On June 23 2016 the United Kingdom shocked the world by voting to leave the European Union by a slim majority of 51.9% in favour of Brexit. Even though the UK government is not legally bound by the decision, the vote is still politically binding.
The United Kingdom will remain a member state bound by EU treaties until Brexit is enforced.
The consequences of Brexit have been much speculated upon across the European Union, especially since it is clear that Brexit will have a significant effect not only on economics and politics, but also on different areas of law including intellectual property.
Brexit's impact on trademark protection has lead to heated discussions regarding its effect on future business. As many companies have a keen interest in protecting their trademarks in the European Union, and thus also in the United Kingdom, Brexit has caused much uncertainty regarding the extent of future trademark protection. The need to change trademark strategy is a key concern.
EU trademarks (previously, Community trademarks) were created by EU Council Regulation 40/94 in December 1993. Since the regulation does not state what the consequences are when a member state leaves the European Union, Brexit is problematic.
A company in an EU member state can register a trademark in the European Union through one application to the EU Intellectual Property Office. An EU trademark owner has the exclusive right to use the mark in the European Union. Consequently, the owner of an EU trademark is entitled to prevent all third parties from using the same or a similar mark for identical or related goods and services without the owner's consent. Thus, the EU trademark system is based on one single registration procedure, which gives the owner an exclusive right in all member states. Accordingly, an EU trademark has a unitary character, which means that it cannot be valid in just one or some member states. As a result, its protection is extended to all member states.
Due to its unitary character, an EU trademark is protected in the United Kingdom. However, once Brexit becomes effective, an EU trademark will no longer be recognised in the United Kingdom. In theory, this means that an EU trademark owner would lose its trademark rights in the United Kingdom. Consequently, trademark protection in the United Kingdom would require a national proceeding. However, it is unclear what will happen in practice to those EU trademarks which are currently protected in the United Kingdom once Brexit becomes effective. The assumption is that the United Kingdom will provide the existing EU trademarks with transitional provisions under which the rights holders can change their existing EU trademark registrations to a national UK trademark registration.
Despite possible transitional provisions, Brexit must be considered in respect of any future licence and IP agreements. Many agreements contain territorial provisions and the scope of agreement is often defined as the 'European Union'. How this will be interpreted once Brexit is effective is yet to be seen. Companies are therefore advised to amend their existing agreements before Brexit is enforced and to define EU scope to include the United Kingdom.
It remains unclear as to how Brexit will affect trademark protection. Even if little changes immediately, companies with a strong interest in protecting their trademarks in the United Kingdom have been advised to be alert to Brexit and its consequences. In particular, companies with a strong brand or trademark portfolio in the United Kingdom should consider Brexit when planning a future trademark strategy, since Brexit is likely to affect the value of the brand or trademark portfolio. However, while economists speculate that Brexit will reduce business and drive companies away from the United Kingdom, it remains unclear exactly what Brexit will influence. Should Brexit be initiated, it will leave its mark on trademark protection.
For further information on this topic please contact Wilma Yläjärvi-Tuominen by telephone (+358 9 681700) or email (firstname.lastname@example.org). The Dittmar & Indrenius website can be accessed at www.dittmar.fi.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.