• British Prime Minister raises possibility of a ‘hard' Brexit
  • ‘No deal’ scenario raises questions about UK approach to EU trademarks
  • A lack of “bandwidth” is a concern, says industry expert

UK Prime Minister Theresa May spoke again this week of the possibility of the United Kingdom leaving the European Union without a negotiated deal, and dismissed joining the European Economic Area (EEA) as an option for the country. With the outcomes favoured by most brands and IP professionals unlikely in such a scenario, it is crucial for the United Kingdom to formulate an approach to EU trademarks in the event of a 'hard' Brexit.

The UK Prime Minister made the comments in a speech to the House of Commons. While declaring her commitment to successful Brexit negotiations, May stated that her government was preparing for every eventuality, including leaving without a deal (the chancellor, Philip Hammond, has since reiterated the need to prepare for a ‘no deal’ outcome). The Prime Minister additionally confirmed her intention to exit the EU single market and customs union, and ruled out Britain joining the EEA. She declared her preference instead for a tailor-made bilateral arrangement not modelled on any existing EU agreement. These comments may simply be part of a negotiating strategy, but prominent UK political analysts are starting to see a ‘no deal’ scenario as “more likely”.

The government’s stated position suggests that the post-Brexit trademark system preferred by the IP community is unlikely to be realised. The Chartered Institute of Trademark Attorneys (CITMA), for instance, favours the United Kingdom remaining part of the unified EU brand rights system. This, it argues, is “the most logical way to achieve minimal disruption and cost burden to business” and to ensure that UK professionals retain rights of representation before the EUIPO, where currently one in four EUTM applications are handled by British practitioners. Yet, under the existing rules of the EU trademark system, this is only possible if the UK joins the EEA.

If the EEA is not an option, could a bilateral agreement be reached allowing the United Kingdom to remain part of a common European trademark system, and ensuring rights of representation for the country’s professionals? CITMA has raised the possibility that the pan-European regime be reformed to include non-EEA countries. However, it notes that this unlikely, especially in the short term. Echoing this analysis is Nick Bolter of Cooley, who told World Trademark Review: “Yes, there could be a bilateral agreement which changes EU trademark law to encompass the United Kingdom, as well as the EEA, but it will be difficult to get the European parliament to agree to it, and to dedicate time to it.” In any case, such an arrangement would most likely require the United Kingdom to accept the jurisdiction of the European Court of Justice in IP matters – something the British government has ruled out, except in a possible two-year transitional period.

In the absence of a bilateral deal on trademarks, the British government will have to decide unilaterally on its approach to the more than one million trademarks on EUIPO’s register. It will need to do this before a ‘hard Brexit’, if there is to be a smooth transition into the new dispensation. Large numbers of brands – including many well-known British companies – currently depend on EU trademarks for protection in the UK market. ‘Grandfathering’ those rights into the UK system is important; otherwise, many companies would be stripped of high-value intellectual property, at least in the short term.

Several possible approaches to EU trademarks in the United Kingdom were explored by CITMA in an August 2016 working document. These ranged from the unilateral recognition by the United Kingdom of EU trademark registrations, to an opt-in system for European rights holders, to an arrangement requiring continental brand owners to file UK applications afresh. Since then, CITMA has committed itself to the automatic transfer of all existing EU rights onto the UK register with the same scope of protection and with minimal cost – the so-called ‘Montenegro option’. Bolter takes a slightly different view, favouring the so-called ‘Tuvalu option’, in which EU rights holders would be required to opt in and pay a small fee: “Many existing rights have never been used in the United Kingdom, and the transfer of these marks onto the UK register could confuse local companies. The register is clogged up at the moment and the requirement to apply and pay small fee might help with that.”

While the EU has published a paper outlining its vision for the treatment of intellectual property post-Brexit, the British government has not yet confirmed its stance. Despite assurances that all possibilities are being planned for, it is conceivable that the United Kingdom may not have a system in place for dealing with European trademarks when it exits the EU. Bolter believes “it is possible for the UK to crash out of the EU with no arrangement in place for grandfathering EU trademarks. I don’t think this is likely, but it is technically possible.”

This would not be because it is difficult for the government to choose between the options outlined by CITMA; there is seemingly no political opposition to the grandfathering of EU rights. The problem might arise from a potential lack of time, attention and resources to dedicate to IP questions. With any number of issues to be addressed in the event of a ‘hard Brexit’, it is possible that trademark matters will just slip under the radar. “What we have seen over the past six months doesn’t give you much confidence that there is sufficient bandwidth available for the issue,” observes Bolter.

It is important, therefore, that efforts be made in the coming months to push IP up the UK government’s league table of priorities, and to ensure that contingency plans are put in place in a timely fashion. For his part, Bolter has invited UK Minister of IP Jo Johnson to next year’s INTA conference in Seattle. That alone may not be enough but collective campaigning on the part of the trademark industry will go a long way to helping ensure that trademarks do not slip through the negotiating cracks.