case management is desirable; and 
  3. the High Court for more complex claims. 

Primary evidence is set out in witness statements which are verified by a statement of truth. The statement must be given by someone with personal knowledge of the facts and matters and is commonly supported by documentary evidence in the form of exhibits. Witnesses may be cross-examined at trial.

The limitation period in the UK is six years from the date on which the relevant infringing act occurred. If an infringement is ongoing, it is only possible to claim damages for the six years preceding the date on which the claim form was issued.

A trade mark may be enforced against a range of unauthorised third-party use in the course of trade, including use on goods and packaging, through importation into the UK, in a domain name, a trade name, a metatag, and on business papers and advertising.

A trade mark can be enforced against its unauthorised use in social media provided the use is directed at users in the UK. Additionally, the particular social media’s dispute resolution procedures may also be used.

Comparative advertising is allowed in the UK under the Business Protection from Unfair Trading Regulations 2008 (BPUTR). To comply, a comparative advertisement must compare goods or services meeting the same needs or intended for the same purpose, and objectively compare one or more material, relevant, verifiable, and representative feature of those goods and services. It must not be misleading or create confusion, and must not denigrate a competitor, or its brand or goods, or take advantage of a competitor’s repute.

There is no express defence of parody against trade mark infringement. 

Trade mark infringement and passing off can both be pleaded in the same case. Additionally, a useful weapon in the armoury of luxury brands is the availability of criminal proceedings for trade mark, copyright, and registered design infringement. Criminal (rather than civil) proceedings are often deployed against those involved in the production and sale of counterfeit products because a criminal conviction can act as a strong deterrent against future counterfeits.

It is important to consider the law of unjustified threats when making allegations of infringement against third parties, particularly retailers. The law applies to trade marks and designs and permits a person aggrieved the ability to seek a declaration that the threats are unjustified, damages and an injunction to prevent further threats. 

A major current issue that luxury brands face is use of their brands in the Metaverse. As interest in the Metaverse grows, more brands are establishing themselves on virtual platforms. A number of cases in relation to brand infringement in the Metaverse have been decided in favour of the rights holder based on existing registrations for physical goods where the owner had a strong reputation in the brand. However, it is recommended that brand owners look to register trade marks for virtual goods, particularly luxury brands which are more likely to be courted in relation to unlicensed non-fungible tokens (NFTs). The UK Intellectual Property Office has issued a statement that virtual goods should be filed in Class 9. 

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2 . Copyright

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2.1. Sources of law

The Copyright, Designs and Patents Act 1988 (CDPA) is the principal source of law and regulation relating to copyright in the UK. A considerable amount of UK copyright law was derived from EU law and even though most EU-derived legislation and judgments at the end of the Brexit transition period became retained UK law, there is likely, in time, to be divergence. 

UK courts and tribunals may have regard to judgments handed down after the end of the transition period by the CJEU, or another EU entity so far as it is relevant to any matter before the court or tribunal, but they are not binding in the UK.

UK copyright works are protected overseas through the reciprocal protection mechanisms set out in the principal international copyright conventions to which the UK is a party, including the Berne Convention.

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2.2. Substantive law

UK copyright law protects original literary, dramatic, musical, or artistic works which, as a general rule, must be recorded or ‘fixed’ in some way. Additionally, UK copyright law protects sound recordings, films or broadcasts and the typographical arrangements of published editions.

Copyright is a valuable and enduring right — it typically lasts for the life of the owner plus 70 years.

The general rule is that the person who creates a copyright work is the ‘author’. The author of a work is the first owner of copyright in it. Where a work is made by an employee in the course of their employment, the employer will be the first owner of copyright in the work subject to any agreement to the contrary. Where there is no contract regarding ownership of copyright, such as can be the case with freelancers, independent contractors and suppliers, the usual rule applies and the author of the work will be the creator, rather than the company. In these circumstances, a written assignment of copyright should be obtained to ensure that the commissioning party is the owner of the legal title to the copyright work. The formalities for assignments are broadly the same as for trade marks (see Section 1, above).

Additionally, moral rights attach to copyright works. The two principal moral rights afford the author: (1) the right to be identified as the author of a copyright work; and (2) the right to object to derogatory treatment of a copyright work. Whilst moral rights apply to literary, dramatic, musical, or artistic works and films, they do not apply in the case of sound recordings, broadcasts, or typographical arrangements.

In an assignment of copyright, the original author can waive, but cannot assign, their moral rights.

It is important for luxury brand owners to note that it is not straightforward to rely on copyright for the protection of three-dimensional items such as industrial designs and clothing. This is because such items are protectable under copyright law only if the manufactured item itself is an artistic work. Items which are not artistic works can be protected under designs law, but the period of protection is much shorter than copyright, and this affects older ‘heritage’ designs. 

The owner of copyright has the exclusive right to:

  • copy the work;
  • communicate or issue copies of the work to the public;
  • rent or lend the work to the public;
  • perform, show, or play the work in public; and
  • make an adaptation of the work or do any of the acts listed above in relation to an adaptation.

Doing any of the above ‘restricted acts’ without the owner’s consent can amount to acts of ‘Primary’ infringement. ‘Secondary’ acts of infringement include possessing, selling, hiring, distributing, or exhibiting articles through a business where the ‘infringer’ knows or has reason to believe they are infringing copies of a copyright work. 

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2.3. Enforcement

Copyright protection automatically attaches to new qualifying works from the moment of creation in tangible form. There is no requirement to register copyright with a UK regulatory body. However, it is sensible to mark a work with the copyright symbol (©), the owner’s name, and the year of first publication to provide notice that the work is protected.

Copyright infringement occurs where one of the restricted acts is carried out in respect of the whole or a substantial part of the work, either directly or indirectly. Actual copying is required to infringe the reproduction right in a copyright work, and each of the other restricted acts only apply to works which amount to infringements. The key CJEU Infopaq case seems to vary the UK law relating to copying of a ‘substantial part’ of a work. It established, amongst others, the key test is whether there has been copying of elements which reproduce the expression of the author’s intellectual creation.

An earlier copyright can be used to invalidate or oppose a trade mark or a registered design and can act as a defence to infringement. Further, copyright can subsist in a logo used by a business which can be used against unauthorised domain name and company name registrations.

Copyright can also be used to prevent infringements on social media, provided such use is without the copyright owner’s permission. Rights holders may also prevent unauthorised use of their copyright in comparative advertising without permission from the rights holder. The BPUTR does not expressly provide a defence for copyright infringement.

The defences to copyright infringement are narrow, the main one being that the original work was not copied. The CDPA permits “fair dealing” for the purposes of research and private study, criticism, or review, and reporting current events. The Quotation and Parody Regulations 2014 allows fair dealing with a copyright work for the purpose of caricature, parody, or pastiche without the permission of the copyright owner. However, this defence is limited, designed to facilitate freedom of expression rather than the sale of goods and services.

The comments above in Section 1, in relation to limitation and formalities for assignments, apply equally to copyright. 

Modern advances in technologies such as the emergence of the Metaverse and NFTs, are requiring rights holders to reconsider the best ways to both exploit and protect their copyright works. It is worth emphasising that obtaining copyright clearance is as important in the metaverse as it is in the real world.

Utilising copyright as part of a strategy to combat counterfeiting is an important part of a brand protection strategy against the developing sophistication of pirates. Luxury brands are having to become increasingly creative not only through the utilisation of new technology to reliably monitor the supply chain such as radiofrequency identification tags for example, but also by developing lavish data-rich digital experiences to promote luxury goods. 

Copyright underpins the promotional content by which luxury products appeal to the imagination of consumers through digital product launches, virtual projects and product placements. These can enhance the appreciation and the ideology behind the brand and encourage consumers to reject fake products.

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3 . Design

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3.1. Sources of law

Designs in the UK are protected by a combination of UK and EU-derived registered and unregistered rights, and, to a limited extent, artistic copyright (see Section 2, above).

Following Brexit, EU Registered and Unregistered Designs have evolved into new UK rights (see Section 3.2 below).

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3.2. Substantive law

The Continuing Community Unregistered Design (CCUD) is a UK right created to provide ongoing protection for existing Unregistered Community Designs when they ceased to be effective in the UK following Brexit. For the purposes of this right (and each of the EU-derived design rights) ‘design’ means the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation. 

The duration of protection is three years from the date when the design was first made available to the public. In practical terms the latest time at which a CCUD could be in effect is 31 December 2023. As with other EU-derived design rights a CCUD only qualifies for protection if, on the date when it was made available to the public, it was ‘new’ and had ‘individual character’. Designs solely dictated by technical functions are excluded from protection. Protection arises automatically and the right provides protection against copying of the design.

The Supplementary Unregistered Design (SUD) provides the same automatic protection as a CCUD for designs first disclosed in the UK after Brexit. In the fast-paced world of luxury clothing for example, SUD is the mainstay of protection for many luxury products. Fashion houses in particular have used CCUD’s and SUD’s to remove cheap copies of their designs from the UK market.

A UK Registered Design (URD) is a registered right and, to qualify, the owner must be a national of the UK or another qualifying country. It is sufficient for a company that meets the relevant criteria to instruct an individual who is not a qualified person to create this right. URD protects two-dimensional and three-dimensional features of the appearance of products which are industrial or handicraft items or parts of such products. The definition of a ‘design’ is largely the same as for CCUD’s. The URD may be renewed every five years up to a maximum term of 25 years.

The URD is subject to a 12 month “grace period”. Any disclosure made by the designer in the 12 months before the filing of the application is not taken into account when deciding whether a design is ‘new’. In short, you should not disclose designs before filing, but to cater for product launches, URD’s may be filed within 12 months of the first disclosure to the public.

A Re-registered Design is essentially the same as a URD. The re-registered right in the UK only subsists if the Community registered design was granted before 2021.

Finally, the discrete UK Unregistered Design right is retained under the CDPA. This differs from the other rights in that it protects the shape or configuration of the whole or a part of a product. Designs must be original and not ‘commonplace’ and must be recorded in a design document or an article. Restrictive requirements relate to the nationality of the designer, their employer or the person commissioning the design. Most designs originating outside the UK will not qualify for protection. 

This right covers three-dimensional features of the design of industrial articles, whether aesthetic or functional. Surface decoration is excluded from scope of this right, but it is nonetheless a very versatile right which lasts for the shorter of 15 years from first creation or 10 years from first marketing. Licences of right are available in the final five years.

The position in relation to ownership of rights (including employed designers), assignment, and limitation is similar to copyright. In short, the designer is typically the initial owner of design rights in their work. If an employee creates a design during their employment, the employer becomes the owner of the rights. As with all IP rights, it is sensible to make provision for ownership of IP rights in the employee’s employment contract. 

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3.3. New technologies

New technologies like blockchain are now important in the high-end product industry, addressing key challenges like counterfeiting. Blockchain allows the tracing of a product’s history, including in second-hand markets, and permits access to digital proof of the product’s authenticity. Smart tags are being used by companies for provenance identification and to help tackle counterfeiting.

Furthermore, AI-powered recommendation systems analyse customer data to suggest personalised products, streamlining operations, enhancing the customer experience, and expanding market reach for luxury brands. This leads to a more enjoyable and convenient luxury shopping experience, which can boost sales.

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3.4. Enforcement

Copying is necessary to infringe unregistered designs. Registered designs do not require proof of copying. Further, the tests for infringement of CCUDs, UDs or SUDs differ to UK unregistered design right. In relation to the former the test is whether the infringing product produced ‘the same overall impression’ as the relevant design. For the latter, the test is whether there has been copying of the design so as to produce articles exactly or substantially to the design. 

For all designs a typical defence to infringement is that the design is invalid and cannot be relied upon. In simple terms this means the design is not sufficiently different from earlier public designs. Often in infringement actions the defendant will cite earlier designs which ‘invalidate’ the rights in the design relied-on. Such earlier designs can also be used to oppose or invalidate a registered design. Additional limited defences apply to private or experimental acts and acts for ‘fair’ teaching purposes providing the source is cited.

URDs are particularly useful in online takedowns because there is no substantive examination at the registry, and they are granted quickly. 

The BPUTR does not specifically call out designs in relation to comparative advertising, but the rules referred to above in Section 1, should apply equally to designs.

There is no parody defence for designs.

The right to repair luxury goods or to obtain spare parts for them is a complex issue in the UK because of existing case law which has recognised the public policy requirement for an owner to obtain parts from parties other than the manufacturer. This is usually a minor concern for luxury brands, apart from those in the automotive sector. However, in relation to UK unregistered design right, protection is not provided to features of shape or configuration which are dependent on the appearance of another article. This serves to protect the spare parts market.

It is common to bring proceedings for design infringement together with other rights. Depending on the type of item, this might mean a combination of different designs, such as UK UDR and CCUDR, or could include copyright infringement, passing off, and unfair competition.

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4 . Right of privacy, publicity and personal endorsement

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4.1. Sources of law

The UK has no codified law of privacy or image rights as such. Protection against use of a person’s image is achieved via a patchwork of rights including passing off, confidential information, misuse of private information, data protection law and trade mark rights.

On 22 June 2022, the UK Government introduced the Bill of Rights Bill 2022 to Parliament. The Bill sought to repeal the existing regime and create a new domestic framework for privacy and human rights. The Bill was withdrawn on 27 June 2023 and is not at present going to be progressed.

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4.2. Substantive law

Passing off, which bears comparison to unfair competition, provides a means by which images of celebrities, for example, are protectable in the UK. Passing off has been used by pop star Rihanna to prove that her likeness had goodwill in relation to fashion items, and the subsequent sale by Arcadia of a range of t-shirts bearing her likeness without her consent constituted a misrepresentation and amounted to passing off. However, the judgment clearly set out that this was not an indication that the floodgates were opening with respect to passing off actions where a famous person’s image appeared on merchandise without their permission. A problem faced in this regard is that the use of a famous person’s image on some items can be seen as a mere ‘image carrier’ rather than a designation of ownership. It all depends on the item and the image in issue.

Passing off has also been used by former motor racing driver Eddie Irvine whose image was used by sports radio channel ‘Talksport’ to promote their services. In a 2002 case, passing off was cemented as a means of relief for celebrities whose name, image or likeness had been used in a way which falsely suggested that they endorsed goods or services. However, succeeding in a false endorsement case is not straightforward and is heavily dependent on the evidence. An aggrieved party must show that they had a substantial reputation or goodwill and a significant section of the market believed they had endorsed or approved the goods in question.

Trade mark law provides an important practical means of protecting images. Any mark which is “distinctive” and is capable of distinguishing the owner’s goods is registrable. Many celebrities have registered their names, signatures, and their images as UK trade marks or EUTMs in respect of certain goods. More unusual marks, such as a person’s likeness, can lead to difficulties when it comes to registration. Case law has precluded the registration of images of pop stars’ images in relation to posters and related items on the basis that purchasers don’t really care where the goods originate as long as they contain the image of their idol. 

Trade marks and any residing goodwill can be assigned or licensed for exploitation to another party. The bundle of rights making up an individual’s rights to publicity can in theory be controlled through contract and can be exploited after the death of the individual. The estates of many famous people such as Albert Einstein or Elvis Presley can continue to exploit the former individual’s name and image long after the individual has died. 

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4.3. Enforcement

Enforcement of image rights will depend on the nature of the claim. For more on the enforceability of trade marks and passing off, see Section 1, above.

The increasing use of modern technology and AI causes difficulties for those seeking to commercialise and protect their image. ‘Deepfakes’ can be produced very quickly and used to produce unauthorised endorsements of products and services without the consent of the individual concerned. Actors, musicians and well-known politicians have been on the receiving end of such activities, including Tom Hanks in September 2023 when an AI-produced image of him was used to promote a dental plan without his consent. Screenwriters and actors in the United States went on strike in 2023 in part to demand that studios and streaming giants agree certain limits on the use of AI-powered tools. 

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5 . Product placement

Product placement is advertising through the inclusion of, or reference to, a product, service, or trade mark in a programme for commercial purposes. 

Product placement in films, TV series, entertainment shows and sports programmes is permitted in the UK under the Communications Act 2003 and Ofcom’s Broadcasting Code (the Code). 

Products cannot be placed in children’s programmes, news and current affairs programmes, consumer advice or religious programmes. 

Product placement is prohibited for cigarettes and other tobacco products, prescription-only medicines, and alcoholic drinks.

Undue prominence must not be given to the product, service or trade mark by distorting or creating new content solely for its placement in the programme and there must be ‘editorial justification’ for the product placement. Broadcasters must inform viewers of the product placement at the start of the programme as well as during advertisement breaks for on-demand programme services.

There is usually an agreement between the programme provider and the brand owner or its agent. Breaches of the Code (or the agreement) by the programme provider would provide the brand owner with the right to seek damages or specific performance. 

An unapproved inclusion of a luxury product or brand in a television programme or film is permissible on an ‘incidental’ basis provided that the use does not imply a false endorsement. This is obviously a concern for a luxury brand because unauthorised exposure of the brand in an uncontrolled environment could diminish the aura of luxury around the product. 

Additionally, Ofcom has the power, amongst other things, to stop the communication on receipt of a complaint. 

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6 . Protection of corporate image and reputation

In English law, there isn’t a dedicated right of publicity or privacy. Businesses typically resort to intellectual property rights including copyright and trade mark, as well as passing off and the laws of confidential information to protect their rights. 

Further, luxury businesses can maintain control over their image through contractual restrictions with third parties and can maintain their reputation under defamation laws. In relation to contractual controls there are two particularly important points to note. 

First, it is possible for luxury brands to enter into selective distribution agreements and to prohibit the sale of their products in specified outlets or platforms if the ban has the effect of preserving the luxury image of the goods. 

Secondly, it is common for luxury brands to impose non-disparagement obligations in its contracts with third parties including with endorsers and influencers. If the latter’s acts adversely affect the luxury brand it will typically have the right to withhold or recover payments made to the third party, and to terminate the contract. 

One issue of note for UK luxury brands is that since 1 January 2021, the UK has maintained the regional exhaustion regime of the European Economic Area (EEA). Under this system, once a right holder authorises a product’s sale in the EEA, they cannot prevent its resale there, unless the goods undergo significant changes. This setup allows EU right holders to freely export goods to the UK if they wish without impeding resale within the EEA. However, the EU hasn’t reciprocated, and UK rights holders cannot prevent parallel imports from the EEA, but EEA rights owners can prevent UK-market goods from entering the EU.

Attempts to impose minimum sale prices on re-sellers through resale price maintenance (RPM) are likely to fall foul of competition law principles. ‘Recommended’ prices are permissible if they do not comprise a disguised minimum resale price or a fixed resale price. 

Finally, in a contractual arrangement, liquidated damages are permitted but they must be justifiable under the contract. A clause which is not in proportion to the legitimate interest of the innocent party may be unenforceable. 

The author would like to thank James Moore, George Curie, Hannah Simpson and Amani Ismail for their support in writing this chapter.

EXPERT ANALYSIS

Chapters

Australia

Belinda Breakspear
Harriet Young

China

Lina Li
Yunze Lian

Germany

Dr Wiebke Baars

India

Dhruv Anand
Nimrat Singh
Sampurnaa Sanyal
Udita Patro
Pravin Anand

Italy

Fabrizio Jacobacci

Japan

Masaki Mikami

Lebanon

Julien Khoury
Nisrine El Haddad
Patricia Seaiby
Rany Sader

Mexico

Ricardo R. Díaz Cisneros

Netherlands

Herwin Roerdink
Tjeerd Overdijk

South Korea

Clare Ryeojin Park
Dae Hyun Seo
Won Joong Kim

Spain

Eleonora Carrillo
Ignacio Martínez
Rafael Linage

Sweden

Helena Brännvall
Karin Crafoord
Magnus Henning

Thailand

Adele Marchal
Chanapa Thussanasumrit
Munif Chaipanya
Orranat Suvarnasuddhi
Pawat Varapirom

Ukraine

Dmytro Stefanovych
Ganna Prokhorova
Ilona Boliubash

United States

Alan Behr
Tod Melgar

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