There has been much discussion in recent times on Brexit and its likely implications for intellectual property. Now that the draft Withdrawal Agreement governing how the UK will leave the EU has been published, we have a better understanding as to what is the likely outcome, but nothing is settled yet. So what could still go wrong, and what happens if it all falls apart?

What is the status of the negotiations on Brexit?

On 19 March 2018, the European Commission published the latest draft of the agreement on the withdrawal of the United Kingdom from the European Union. This draft will be further debated at an EU Summit in June 2018, with approval of the text expected to take place at the following EU Summit in October 2018. The EU and UK Parliaments would then move to ratify the agreement in early 2019 before the withdrawal date of 29 March 2019. However, there are many potential difficulties which must be resolved before the agreement is concluded, including the Irish / UK border issue and trade controls and regulations. While we would not expect any major changes on the draft IP provisions, any of these other issues might hold up the entire agreement, and drag down IP certainty with them. The UK Parliament is also currently debating the extent of approval required from the UK Members of Parliament before the UK Government can ratify the agreement, potentially adding a further layer to the required approvals.

Assuming that the Withdrawal Agreement is ratified, a 21-month transitional period will then apply from 29 March 2019 to 31 December 2020 during which most EU laws including those on IP will still apply in the UK. After 31 December 2020, the permanent arrangements to be agreed between the EU and UK, and between the UK and the rest of its trading partners, will come into effect.

What happens if it all falls apart?

If the agreement is not ratified by 29 March 2019, the UK will “crash out” of the EU without any agreement and any EU-wide rights will cease to apply there. This would mean that EU trade mark registrations would cease to apply in the UK from that date onwards. However, even without an agreement, the UK Government would be free to decide that they would continue to recognise and enforce EU trade marks and designs there, or that those EU registrations are transferred to the UK register automatically or with some formalities or re-examination. This would benefit UK companies who have EU registrations as well as foreign companies, and would avoid any eroding of confidence in the UK as an attractive place to do business. There might be some period of time before the UK Government could get those provisions in place, but those provisions could presumably be backdated to avoid any gaps in protection. The intention of the UK Government as expressed in the draft Withdrawal Agreement to continue the effects of EU trade mark rights in the UK, the fact that the fate of those rights is in the UK Government’s hands in the event of a crash-out with no agreement, and that continued protection of those rights would benefit the UK and its companies as well as foreign companies, paints a comforting picture for IP owners even in this “worst case scenario”.

So what should EU trade mark owners do now?

Our advice to owners of existing EU trade marks is to continue to monitor developments, and that they do not necessarily have to rush to file new applications for the same marks in the UK. We will keep our clients informed as soon as the final position comes clear. However, for a new or revised brand, it would make sense to file an EU application and a separate UK application, as the small additional fees at the outset would be justified to avoid even the (hopefully remote) commercial risk of a crash-out without agreement.

The draft Withdrawal Agreement terms on trade marks and designs:

‘Cloning’ of European Union Trade Mark Registrations and Registered Community Designs onto the UK registers

In what is undoubtedly positive news for IP rights holders, Article 50 of the draft Withdrawal Agreement confirms that all European Union Trade Marks and Registered Community Designs which are registered before the end of the transition period (31 December 2020) will be “cloned” into national UK registrations without any re-examination by the UK Intellectual Property Office. Proprietors of such registrations will not have to take any action; cloning will be done automatically and without any official fee. Furthermore, every new cloned UK registration will keep the filing date, priority date and renewal date of its European Union Trade Mark or Registered Community Design counterpart. On next renewal, the IP rights holder will have to decide whether to renew the EU registration, the UK registration or both.

The owner of the newly formed UK registration does not have to appoint an address for service in the UK immediately, although one maybe required when it next comes up for renewal. We are happy to act as UK address for service for any UK registrations of our clients, through our Belfast (UK) office. Please let us know if you would like to avail of this service.

The owner of that UK trade mark registration will not be liable to any revocation action based on non-use of the mark in the UK before the end of the transition period. However, it is not yet clear what will happen if the EU registration had not been used anywhere before the end of the transition period. In those circumstances, an EU registration which was vulnerable to revocation in its entirety would be cloned to a new UK registration, keeping the same filing date but potentially starting a new 5-year clock for the UK before that new cloned UK registration becomes vulnerable to revocation for non-use again.

Article 52 of the Withdrawal Agreement also logically provides that holders who have obtained International Registrations for Trade Marks and Designs designating the EU under the Madrid system before the end of the transition period will continue to have their registrations protected in the UK. This would require some implementation by WIPO which operates the International Registration system.

Applications for European Union Trade Marks and Community Designs which are still pending at the end of the transition period will not cover the UK but can claim priority for a new UK filing

Applications filed for European Union Trade Marks and Community Designs which are still pending at the end of the transition period (31 December 2020) will not cover the UK. However, under Article 55 of the draft withdrawal agreement, applicants will have a right of priority to file a corresponding national UK application up until 30 September 2021 i.e. within 9 months of the end of the transition period date. That UK application can retain the same effective date as the EU application.

Unregistered Community Designs will continue to apply in the UK

Article 53 of the draft Withdrawal Agreement provides that the holder of a right relating to an unregistered Community Design which has accrued prior to the end of the transition period shall become the holder of a corresponding enforceable IP right in the UK. The duration of protection shall be at least equal to the remaining period of protection provided for under EU law.

What happens next?

It’s back to the negotiators and politicians to try to reach agreement on all of the economic and legal issues. While we don’t expect any major changes to the draft IP provisions, they will stand or fall with the rest of the agreement.