On 28 February 2018 the European Commission published its first draft of the Withdrawal Agreement, the agreement that will contain the terms on which the United Kingdom will leave the European Union on 30 March 2019. It should be noted that this is only a draft agreement and one that sets out the EU’s desired position, not an agreed outcome. Important and much publicised issues concern the future role of the Court of Justice of the EU (CJEU) and the border between Northern Ireland and the Republic of Ireland. These will probably take months to resolve.

Nevertheless, the draft Withdrawal Agreement is of considerable interest to the intellectual property world, as it expressly sets out the EU Commission’s wishes for the treatment of EU intellectual property rights after Brexit, in particular EU trade marks (EUTMs) and registered Community designs (RCDs).

First of all, the draft Agreement presumes that there will be a transition period (which the UK government refers to as an implementation period) during which the status quo will be preserved. The Commission proposes that the transition period will last until 31 December 2020. This was set out in a proposal from the Commission made earlier in February. The UK government’s response to that was that the length of the transition period should be determined by “how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership” and that a period of “around two years” would be appropriate. This suggests that the period may in fact need to extend beyond 31 December 2020, at least by a few months.

During the transition period the default position will be that European law will continue to apply in the United Kingdom and that any reference to in EU law to “Member States” will be understood as including the UK. This means that EU intellectual property rights, including EUTMs and Community designs (registered and unregistered) will continue to apply in the UK and be recognised and enforced – on an EU-wide basis – by the UK courts. Also covered will be EU database rights, Community plant variety rights, and protected geographical indications and designations of origin. Furthermore, UK attorneys and lawyers will continue to be able to exercise their representation rights before the EU Intellectual Property Office and the CJEU during the transition period. The UK government appears to be in agreement with this.

At the end of the transition period, an EU intellectual property right such as an EUTM will no longer extend to the United Kingdom. However, the EU envisages that there will be no loss of protection for holders of EU intellectual property rights. The draft Agreement stipulates that the holders of such rights that have been registered or granted before the end of the transition period will, automatically and without charge, be granted a comparable intellectual property right in the United Kingdom. For EUTMs, this would mean a trade mark consisting of the same sign, for the same goods or services. For registered Community designs, this would mean a registered UK design for the same design. The date of filing or the date of priority will be the same as that of the EU trade mark or design. Where applicable, the new UK trade mark will be entitled to claim the seniority applicable to the corresponding EUTM. The first renewal date of the new UK intellectual property rights will be the same as the renewal date of the corresponding EU right, and for rights of limited duration, the potential duration of the new UK rights will be as least as long as the EU right on which they are based.

Whether the UK government will be happy with the proposals regarding these new UK intellectual property rights is not yet known. It seems likely that the UK will be in agreement with the general principle that there should be no loss of rights but there could be other ways of achieving this outcome. For example, the UK could decide that EU intellectual property rights should still be recognised by the UK courts after the end of the transition period up until their next renewal date and that rights holders will need to take some positive action if they wish to maintain their rights thereafter.

One omission from the EU Commission’s draft Agreement is any mention about the status of unitary patents should the Unified Patent Court Agreement come into force before Brexit and unitary patents (strictly speaking, European patents with unitary effect) be granted pursuant to the related EU unitary patent regulation. This omission is presumably because it is unclear at the moment whether the UPC Agreement will enter into force, given that the UK has yet to ratify and ratification by Germany has been put on hold pending the outcome of a constitutional complaint. (Ratification by the UK and Germany are essential preconditions for the UPC Agreement to enter into force.) However, if unitary patents are granted there will need to be some provision to ensure their application to the UK after the end of the transitional period.

Of course, none of the above provisions will apply in the event that the EU and UK fail to conclude a Withdrawal Agreement – the “no-deal” scenario. Negotiations will do doubt go to the wire and, whilst it appears highly unlikely that they will break down completely, it would be nevertheless be prudent for intellectual property rights holders to plan for such an eventuality.