After more than a year of uncertainty and speculation, we are finally starting to see some welcome clarity on the EU and UK positions on trade marks as a consequence of Brexit.

What trade marks owners should do now:

  • Review your co-existence, licence and other agreements to determine if appropriate definitions of the “European Union” have been used;
  • Check EUIPO oppositions and cancellations which are suspended, in the cooling-off period or entering into the cooling-off period now and/or until the end of 2018. These are disputes that could potentially straddle the end of the transition period and a change in strategy may be needed. Where such actions are based exclusively on UK rights, it may be advantageous to the attacking party to ensure that the proceedings are concluded before the end of the transition period;
  • As pending applications will not be part of the ‘cloning’ process post Brexit, consider filing both an EU and UK trade mark where there is a potential for an official or third party objection which might result in an EUTM application not proceeding to registration before the end of the transition period;
  • Review defensive filing strategies and ensure your strategy maximises the possible advantages from filing an EUTM, where no bona fide intention to use is required (unlike the UK), and there will likely be a restart of the non-use grace period for any ‘cloned’ UK registrations;
  • Do not allow UK registrations to lapse from which a seniority claim has been made if continuing UK protection is required.

Background

On 19 March 2018 a third version of the so-called Draft Withdrawal Agreement (“Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community“), was published, setting out provisions relating to intellectual property and specifically trade marks, showing where there is full agreement, agreement in principle and no agreement between the UK Government and EU Commission as to the terms on which the UK will leave the European Union.

Reassuringly, the draft proposes and indicates full agreement to a transition period, where the status quo will remain until 31 December 2020. Negotiations between the UK and EU27 are still ongoing, and the stated aim is to have a final text agreed by October 2018.

Points agreed between the UK and EU27:

  • Post Brexit, European trade marks (EUTMs) – and registered European designs (RCDs) – will no longer cover the UK. However, there will be a process where registered EUTMs and RCDs will be ‘cloned’ into separate UK registrations at the end of the transition period, which will not be subject to any re-examination and retain the priority date from the EU trade marks.
  • International Registrations designating the EU will be allocated an equivalent UK designation, without re-examination and retaining the priority date from the EU designation. Similar rules are expected to apply to RCDs.
  • A new ‘cloned’ UK registration can be revoked or invalidated if the original EUTM is successfully attacked without the need to bring UK proceedings, as long as the EU action was filed before the end of the transition period and the basis for the attack is one that would have effect in the UK. If the grounds for attacking the EUTM would not apply in the UK (e.g., if it is based on a non-UK national right or descriptiveness in a non-English speaking country), then the UK registration would be preserved.
  • It appears likely that the new ‘cloned’ UK registrations originating from EUTMs which are vulnerable to revocation for non-use at the end of the transition period will be given a new non-use grace period of five years.
  • The Agreement does not mention reciprocity regarding non-use revocation of EUTMs, but the EUIPO’s Q&A document published in January 2018 stated that use of an EUTM in the UK qualifies as use ‘in the EU’ in so far as it relates to the relevant period before Brexit. Whether or not this will be extended to the end of the transition period is uncertain.
  • Seniority rights will continue to be protected, although we anticipate there may be some logistical difficulties around reinstating any lapsed rights from which seniority claims have been made, and brand owners may need to take proactive steps to ensure seniority claims are properly carried over.
  • New ‘cloned’ UK rights that come from EUTMs with enhanced protection due to reputation in the EU will continue to benefit from that reputation in so far as it arises from use which has taken place anywhere in the EU prior to the end of the transition period, even if the use was not in the UK. However, any continuing reputation based on use after the end of the transition period will need to be UK use, so any historical reputation in the remaining EU27 will become less relevant in UK proceedings over time and eventually fade away.
  • The filing date of any pending EUTM applications will be able to be claimed for an equivalent new UK applications by way of a special “priority” application, provided this claim is made within the 9 month period after the end of the transition, preserving the EU priority date and other details.
  • Goods which were put on the market in the EU before the end of the transition will be exhausted in both the UK and EU thereafter.

Still up for discussion:

  • On the question of exhaustion: it remains unclear what type of exhaustion principles will apply in the UK post-Brexit, with all options including local, regional and international exhaustion still on the table. Article 57 of the draft agreement provides that if IP rights have been exhausted both in the UK and EU before the end of the transition period, then these rights will remain exhausted in both areas after the transition. While Article 57 of the draft agreement provides some welcome clarity, this is a definite area to watch as the rules of exhaustion will have a great influence on enforcement of intellectual property rights and much will depend on what will be agreed upon with the EU27 in the context of future trade arrangements. Currently, the UK applies the principle of European exhaustion, which means that once a brand owner puts goods on the market anywhere in the EEA, they cannot stop those goods being re-sold in other parts of the EEA. Depending on whether the UK national legislature adopts an international or national regime of exhaustion of rights following the transitional period, will have practical implications at the end of the transition period, when it comes to identifying which goods in the supply chain have been put on the market in the remaining EU and/or the UK at what exact point in time.
  • There is currently no agreement on whether a fee will need to be paid or form completed for ‘cloned’ UK registrations. However, we hope that this will be done as an automated administrative process at no cost to brand owners, as prior statements from the IPO appear to suggest that this is the preferred option.
  • We still await clarity on the rights of UK representatives to act before the EUIPO after the end of the transition period. This affects UK representatives who don’t have a business in the remaining EU member states and the relevant qualifications. In view of Baker McKenzie’s significant European presence, this does not present any issues for ongoing client representation.
  • Another issue that has not yet been agreed upon is the continued protection for protected geographical indications (PGIs), protected designations of origin (PDOs) and other protected terms in relation to agricultural products in the UK post Brexit. There are currently no equivalent UK national rights and significant media interest has focused on this topic, with some questioning whether British sparkling wine may be labelled as champagne post Brexit.