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Brexit and trademark protection: what you should know

The consequences of Britain’s withdrawal from the European Union will no doubt be felt globally, and across many spheres. With an ambiguous exit strategy to navigate, fresh calls to extend the transition period, and recent court rulings compounding unease, the full extent of Brexit repercussions remains to be seen.

The most popular scenarios to have arisen since the Brexit referendum are framed around alternative trading arrangements. Certain consequences will follow with respect to intellectual property, regardless of the chosen model. How the IP landscape changes after Brexit will depend on the United Kingdom’s future arrangements with the EU, and, in particular, whether the UK joins the European Economic Area (EEA). The transition period should take about two years, albeit recent calls for an extension are yet to be heard.

Intellectual Property post-Brexit

Intellectual property protected through European mechanisms such as the European Patent Office (EPO) would most likely be unaffected by Brexit. The UK is a member of the European Patent Convention (EPC), which is not linked to EU Membership status. Non-EU members – including Norway, Switzerland and Turkey – are signatories to the Convention and participate in the system. The European Patent, which is a collection of national patents accessed through a central application process, will still be available through the EPO.

Copyright is an intellectual property least harmonised in the EU. With copyright extended only nationally, the UK will make no significant changes to its law in this regard – even to those aspects introduced as a result of EU legislation.

Britain however would need to legislate on what happens to protections granted through EU Directives such as the EU Trademarks (EUTMs), previously known as community trademarks, as this is the most harmonised form of IP in the EU. In fact, the EU trademarks regime has been established through EU legislation and covers every member state of the Union.

The EU Trademarks conversion

An EU trademark is characteristically one trademark right with its own regime, and not a collection of various national rights. It has a unitary character where the owner obtains a single right valid in the 28 EU member states. Once Brexit is finalised, existing EU trademarks will no longer provide coverage in the UK for the right holders. In this context, transitional arrangements would have to be put in place and the UK will have to find a solution to facilitate the conversion of EU trademarks into UK national trademarks. A trademark holder wanting continued trademark protection in the UK would have to obtain a national UK trademark in addition to their EUTM whilst retaining priority of filing dates. The current system allows the ‘conversion’ of an EUTM into national rights but this is done against a fee, which could be substantial for firms holding large trademark portfolios.

The UK could also pass legislation to simply recognise the effect of EUTMs, postponing the need to convert them to the date when the trademark would be due for renewal (every 10 years). In all likelihood the UK will enact laws that provide for conversion and this process will be determined in more detail over the course of the exit negotiation period. The preference for conversion stems from an immediate need of a solution to moderate feelings of uncertainty and confusion among right holders. Whatever solution is adopted, the UK Intellectual Property Office (UKIPO) will face a remarkable increase in workload.

Two courts

A key advantage of EUTMs is that owners may obtain a Europe-wide injunction to impede an infringement or prevent its risk. Pan-European injunctions based on EUTM rights would no longer cover the UK. Post-Brexit applications, when an infringement occurs in one or more EU countries and in the UK, the EUTM holder will have to bring two sets of proceedings: one set before the EUTM court for pan-European injunctions, in order to stop the infringement in EU member states, and another set before the UK courts as concerns the UK infringement. This is expected to raise litigation costs considerably for the right holders.

Non-use

The EUTM Regulation provides that EUTMs can be revoked where there has been no genuine use of the mark in the EU for a continuous five-year period and there are no valid reasons for non-use. Therefore, EUTMs that had been previously used only or predominantly in the UK would become vulnerable to revocation for non-use. Post-Brexit use in the UK is unlikely to count.

Transition period

There have been no changes to EU intellectual property law or rights resulting from the Brexit vote. The scope, enforceability and effectiveness of unitary EU trademarks will remain unchanged for the UK and the other 27 EU member states until the UK eventually leaves the EU.

During the transition period (until 2018, if not extended), it is advisable to file both an EUTM and a separate UK national application. This may circumvent the need to convert the EUTM after the actual leave and will also provide certainty for long-term protection of trademarks in the UK. It is also a good option for trademark owners who want registration in a limited number of countries.

Brexit will not affect the direct filing of trademark registration applications into the United Kingdom.
Any Madrid applications (or international registrations) based on EUTM will remain unaffected during and after the transition period. UK-based companies looking to file new international registrations (IR) based on an EUTM will have to prove that they have a commercial establishment in an EU country to indicate the base mark for IR. Conversely, UK companies shall first file a UK application and use this as a basis for IR, designating the EUTM.

Impact on companies

The upcoming divergences between EU law and UK law will create ambiguity for TM holders or IP holders in general. This could make it more difficult and expensive to design and implement IP enforcement strategies. Post-Brexit companies will generally have to pay higher costs by supplementing their EUTM with UK national rights and by having to make two separate applications to achieve the same geographical scope as the EUTM currently offers. Moreover, in order to protect themselves from revocation on grounds of non-use of a trademark, right holders will have to begin to use the EUTMs more extensively in the EU. This adds another layer of complexities and costs for those companies which did not foresee extensive use of their trade mark in the EU and have not provided for such investments.

Reproduced with kind permission from Tatiana Foltea and Trade Pacts – the global home of trade law professionals
Visit www.tradepacts.com for details.

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17.01.2017
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