The UK’s no-deal Brexit plans for EU trade marks and designs

In April 2019, the EU granted the UK government a six-month extension to the Brexit deadline (exit day is now 31 October 2019) to obtain parliamentary approval for the Withdrawal Agreement which was agreed in November 2018. The new UK government, under the leadership of Boris Johnson, has little more than two months to reach an agreement or leave the bloc without one. Johnson vowed to leave the EU on 31 October, with or without an agreement.

Any agreement will have an impact on the protection afforded to EU trade mark and design rights.  The UK government has issued guidance notes (see here) and draft legislation (see here) which set out how EU trade mark and UK/EU design rights will be treated in the event of a no-deal Brexit.

This article for Managing Intellectual Property’s IP Stars – written by Mathys & Squire expert trade mark attorneys Margaret Arnott, Harry Rowe and Daniel Ramos – sets out a summary of some of the main changes proposed by the UK government in the event of a no-deal scenario (although any future agreement would no doubt seek a greater degree of reciprocity between the UK and the EU), as well as the potential impact of these changes.

EU registered rights on exit day

All registered EU trade marks (EUTMs) and community designs (RCDs) existing as at the exit date will be protectable and enforceable because the UK IPO will create equivalent new UK rights called ‘comparable UK trade marks’ and ‘re-registered UK designs’, respectively. These equivalent rights, which will be created on the exit day, will be recorded on the UK registers and treated as if they had been applied for and registered under UK law.

No fee will be required, and the equivalent rights will benefit from the same filing, registration and priority dates as the EUTM/RCD from which they derive. These rights will be treated as fully independent UK rights and will need to be challenged, assigned, licensed and renewed separately from (or in addition to) the original EUTM/RCD.  After the exit date, any EUTM/RCD proprietor may opt out of holding an equivalent UK right (subject to certain conditions).

Pending EU applications
IP owners with pending EUTM/RCD applications as at the exit date will have a nine-month window within which to file an application for an equivalent UK right. So long as the application is made within this period, applicants will be able to claim the earlier filing date or any priority date of the corresponding EUTM/RCD. In contrast to comparable UK trade marks or re-registered UK designs, these applications will be treated as new UK trade mark or design applications, which will require the applicant to pay a fee and will be examined under UK law.

RCDs for which publication has been deferred as at the exit date (it is possible to defer the publication of an RCD at the EUIPO for up to 30 months) will also be treated as if they were pending RCD applications (although there will be no examination by the UKIPO, because the RCD will have already been examined by the EUIPO).

International registrations
International trade mark registrations and international design registrations designating the EU, which have protected status before the exit day, will be treated in the same way as EUTMs/RCDs. In the case of an international trade mark designating the EU, a comparable trade mark (IR) will be created. In the case of an international design registration protected in the EU, a re-registered international design will be created. These new rights will be treated as if applied for and registered under UK law as national rights, and will share the filing and registration dates of the international registrations from which they originate; as a result, they will need to be renewed separately from the international rights from which they derive.

International trade mark/design registrations designating the EU that have not yet achieved protected status immediately before the exit date will be treated in the same way as pending EUTM/RCD applications (subject to some differences relating to subsequent trade mark designations). The UK IPO has published notices (here and here) on how these equivalent rights will be identified on the register.

IP agreements and ongoing litigation
Any assignment or licence agreement that has been granted in relation to an EUTM/RCD pre-Brexit will continue to have effect across all EU member states including the UK, unless the agreement states to the contrary. Similarly, any ongoing infringement proceedings in the UK courts relating to EUTMs/RCDs as at the exit date will continue as if the UK were still a member of the EU; the UK court will retain the power to grant remedies in relation to any unauthorised use of the comparable trade mark/re-registered design as if it were the original EUTM/RCD. The remedies available to the UK courts will, however, be limited in scope to the UK, and the UK courts will no longer be able to grant pan-European injunctions. Furthermore, counterclaims for invalidity will apply only in respect of the comparable trade mark/re-registered design rather than the original EUTM/RCD as a whole.

Unregistered rights

Continuing unregistered designs
Any unregistered community design (UCD) existing prior to the exit date will continue to be protected in the UK for the remainder of its three-year term as a ‘continuing unregistered design’ (CUD). As with RCDs, this right will be automatically created on exit day. Importantly, the validity of a CUD will not be impacted if the underlying UCD arose from the disclosure of the design in an EEA member state outside of the UK. As with EUTMs/RCDs, any assignment, licence or legal proceedings that involve a UCD will remain effective as if the UK were a member state of the EU, although the remedies available will be limited only to the UK.

Supplementary unregistered design
As UCD protection will no longer cover the UK post-Brexit, the UK  government will create an equivalent UK unregistered design right called a ‘supplementary unregistered design’ (SUD), which will provide protection in the UK post-exit date to both 3D and 2D designs equivalent to that which they would have previously benefited from under the UCD regime. SUD protection will sit alongside existing UK unregistered design right protection, which remains unchanged. According to the UK government, the term of, and conditions for, protection for a SUD will be ‘similar’ to those in respect of a UCD; however, SUD will only provide protection within the UK and will only be created if a design is first disclosed in the UK or another qualifying country/territory. Furthermore, the invalidation of a UCD post-exit date will have no effect on the corresponding SUD in the UK. There is, however, some uncertainty over whether it will be possible for designers to obtain both UCD and SUD protection for designs. In order to benefit from UCD protection in the EU, a design must be first disclosed in the EU, whereas in the UK designers will only benefit from SUD protection if a design is first disclosed in the UK.

It is therefore not clear at present whether simultaneous disclosure in both the UK and the EU will give rise to both UCD and SUD protection, or whether designers will have to choose between either UCD or SUD protection. Either way, post-Brexit, designers will need to consider carefully when and where they first disclose their designs. That said, the UK government has suggested that the position may change if an agreement is reached with the EU on unregistered design protection in the future, e.g. first disclosure in the EU may establish SUD and vice versa.

UK unregistered design right
UK design right will function alongside CUD and SUD protection after exit day. Under the current law, a UK design right can be established by an individual who is resident in the EU, or a business formed under the laws of an EU member state, where first disclosure of the design occurs in an EU member state. However, after the exit date, disclosure in the EU will no longer create a UK design right – qualification for a UK design right will be limited to persons residing in and businesses formed under the laws of the UK or a qualifying country. Where qualification is a result of first marketing, disclosure must have taken place in the UK or a qualifying country. As with SUD protection, the UK government has suggested that this may change if a future agreement is reached with the EU.  

Exhaustion of rights

The rights conferred by EUTMs/RCDs are exhausted after products bearing an EUTM or manufactured to the specification of an RCD are put on the market in the EEA by the owner of the EUTM/RCD or with its consent. As a result, right holders are unable to control the resale and distribution of genuine products in the EEA (although there are a number of exceptions to this rule).

After the exit date, the UK government has suggested that it will continue to recognise the EEA regional exhaustion regime. As a result, there will be no impact on those importing goods into the UK from the EEA. Businesses will, however, be unable to parallel import goods from the UK to the EEA; such action, without the right holder’s consent, would constitute an infringement of the right holder’s IP. This is likely to have considerable practical implications for those exporting in parallel to the EEA, since they will need to obtain consent from right holders to continue to do so. Read the government’s guidance notice on exhaustion here.

Rights of representation

At the time of writing, the referendum result is yet to have an effect on the rights of UK practitioners to represent their clients before the EUIPO.  In a no-deal Brexit, UK representatives will lose their right of representation before the EUIPO on exit day. With many firms considering the contingency of opening an office in the EEA from which to represent clients, the EUIPO recently clarified its position with respect to professional representatives proving their eligibility to act before the EUIPO post-Brexit.

In the instance that a UK practitioner requests the transfer of their establishment to another EEA member state, or requests an additional representative ID, the EUIPO may request evidence that the requestor is conducting ‘real and effective’ business from the new address. This is to ensure that the new address is not merely a post office box or address for service.

The EUIPO has issued guidance on the type of evidence which will be accepted as proving that real and effective business is being undertaken. Evidence should not be limited to the mere existence of premises, but should show that the practitioner(s) is/are working from the new office. Examples of evidence previously accepted include official company incorporation documents, employment contracts and official evidence of tax establishment. However, the EUIPO emphasises that each case will be considered on its own merits and that, whilst a single piece of evidence would likely be insufficient, a combination of evidence will improve the chances of the new address being accepted.

In contrast to practitioners listed as ‘professional representatives’ before the EUIPO, there is no requirement for a ‘legal practitioner’ to be a national of an EEA member state. Therefore, any practitioner with a qualification recognised in another EEA member state may be entered onto the EUIPO’s database of legal practitioners. That said, the practitioner would still have to comply with the requirement of having a real and effective business establishment in an EEA member state to be able to represent clients before the EUIPO.

The EUIPO has taken the position that it will refuse any request for exemption from the nationality requirement prior to Brexit where the requestor is a UK national. It is clear, therefore, that the ability to continue to represent clients before the EUIPO will be very much dependent on the UK government’s ability to negotiate an agreement which preserves this right. Alternatively, UK practitioners will need to jump the various hurdles set by the EUIPO in order to obtain an address in the EEA which is considered a real and effective business address, as well as obtaining an equivalent qualification in an EEA member state.

Whilst the UK IPO/government have set out in some detail the Brexit plans for trade mark and design rights, the policy of the new UK government under Boris Johnson to leave the EU on October 31, with or without any withdrawal agreement, means that it is imperative that rights holders and UK trade mark practitioners alike formulate a strategy to address the real possibility of a no-deal Brexit. With respect to the latter, this may lead to UK firms merging with European firms in order to meet the real and effective business requirement. To learn more about rights of representation, read the note published by the Chartered Institute of Trade Mark Attorneys (CITMA) here and the EUIPO’s notice in April 2019 here.

This article was originally published on the IP Stars website in August 2019.