For owners of Intellectual Property in the EU, in particular European Union Trade Marks (formerly Community Trade Marks), the United Kingdom’s vote to leave the European Union will likely have a material impact on the administration of, and strategy to protect, trade marks in the UK and EU. Here, we consider the issues which are likely to arise.

Converting EU trade marks into UK registrations

With the UK voting to exit the EU, the status of an EU Trade Mark in the UK is in question. The prevailing view amongst UK Trade Mark Attorneys is that a process to allow owners of EU Trade Marks to convert their rights into UK Registrations will be put in place.

In this regard, the EU and neighbouring countries have previous experiences to draw upon. Specifically, transitional provisions have been legislated to address conflicts when new members have joined the EU. In addition, re registration or automatic recognition processes arose with the split of various Balkan states.

Accordingly, UK Attorneys are expecting an orderly transition and the Institute of Trade Marks Attorneys (ITMA) in the UK has set up a Brexit Task Force to work with the Minister for Intellectual Property on trade mark related issues. However, there are numerous issues to consider:

  • System of Conversion: This could either be an automatic or opt-in system Logically, an opt in system would seem appropriate or, otherwise, the UK Register could become cluttered with marks which may never be used in the UK.
  • Possible Re-examination: It is not presently clear whether a converted UK Registration will undergo a re examination or be published for third party opposition purposes before the conversion is complete. Logically, such processes should not apply to registered EU Trade Marks, but it is arguable that EU Trade Mark applications should undergo examination in accordance with UK trade mark legislation.
  • Existing Oppositions: Of specific concern, are EU Trade Marks which have been accepted and are either in the opposition period or under opposition. Presumably, special provision will be made for the conversion of marks in this phase, including for an opponent to an EU Trade Mark to also oppose registration of the converted application in the UK. Where an EU Trade Mark has been designated against an International Registration, the opposition issue comes into sharp focus as EU Trade Mark rights secured under this procedure have a significantly longer opposition period than UK applications. This potentially makes seeking protection in the EU using the International Registration system less desirable or suggests the UK should be separately designated.
  • Seniority Claims: Consideration should be given to recognising seniority claims made against EU Trade Marks from an earlier UK right. A seniority claim against an EU Trade Mark arises from absorbing the priority of an earlier identical national trade mark and is recorded in the EU Trade Mark Register. Commentary from ITMA suggests that seniority claims will be recognised as part of the conversion process.

Should you still apply for the EU trade mark?

Although there is significant uncertainty in relation to the transitional arrangements between the EU Trade Mark and the UK Trade Mark, there is undoubtedly still merit in using the EU Trade Mark system. However, much will depend on the brand owner's commercial interests.

With Brexit on the horizon, if a brand owner's commercial interests are limited to the UK, then an EU Trade Mark seems less desirable. Firstly, conversion to a UK Trade Mark in the future will undoubtedly incur a cost and, moreover, the residual rights in the EU Trade Mark, post conversion to the UK, may become vulnerable to removal on grounds of non-use (once 5 years has elapsed from registration).

The strategy is less clear where a brand owner is interested in using a mark in the UK and at least one other EU country. The preferable option may be to avoid the EU Trade Mark as, once future conversion to a UK registration is considered, there would be limited cost benefit in using the system. An additional opposition risk arises where the EU Trade Mark covers 28 countries, in which there may be competing national rights.

However, if the party is interested in registering in two or more countries, in addition to the UK, then the cost/benefit matrix in using the EU Trade Mark still seems in favour of using the system.

These strategic considerations may change and, should further countries seek to leave the EU, there may be added complexity. However, brand owners with an interest in the EU should turn their minds to the impact of Brexit when considering registration strategy.

How will parallel importation and customs seizures be impacted by Brexit?

Currently, the UK recognises the doctrine of regional exhaustion of rights within the European Economic Area (EEA), comprising the EU, Norway and Iceland. This means that goods which are initially placed for sale in one Member State of the EEA may then be transported to the UK for sale without infringing UK trade mark rights.

While the UK is expected to leave the EU, it is not presently clear whether it will also exit the EEA. If it does leave the EEA, it is also unclear if the UK will amend its legislation to restrict parallel importation of goods first placed in an EEA Member State. We have limited information on which to speculate on the UK Government's position at this stage, but brand owners affected by parallel importation issues should carefully monitor any changes.

With regard to customs seizure, UK brand owners currently rely on the EU IP Enforcement Directive to make a single EU customs recordal. This enables customs officers in every EU Member State to seize, detain and destroy potentially infringing goods. It follows that the UK’s withdrawal from the EU will mean brand owners will need to separately record newly converted UK rights with the UK Border Force. This is a space which should also be monitored.

How will licences/infringement proceedings be affected by Brexit?

An important consideration is the impact Brexit will likely have on the scope of IP licences, franchise agreements, co-existence agreements and other IP contracts; in particular, those which concern EU-wide rights and obligations.

Affected businesses may need to review or renegotiate their current contractual agreements and, depending on the parties' intentions, the UK may have to be carved out of such agreements or specifically incorporated so that these agreements continue to have their intended effect once the UK has left the EU.

With regard to infringement proceedings, there will undoubtedly need to be transitional arrangements and there is a degree of uncertainty. For example, the UK Courts may lose the power to grant pan-European injunctions, one of the key benefits arising from the EU Trade Mark. Moreover, the UK may now diminish as a venue of choice for litigating European IP infringement and it may become necessary for parties addressing counterfeiting to run concurrent infringement proceedings in the UK, as well a Member State in the EU.

What should brand owners be doing now?

Although there is no need to make rushed decisions, as the UK is not expected to exit the EU for at least 2 years, over the coming months brand owners should turn their mind to the issues which may arise in the UK and EU from Brexit. It is an opportune time for brand owners to review the adequacy of protection of their trade mark rights and related commerical arrangements in the EU.