On 19 March the EU and the UK agreed the terms of a Brexit transition period ending on 31 December 2020. An updated colour-coded version of the EU’s Draft Withdrawal Agreement was published by the negotiators indicating which articles are provisionally agreed (highlighted in green), agreed from a policy perspective but subject to the drafting (highlighted in yellow) or not agreed but still being discussed (no highlighting). Most of the intellectual property provisions (Article 50 – Article 57) are now agreed however there is much post-transition detail left to be decided (see commentary below).

Details of the IP provisions of the Draft Withdrawal Agreement can be found in our earlier blog here. The following areas are still subject to on-going discussions:

Geographical Indications (GIs)

The protection of GIs (and rights such as protected designations of origin or traditional terms) appears to be a significant concern for the EU Commission. Unless specific UK legislation mirroring existing EU protection for GIs is enacted post-Brexit, the valuable protection of EU geographically sensitive food and drink product indications will be lost. Whilst this would enable UK retailers to sell English sparkling wine as ‘champagne’ and dry cured ham as ‘Parma’, protection for GIs and PDOs that benefit UK products (such as Cumberland Sausage, Cornish clotted cream and Scotch whisky) would also be lost. There are far more EU GIs and PDOs so the impact on EU businesses would be far greater.

Registration Process and Costs

The provisions as currently drafted, which refer to the registration process for ‘comparable’ UK rights by the UKIPO being free of charge, could be onerous for the UK government; the number of registrations at the UKIPO will rise dramatically with the potential for a large number of UK registrations which were never intended to be used in the UK. Whether the UK Government intends to try to negotiate a different scheme or whether it is simply withholding agreement as a bargaining chip remains to be seen.

Supplementary Protection Certificates

These provisions also remain to be decided although it is unclear why. The simple “grandfathering” regime proposed in the Draft Withdrawal Agreement (whereby pending applications at the end of the transition period continue to be governed by EU law and provide the same level of protection) seems sensible and it remains to be seen what is preventing agreement. Again, the value of SPCs (which come at the end of the patent term, when sales are generally at their height before the product goes generic) could make this an area where the UK government feels any regime needs particular consideration, and may provide scope for a bargain.

Commentary

In general the paper deals only with IP rights in existence at the end of the transition period and many long-term issues remain to be decided.

Article 50 has been amended by the UK government to specify that after the end of the transition period the reputation of a trade mark shall be based on the use of the mark in the UK (rather than in the EU). This means that after the end of the transition period, ‘comparable rights’ created in the UK by virtue of the Withdrawal Agreement provisions could be removed from the UK register if they are not used in the UK; use in the EU only will not be enough. This seems to be sensible but it remains to be seen whether a new ‘non-use’ grace period for ‘comparable’ UK rights will start after the end of the transition period or how long this grace period will be.

The draft Withdrawal Agreement remains silent on many important post-transition issues. For example, whether use in the UK will allow a right holder to maintain an EU27 trade mark registration post division when the only use made of the trade mark is in the UK; and how will the UK bona fide “intent to use” requirement be applied to marks that have been derived from an existing EUTM and automatically registered at the UKIPO? The EUIPO has no ‘bona fide intent to use’ requirements. As we mentioned in our previous blog posts (available here and here), the issue of exhaustion of rights is dealt with only briefly and much remains to be negotiated.

Although the extensive green highlighting gives the appearance that much has been agreed, the Draft Withdrawal Agreement in relation to Intellectual Property issues deals largely only with the basics, with a number of complex post-transition issues that are yet to be discussed. The UK and the EU negotiating teams aim to finalise the Withdrawal Agreement by October 2018.