The EU Commission on 7 September 2017 published its eagerly awaited position paper on intellectual property rights post Brexit ion. https://ec.europa.eu/commission/sites/beta-political/files/position-paper-intellectual-property-rights_en.pdf

In a nutshell

Recognizing that Brexit will create uncertainty for both the UK and the EU in relation to the scope of protection of certain IP rights in the UK post Brexit, the paper states that the unitary protection of certain intellectual property right, such as EU trade marks and the registered and unregistered Community design rights, should not be undermined by Brexit. The Commission ‘s proposals aim to ensure that already existing unitary rights remain protected in the UK after Brexit and that such rights that are still pending registration at the time of Brexit will be equally protected thereafter. The proposal focusses on transitory rules for existing and pending rights but remains rather vague about the rules for new intellectual property rights created after the date of Brexit.

What does the EU negotiation proposal say?

The EU Commission’s five page long negotiation proposal suggests data sharing and cooperation between the relevant agencies post Brexit and focusses on various points which it would like to see covered in an agreement between EU27 and the UK.

The most important points of the EU Commission’s proposals are:

  • intellectual property rights with unitary character within the EU, such as registered European trade marks (EUTMs) and registered Community design rights (RCDs), should continue to cover and be enforceable in the UK post Brexit. This, the proposal suggests, should happen automatically and at no cost, with a minimum of administrative burden to rights holders, even if this would require the introduction of new UK laws, i.e. the Commission thus suggests an automatic replacement of existing rights;
  • any procedural rights connected to any unitary rights (such as the rights of priority and seniority), which are still pending on the withdrawal date should not be lost post Brexit. This aims to safeguard any applications pending at the time of Brexit;
  • unregistered Community design rights, which currently do not have an exact equivalent under domestic UK law, should continue to cover and be enforceable in the UK post Brexit,
  • protected geographical indications (PGIs), protected designations of origin (PDOs) and other protected terms in relation to agricultural products (such as traditional specialities guaranteed and traditional terms for wine) protected under EU law should be granted continued and comparable protection under newly introduced UK laws post Brexit;
  • similar mechanisms of continued protection are also envisioned for databases and for supplementary protection certificates (SPCs) or for the extension of their duration, filed in the UK and ongoing at the time of Brexit;
  • intellectual property rights which were exhausted in the EU territory before Brexit should remain exhausted in both the EU27 territory and in the UK territory. The conditions of this exhaustion should be determined under EU law.The EU Commission’s paper does not address enforcement proceedings of such rights post Brexit, the Unified Patent Court or representation rights at the European Trade Mark Office (EUIPO) for UK practitioners post Brexit.

What could all this mean for the UK?

At first glance, the EU Commission’s short and high-level position paper does not appear particularly controversial. The proposal includes many reasonable suggestions, which tally in large parts with proposals made by stakeholders in the UK, such as the Chartered Institute of Trade Mark Attorneys (CITMA) and other legal and industry bodies, all of which have advocated solutions that would allow for registered EU trade marks and designs to still be protected in the UK post Brexit by way of a “split out” of the UK part to ensure continued UK protection.

The devil will lie in the detail

The EU Commission’s emphasis on legal certainty for rights owners post Brexit is to be welcomed. Under the proposal, owners of registered EU trade marks and designs would not have to re-register their rights as UK rights but would be guaranteed automatic UK protection. This process would save costs, administrative burden and allow for a smooth transition process. Following the Brexit vote we have seen a trend of rights owners filing for national UK trade mark and designs. If the EU Commission’s proposal was indeed agreed upon with the UK, then this could result in a reversal of this trend since brand and design owners may wish to register their rights with the EUIPO prior to Brexit to avail themselves of the benefits of this proposed split off.

The details of such an arrangement will have to be carefully negotiated, bearing in mind also the administrative burden for the UK Intellectual Property Office. Technical questions such a genuine use of a trade mark, reputation, renewal dates, the effect on pending inter partes proceedings pending at the EUIPO and pending cases relating to such IP rights at the CJEU are only some issues that will have to be tackled.

The EU proposal also states that these general principles should be applied in accordance with EU law, as “interpreted by the European Court of Justice” (CJEU). This opaque comment could be seen as alluding to a continued influence of the CJEU in the UK post Brexit beyond what is envisaged by the UK’s Withdrawal Bill. Potentially controversial are also some of the comments made in the footnotes of the proposal, e.g. that the recognition of a trade mark in the UK should not be refused on the ground that the equivalent EU trade mark had not been put into genuine use in the territory of the UK before the withdrawal date and that the owner of an EUTM with a reputation in the EU should be allowed “to temporarily exercise” equivalent reputation rights in respect of the equivalent UK trade mark” even if the equivalent national trade mark in question does not yet have a specific reputation within the UK”. Similarly, while the paper speaks of “comparable” UK rights to be granted in the context of unitary rights (e.g. EUTMs and RCDs), which implies discretion for the UK, it advocates “equivalent” protection in case of SPCs, which alludes to a much closer alignment with existing EU laws post Brexit.

On the point of exhaustion, the paper only seems to address the question of exhaustion in relation to goods placed on the market prior to Brexit without proposing any rules going forward. Currently, the UK applies the principle of European exhaustion, which means that once a brand owner put goods on the market anywhere in the EEA, they cannot stop those goods being re-sold in other parts of the EEA. The proposal protects parallel import of goods first sold before Brexit, but it is possible that parallel trade in post-Brexit goods could be hampered depending on whether the UK adopts a national, regional or international exhaustion approach. The rules of exhaustion will have a great influence on enforcement of intellectual property rights so that this will be an area to watch.

There is some good news for businesses (especially the fashion industry and other seasonal industries in particular), in that the Commission proposes that EU unregistered Community design rights should continue to cover and be enforceable in the UK post Brexit. The EU unregistered Community design right protects aspects of design which are important to fashion designs such as surface decoration (a novel pattern, for example), textures and materials. While there is also an unregistered UK design right under the Copyright Design and Patents Act 1988, this is a very different type of right, generally better-suited to protecting industrial or functional designs.

Significant media interest has focussed on the proposed continued UK protection for protected geographical indications (PGIs), protected designations of origin (PDOs) and other protected terms in relation to agricultural products, with some questioning whether British sparkling wine may be labelled as champagne. There are currently no equivalent UK national rights and the EU proposal suggests that the UK legislator should introduce news laws in order to ensure such protection (at least for existing rights) going forward. Such rights can be an emotionally charged topic and there is little reason to suspect that UK protection will not simply continue for existing rights, since it is the intention of the UK Government’s “Great Repeal Bill” to simply transpose existing EU legislation (which will include legislation protecting PGIs etc.) into UK law.

Outlook

The EU Commission’s paper rightly recognises the need for legal certainty for rights holders and businesses in the UK and EU27 post Brexit is a welcomed step in the right direction. However, the list of points to be tackled is long so that we have only seen the tip of the iceberg of topics to be addressed by the UK government and EU in this context.

Hiroshi Sheraton is a partner in the firms Intellectual Property practice in London. Specialising in patents, Hiroshi often works on a cross-border basis, co-ordinating pan-European and global IP litigation, as well as advising clients on international patent strategies. He has represented clients in the UKIPO, EPO, EUIPO, the English Courts and the CJEU and has experience of IP matters across Europe, the USA and Asia-Pacific