Kate Swaine
Partner
Co-Head of Intellectual Property, Global
Article
11
Whilst many of us have resisted the temptation to over speculate as to the potential ramifications of a variety of possible Brexit outcomes, as the deadline for Brexit draws ever closer businesses now need guidance as to the impacts they may face. This insight considers the potential effects on European trademark rights ("EUTMs") in the event of some form of Brexit deal versus the no deal scenario.
This article complements our corresponding article on the effect of Brexit on designs.
A Brexit Deal would most likely see the UK and EU enter into the Withdrawal Agreement in some form. It would mean that a transition period would begin on 31 October 2019 until 31 December 2020 (subject to agreement on the specific date). During the transition period the UK will continue to be bound by EU laws. EU laws would cease to have an effect from 31 December 2020, exit day.
No Deal would mean that the UK leaves the EU on 31 October 2019 (exit day) without any agreement between the UK and EU as to how EUTMs will be treated in the UK after 31 October. The government has published draft legislation in the form of The Trade Marks (Amendment etc) (EU Exit) Regulations 2018 (the "Regulations") which make provision for the treatment of EUTMs in the UK after 31 October 2019.
So what does this really mean for trademark owners?
No. In the event of a Deal, all EUTMs registered as at 31 December 2020 will automatically be protected as "cloned" UK trademark registrations without any loss of priority, filing or seniority dates. The UKIPO has confirmed that at this date all existing registered EUTMs will be cloned into the UK at no cost. The new UK right will have a prefix to indicate that it is cloned and will require its own separate renewal.
In the No Deal scenario, all EUTMs registered as at 31 October 2019 will automatically be protected as "cloned" UK trademark registrations. The UKIPO has confirmed that at 11pm on 31 October 2019, all existing registered EUTMs will be cloned into the UK at no cost as above. The UKIPO has said that it will also waive the "late payment" charges for these registrations for the first six months. There is a provision for EUTM owners that do not wish to have UK protection to opt-out of this cloning but it is not possible to opt out if the mark in question is subject to an interest such as a licence, assignment or security or if it has been used in the UK on or after exit day or there are legal proceedings in relation to the EUTM. It is unclear what the position will be where rights are the subject of legal proceedings in the UK at the time of exit. The government has said that it will provide further guidance prior to exit.
In the event of a Deal, there is no need as any application made between now and 31 October 2019 should proceed through the usual EU process during the transition period and a cloned UK trademark will be created automatically as described above. Applying for a UK mark now as well as an EU mark may simply incur unnecessary cost. Separate trademark applications will be required in the UK and EU after 31 December 2020.
If there is No Deal, owners of EUTM applications pending on 31 October 2019 will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing or seniority dates. An application will need to be made in this nine month period in order to secure protection. Given that there may be delays at the UKIPO after 31 October 2019 in the event of No Deal, if UK protection is required urgently then it may be wise to commence a separate UK application now. After 31 October 2019, separate trademark applications will be required in the UK and EU.
If a Deal is done, these will follow the usual EU process to grant and on 31 December 2020 will automatically be protected as described above if they have been granted. If any EUTM application is still pending as at 31 December 2020 the applicant will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing or seniority dates.
In the event of No Deal, applicants with EUTMs applications pending on 31 October 2019 will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing and seniority dates. This means that any objections or oppositions will have to be dealt with again in the UK even if they have already been dealt with as part of the EU process.
In the event of a Deal, the EUTM will not change until 31 December 2020. The EU has said that use of an EUTM in the UK before 31 December 2020 is likely to count as use of the EUTM going forwards if it is within the relevant five year period but ultimately the issue will need to be determined by the CJEU. If the EU is correct, then an EUTM would not be revoked for non-use unless and until five years after last genuine use took place in the UK. However the position is not certain.
The same will apply in relation to a No Deal scenario but the timing will run from 31 October 2019.
If an EUTM is around five years old and has only been used in the UK, given the uncertainty, the owner should consider the likelihood of it using the mark in the EU in the future and the potential encroachment on those EU rights by third parties if it were to become vulnerable for non-use. The safest approach may be to refile the mark in the EU in order to safeguard the EU rights for a further five year period.
Under a Deal or No Deal, the UK has agreed that UK cloned registrations will not be revoked on the basis that they have not been used in the UK before exit day. Use in the EU in the five year period prior to exit will support the UK cloned registration. The UK cloned registration will only become vulnerable if it has not been used in the UK or EU in the preceding five year period.
Regardless of whether there is a Deal or No Deal, the UKIPO has said that the same cloning provisions described above will apply to international trademarks in the event of No Deal and that these too will clone into standalone national UK rights, rather than designating both the EU and the UK.
In order to file an international registration based on an EUTM, the applicant must have a real and effective place of business in the EU. If a UK applicant has a real and effective place of business in the EU then they can continue to file international registrations based on EUTMs regardless of whether there is a Deal or No Deal. However, any new international registrations which are to use an EUTM as the base registration and where the applicant's only real and effective place of business in the EU is in the UK, should be filed before 31 October 2019 in order to avoid the risk of No Deal.
Regardless of whether there is a Deal or No Deal, intellectual property rights which were exhausted both in the EU and in the UK before exit day shall remain exhausted in the EU and in the UK.
If there is No Deal, the UK government has said that it will continue to recognise exhaustion of rights in the UK and the other 27 EU countries but the EU has not made a similar statement.
The long term exhaustion regime in the UK has yet to be determined.
If you have any questions about Brexit and how it will affect your trademarks, please contact one of the members of our UK Brands & Designs team who will be happy to assist you.
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