The UK is due to leave the EU on 31 October 2019. Until a deal is in place, the UK will leave with "no deal". Businesses are being forced to consider what will happen in the event of a "No Deal" outcome, whilst also planning for the proposed Deal. The potential impact of either scenario on design right owners is far-reaching. A Deal, should it occur, will most likely be based on some form of the Withdrawal Agreement. In the event of No Deal the government has provided some guidance for designs in the form of a Statutory Instrument which was approved by Parliament on 22 March 2019.
This article complements our corresponding article on the effect of Brexit on trademarks.
In short, in the event of a No Deal, the status quo will be maintained until 31 December 2020. This will mean that the UK will exit the EU and cease to be governed by its laws as of 31 December 2020, Brexit Day under a Deal. Most of the changes that we expect to see in the event of a deal will mirror the details for No Deal set out below, except that they will come in later. Some of the finer details are still to be ironed out if there is a deal, and there will be a greater level of collaboration between the EU and the UK on the practicalities.
In the event of No Deal then Brexit Day will be 31 October 2019 and existing EU design rights (registered and unregistered) will be transposed into the UK regime, and we will have several new "types" of design - the new ones of "Supplementary Unregistered Design", "Continuing Unregistered Community Design" and "Re-registered Design". These will join the existing UK rights of "UK unregistered design" and "UK registered design". On top of this, there is various terminology for rights converted from applications made under the Hague international system. We trust that this will be simplified in due course in a way that does not do away with the existing protection afforded by the UK unregistered design which is, in our view, one of the best of the collection.
For companies and designers based in the EU member states outside the UK, another important change is that they will no longer qualify for UK unregistered design right protection in the event of No Deal. The position in the event of a Deal has not yet been announced.
Creation of a new "Supplementary Unregistered Design"
The EU's unregistered design right, known as the "UCD", will no longer apply in the UK after Brexit Day. Therefore, the UK is creating a mirror right to ensure that equivalent protection exists in the UK for designs created after Brexit Day. It is calling it the Supplementary Unregistered Design (as it will sit alongside the existing UK unregistered design, which remains unchanged). A slightly different regime will be in place for designs that were created before Brexit Day but continuing in force after Brexit Day.
A Supplementary Unregistered Design will be created if a design is disclosed in a way that could have become known in the normal course of business to the circles specialised in the sector operating within the UK, a qualifying country or a qualifying territory. This will not cover the EU. It will only cover the UK, Hong Kong, New Zealand, and various other smaller countries, including many in the Caribbean. We expect that if the EU makes the UCD reciprocal in due course, so will the UK.
In all other respects, it will work the same way as the current UCD regime. It is worth bearing in mind that this is the UK acting unilaterally - the UCD regime that applies in the remainder of Europe will remain unchanged, except that it will no longer apply to the UK. Therefore, if future first disclosures are made in the UK, they will no longer qualify for the EU right - just the UK version. Designers now have to choose - do they want the UK unregistered rights, or the EU one.
Note that if a UCD is invalidated after Brexit Day, it seems from the current draft that the UK Supplemental Unregistered Design would continue until invalidated separately in the UK.
Transitional provisions: the "Continuing Unregistered Community Design"
For UCDs that were in force immediately before Brexit Day, these designs will become known in the UK as "Continuing Unregistered Community Designs". These will be treated in the same way as Supplemental Unregistered Designs, including that only the UK courts can rule on their validity, but there are some extra provisions regarding certain transitional issues, such as the fact that injunctions in place prior to Brexit will continue and be enforceable in the UK.
Registered Community Designs - what happens to them?
Any EU registered design (registered Community design, or "RCD") that was on the RCD register and published immediately before Brexit Day will be treated on and after Brexit Day as if it had been granted as a UK registered design. Such designs will be known as a "Re-registered design". The date of registration will be the date of the original RCD it derives from, and the date of application will be the date of filing of the application for the original RCD.
The proprietor of an existing RCD can opt out of its design becoming (or remaining) a Re-registered Design, provided it has neither been assigned nor proceedings have been started pursuant to it. We cannot see much merit in taking advantage of this provision; if a proprietor has no interest in the UK jurisdiction, it would make sense to allow the design to sit on the register, then let it lapse at the renewal date.
Where an assignment or licence has been granted pre-Brexit Day, they will continue to have effect post-Brexit Day, whether or not they have been registered, unless (in the case of licences) the agreement states to the contrary.
If an RCD is the subject of ongoing proceedings before the courts of the UK on Brexit Day, they shall continue as if the UK were still a Member State of the EU, and the court will have the power to grant an injunction to prevent unauthorised use of the re-registered design that derives from the existing RCD (but will no longer be able to grant a pan-EU injunction). Any counterclaim for invalidity will apply (only) to the re-registered design, rather than the broader RCD.
Any injunctions granted pre-Brexit Day under an RCD would continue to apply in the UK. There are also provisions dealing with designs that lapse around Brexit Day and how to restore them.
But what about pending applications for Registered Community Designs on Brexit Day?
For design applications that are pending, i.e. neither granted nor refused on Brexit Day, applicants have nine months from Brexit Day to file an application in the UK for a registered design that mirrors that applied for at EU level (which mirrors the trademark regime). If this is done, the date of filing will be treated as being the filing date of the EU application, so that it does not invalidate the later filed UK design.
Where a design has been registered at EU level but publication of the design has been deferred, the proprietor has to apply for a UK registered design within nine months of Brexit Day as if it were still a pending application, but the filing and registration dates will be backdated to mirror those of the RCD.
Ongoing or past litigation
Injunctions granted before Brexit Day will continue to have effect across the EU as constituted on that date. Ongoing litigation about Registered Community Designs in the UK will continue based on the UK Re-Registered Designs, and any injunction at the conclusion will only apply in the UK. Likewise any ongoing litigation about Registered Community Designs in an EU country outside the UK will continue, but any injunction will not apply to the UK.
A low profile, but potentially very significant change to UK unregistered design is also coming
Right at the end of the draft SI, there is a provision which deletes reference to the member states of the EEA as being qualifying countries for the purposes of either companies qualifying for design protection in the UK under the traditional unregistered design right, or by virtue of where a product can be first marketed to qualify. This will mean that European designers no longer qualify for protection of their designs under the UK unregistered design regime, which will be a significant issue for a huge number of designers who rely on these helpful rights in the UK. By making this change, the UKIPO appears to be throwing down the gauntlet to the EU to change the qualification regime for Community Unregistered Designs to allow first marketing in the UK to qualify.
Finally, what about Hague applications designating the EU?
Essentially, they will be treated the same way as RCDs, subject to a few clarifications that relate to the WIPO procedure, save that they will be known as "re-registered international designs".
There will be no fees for transferring EU rights into their equivalent UK versions. However, on renewal of the re-registered designs, the same fee will be payable as it would if it had been a UK registered design all along. This means that, overall, the costs of maintenance of design registrations will increase, as the proprietor will also have to pay a fee to the EU to renew the RCD that is retained that covers the remaining 27 member states.
As most of the above is happening automatically, businesses do not need to take significant steps to ensure their protection continues, especially for registered rights. However, it is sensible for businesses to ensure:
- Designs are identified and tracked, to ensure that both the UK and EU versions are both renewed in good time;
- Registration strategies should be reconsidered - if your business may no longer qualify for the same unregistered protection it has now, consider registering instead - official fees in the UK can be as low as £2 per design;
- Review existing documents such as licensing arrangements to ensure that they cover the newly formed parallel rights;
- Consider the disclosure of new designs very carefully to ensure protection is maximised. There are some strategies that can make the most of the multitude of options available, and others that will risk leaving businesses exposed. Factors include where the employer of the designer is based, where the resulting design is first marketed, and which type of protection is most suitable for protection of the design concerned.
The team at Gowling WLG is experienced in advising on protection strategies for maximising protection, and experience in advising a broad client base allows us to devise bespoke approaches for particular businesses.