With the clock now counting down to the UK’s withdrawal from the EU on 29 March 2019, the full implications of Brexit on intellectual property rights (IPRs) have been unclear. The European Commission published the first draft of an agreement governing the UK's withdrawal from the EU in February which set out, for the first time, a detailed and specific position on IPRs, post-Brexit. An updated draft was published on 19 March 2018 and, although negotiations are still ongoing, it seems that certain key IP provisions have been agreed, providing some much needed clarity for IP owners.

The good news

  • A transitional period from 29 March 2019 to 31 December 2020 has been agreed which means that there is still time for affected IP owners to review their IP portfolios and filing strategies.
  • Holders of EU trade marks, Community designs and Community plant variety rights registered or granted before the end of the transitional period will be granted “comparable” rights in the UK without re-examination. The renewal date of such comparable rights will be the same as the “parent” EU registration.
  • The comparable UK right will enjoy the same filing and priority dates as the EU registration and the benefit of any seniority claimed from a UK trade mark.
  • If an EU trade mark or Community design is declared invalid or revoked, as a result of proceedings ongoing during the transitional period, then the comparable right in the UK will also be declared invalid or revoked from the same date. However, the UK is not obliged to declare the comparable UK right invalid or revoked where the grounds for invalidity or revocation do not apply in the UK.
  • A comparable UK trade mark right will not be liable to revocation for non-use on the ground that the corresponding EU trade mark had not been put into genuine use in the UK before the end of the transitional period. In theory, this means that trade mark owners may have an extended grace period to use the comparable mark in the UK.
  • Owners of EU trade mark registrations that have acquired a reputation in the EU before the end of the transitional period are entitled to rely on that reputation in infringement, opposition or invalidation proceedings in the UK, up to the end of the transitional period. Once the transitional period has expired, reputation will be based on use of the right in the UK.
  • International registrations for trade marks and designs filed at WIPO under the Madrid/Hague systems designating the EU existing before the end of the transitional period will continue to enjoy protection in the UK. However, it is up to the UK to take measures to implement this. The UK will continue to protect databases and international trade marks and designs designating the EU, but the UK will need to take measures to implement this.
  • Database rights that arise before the end of the transitional period will continue to be valid and enforceable in the UK for the remaining period of the database right provided that the holder of the right continues to comply with the qualification requirements.
  • The UK will also continue to protect unregistered Community designs. Whilst the UK does have its own unregistered design regime, there are material differences and the scope of protection is different. The draft agreement provides that the UK will provide equivalent protection for unregistered Community designs arising before the end of the transitional period, which should provide wider protection than the UK unregistered design right.
  • UK patents which are obtained by validation of a centrally examined EP Patent will not be affected, since the European Patent Office (EPO) is not an EU institution. Brexit will therefore have no effect on these patents or this process.

The bad news

  • There has been no agreement as to the actual procedure for the registration of the new comparable rights including whether a new application, or a UK correspondence address, will be required or, importantly, the payment of any additional fee.
  • EU trade marks and Community designs pending at the end of the transitional period will NOT automatically be protected in the UK. However, the applicant will have a priority period of nine months from the end of the transitional period to re-file the application in the UK, claiming the same filing/priority date as the EU right.
  • It has been agreed that a comparable UK trade mark right will not be liable to revocation for non-use on the ground that the corresponding EU trade mark has not been put into genuine use in the UK before the end of the transitional period. However, the UK still needs to specify when the non-use period will start to run after the end of the transitional period. Also, after the expiry of the transitional period, for businesses that have operated exclusively, or primarily, in the UK, there is a risk that their EU trade marks may be vulnerable to cancellation for non-use in the EU.
  • Although comparable trade marks granted in the UK may benefit from the reputation acquired through use in the rest of the EU, it is not clear whether there will be any reciprocity for trade mark owners wishing to rely on reputation arising from UK use for the purpose of oppositions and infringement proceedings in the EU, during the transitional period.
  • The draft withdrawal agreement proposes the continued protection of geographical indications, designations of origin and traditional specialities guaranteed in the UK after the end of the transitional period. However, this is a contentious area and would require the UK to enact new domestic legislation as there are currently no equivalent rights in the UK. The indications are recognised in the UK as a matter of EU law and are viewed by many as mainly protecting producers in continental Europe.
  • The question of exhaustion of rights remains unclear. Currently, IP owners usually cannot prevent the sale of their products if they have previously been lawfully put on the market anywhere in the EU. The draft agreement provides for the exhaustion of IPRs in both the UK and the EU if those rights had already been exhausted before the end of the transition period. However, the draft does not cover exhaustion of rights for goods placed on the market after the end of the transitional period and it is not clear which exhaustion model the UK will adopt. If the UK chooses a UK-only exhaustion regime, it may be possible for UK IPRs to be used to prevent parallel imports from the EU into the UK. The UK’s decision will have practical implications for trading relationships and require parties to identify the timing and location of the placement on goods on the market.
  • The treatment of pending applications for supplementary protection certificates is also a pressing issue that has not yet been agreed. The EU proposes that applications for SPC’s submitted to the UK authorities before the end of the transitional period should be allowed to proceed to grant and any certificate granted should receive protection equivalent to the current regime.

So what does this all mean for me?

  • In the initial aftermath of the Brexit vote, many IP owners did not want to take the risk of the possibility that their EU rights would not cover the UK, and filed additional UK applications. Now that it has been agreed that EU registered rights will continue to be protected in the UK after the transitional period, this may not be necessary. However, for important IPRs, some owners may not wish to take any chances and may want to file additional, appropriate, UK applications.
  • Since pending applications are not part of the deal, you should consider whether your existing EU trade mark or Community design applications are likely to proceed to registration before the end of the transitional period. Owners of applications that have not been granted by the end of the transitional period will have a nine month priority period to re-file the application in the UK. It is important for IP owners to keep an eye on the deadlines.
  • In some cases, it may be advantageous to file any new EU trade marks or designs sooner rather than later, since applications granted before the transitional period will automatically be protected in the UK. After the expiry of the transitional period, separate applications will need to be filed for the UK and the rest of the EU.
  • Trade mark owners must carefully assess the territories where their marks have been put to genuine use. Owners of trade marks that have only been used in the UK, or in the rest of the EU, should consider whether they can put their marks to genuine use in the relevant territory, or to file fresh applications, to ensure that their rights are protected. Although the draft agreement provides that a comparable UK trade mark right will not be liable to revocation for non-use on the ground that the corresponding EU trade mark had not been put into genuine use in the UK before the end of the transitional period, it is not clear when the non-use period will start to run after the transitional period expires. It is also not clear how EU trade marks that have only been used in the UK will be treated by the EU but, after the transitional period, it is likely that these will no longer be deemed to have been used in the EU.
  • Check your portfolio for any seniority claims and make sure that these are not allowed to lapse before the end of the transitional period. Although the current proposal is to grant equivalent UK rights that recognise any claim to seniority, it may still be a safe option not to allow any seniority marks to lapse until we are sure.
  • You must review licences and other IP agreements to consider whether any definitions or other provisions that relate to the EU need amending.
  • Remember that for enforcement purposes, after the expiry of the transitional period, pan-European injunctions based on EU rights will not cover the UK. Separate enforcement actions will need to be brought if infringement is taking place in the UK and in the EU. This will mean increased costs and problems with enforcement if separate injunctions need to be sought.

Conclusion

For now, the agreement that existing EU rights will continue to be protected in the UK is good news, and the draft represents significant progress in providing post-BREXIT certainty for IP owners. However, the agreement is still a draft and nothing is definite until the final Withdrawal Agreement is concluded.