IP Protection Post BREXIT Part 1: A Right-by-Right Analysis

Progress is being made regarding the protection of intellectual property (“IP”) rights in a post-BREXIT scenario on both sides of the English Channel. With BREXIT fast approaching, the European Union (“EU”) and the United Kingdom (“UK”) have been pushing things forward at the negotiators level, but also independently. The European Commission got the ball rolling by releasing the third version of the Draft Agreement on the withdrawal of the United Kingdom and Northern Ireland from the European Union and the European Atomic Energy Community (“Draft Agreement”) on March 19, 2018, which reflected the state of affairs with regard to post–BREXIT protection of pan-European IP rights. Shortly thereafter, on March 28, 2018, another statement was released pertaining to .eu country code Top Level Domains (“ccTLD Statement”). The UK, on the other hand, ratified the Unified Patent Court Agreement (“UPCA”) on April 26, 2018, and, before that, the Hague Agreement for industrial designs that took effect on June 13, 2018. Additionally, the parties jointly released a statement on June 19, 2018 (“Joint Agreement”), stating that they had reached an agreement at the negotiators level with regard to the Draft Agreement relating, inter alia, to the protection of pending Supplementary Certificates (“SPC”).

On July 12, 2018, the UK Government released a White Paper, a proposal for the future relationship between the UK and the EU (“White Paper”). On Thursday, July 19, 2018, the Parliamentary, Robin Walker MP, confirmed the UK Government’s intention to grant protection to IP rights holders following BREXIT equal to that under the current IP regime of the EU, which was then reaffirmed on July 23, 2018, by the post of a news story titled “IP and BREXIT: The facts” on www.gov.uk (“UKGov News”).

This article is the first of two parts dedicated to providing a comprehensive overview of what IP right owners can expect when the UK leaves the EU on March 29, 2019 (“Exit Date”), by summarizing the state of affairs for each IP right category separately. Herein we will give you some background information and deal with post-BREXIT issues related to European Union trade mark Registrations (“EUTM”), Registered Community Designs (“RCDs”), Unregistered Community Design Rights (“UCDs”) and granted Community Plant Variety Rights (“CPVRs”) (together, “EU-IP”). The second part will be directed at issues relating to Geographical Indications (“GIs”), eu. country code TopLevel Domains (“ccTLD”), data base rights, European Patents (“EPs”) and Supplementary Certificates (“SPCs”). Both parts of the article will be supplemented by a set of actions that we suggest can be taken to address the risks indicated by the probable future IP right regimes that we are facing and the risks associated with the uncertainties of a “deal or no-deal” scenario.

SOME BACKGROUND

With the UK’s public vote to leave the EU on June 26, 2016, one of the countless topics to be addressed in the BREXIT negotiations is: “What will become of this EU-IP post BREXIT”? Without any form of agreement between the EU and the UK in place after the Exit Date, EU law will no longer apply to the UK, and the European Court of Justice (“ECJ”) will not have jurisdiction over the UK as of this date. In this worst case scenario, EU-IP will simply cease to extend to the UK from one day to the next. IP right holders that had mainly or exclusively relied upon such EU-IP and made significant investments in this regard could now end up without any form of protection in the UK. Given the thriving activities of UK businesses in filing, for example, EUTMs (being the second highest number of filings in the EU), this is not only a concern for EU-IP holders in the mainland Member States, but also of particular interest for EU-IP holders in the UK.

Agreed and not agreed (until everything is agreed) – Part 1

1.      Transition Period and Certain Common Principles

The Draft Agreement was the first sign of significant progress in the negotiations between the EU and the UK. Certain sections of it provide for certain common principles that apply to most EU-IP. Other arrangements only apply to certain types of IP rights.

First and foremost, as stipulated in Article 121 of the Draft Agreement, the negotiators have preliminarily agreed on a transition and implementation period that runs from March 30, 2019, to December 31, 2020 (“Transition Period”). According to Article 122 of the Draft Agreement, EU rights – including EU-IP – will extend to the UK during the Transition Period and shall:

  • produce in respect of and in the UK the same legal effects as those that it produces within the Union and its Member States;
  • be interpreted and applied in accordance with the same methods and general principles as those applicable within the Union; and
  • be deemed to include the UK when making any reference to Member States in EU.

The Draft Agreement also states that EU-IP granted by December 31, 2020, will also automatically be registered as a separate right in the UK (“UK Equivalent”). This applies to all registered rights – i.e., EUTM, RCDs and CPVRs. The UK Equivalent will have the same filing, renewal and priority dates as the original EU-IP.

If an EU-IP is subject to an invalidation/revocation or nullity or cancellation proceeding that has been ongoing prior to the end of the Transition Period and such EU-IP is declared invalid/revoked or cancelled in such a proceeding (even after the end of the Transition Period), the UK Equivalent too will be held invalid/revoked at the same date. However, in accordance with Article 50 Sec. 3 of the Draft Agreement, the UK will have no obligation to issue such declaration where the grounds for invalidity/revocation or nullity or cancellation of the EU-IP do not apply in the UK.

Another agreement that could be reached pertains to the exhaustion of IP rights, which is a principle common to most IP rights, but has found its specific expression in the EU in what is called the “Fortress Europe.” In principle, exhaustion in the EU applies, and an IP right is not infringed by its use, if the IP right, or a product applying the IP right, was put on the market in the European Economic Area (“EEA”) by the proprietor or with his consent. The Draft Agreement contemplates that IP rights so exhausted within the EU (including the UK, for the term of the Transition Period) will remain exhausted in the UK and the EU thereafter. Naturally, the Draft Agreement does not address exhaustion after the Transition Period. It is yet to be discussed which approach on exhaustion the UK will take after the Transition Period. If the UK decides on using a national exhaustion regime, it may be possible for UK IP rights to be used to prevent parallel imports from the EU into the UK. This topic is further discussed here. In the UKGov News, it has been suggested, however, that the UK looks forward to “exploring arrangements on IP cooperation that will provide mutual benefits to UK and EU rights holders”, and in this sense to discuss issues like exhaustion of IP rights.

 2.     Trademark Rights

In addition to the above-stated principles that will apply to the registration of UK Equivalents, holders of EUTMs that are converted into UK Equivalent trademarks will further benefit, if applicable, from the seniority of a UK trademark that was claimed in the EUTM registration.

A crucial point to highlight is that EUTM applications that were filed within the Transition Period and received a date of filing, but are still pending at its end, will not automatically be converted into UK Equivalents. Instead, the applicant will have a so-called “right of priority,” meaning the right to file for an identical copy of such EUTM application (i.e., identical mark and identical list of goods and services) in the UK within nine (9) months of the end of the Transition Period, and will then be granted the same filing date and priority as its corresponding EUTM application.

Other issues to be aware of relate to:

 a.      genuine use

UK Equivalent trademarks will not be liable to revocation on the ground that the corresponding EUTM was not used in the territory of the UK before expiry of the Transition Period. It remains unclear, however, when the non-use period will start to run after the end of the Transition Period. This effectively extends the so-called “grace period” of the UK Equivalent trademarks, meaning the period in which to commence use of the mark in the UK before the UK Equivalent trademark becomes vulnerable to cancellation for non-use. However, there is no such provision for the reciprocal grant of EUTMs used solely in the UK. Even though the EUIPO’s Q&A document published in January 2018 suggests that use of an EUTM in the UK qualifies as use in the EU at least as it relates to the period before the Exit Date, it has not found its way into the Draft Agreement. For businesses that have been operated in the UK exclusively before the Exit Date, there remains a risk that their EUTMs may be vulnerable to cancellation for non-use in the EU.

 b.      reputation

Until expiry of the Transition Period, UK Equivalent trademarks will benefit from the reputation that the corresponding EUTM enjoys in the EU. Thereafter, reputation will be based on the use in the UK.

c.       International Registrations with EU designations

The UK also agreed to take measures to ensure that trademarks protected in the UK through an International Registration designating the EU via the Madrid System will continue to enjoy protection following the end of the Transition Period.

 3.     Designs

 a.      Registered Community Designs (“RCDs”)

The protection mechanisms provided under the Draft Agreement for RCDs are essentially the same as those for UK Equivalents in general (as described in Section 1) and UK Equivalent trademarks (as described in Section 2) above. Here, too, UK Equivalents will have the same filing and priority dates as their RCD counterparts, and RCD applications still pending at the end of the Transition Period must be filed again with the UK IPO within nine (9) months in order to enjoy such privilege.

In addition, with its ratification of the Hague System on March 13, 2018, which took effect on June 13, 2018, the UK opened up another possibility for foreign companies and individuals to obtain design protection in the UK. Comparable to the Madrid System for international trademark registrations, the Hague Agreement allows applicants to register a design in any one of the 67 contracting countries through a single application via the World Intellectual Property Organization (“WIPO”). Previously, design protection in the UK via the Hague Agreement could be obtained by means of designating the EU only (which included the UK), but it will now be possible to designate the UK directly through the system. On the other hand, in the Draft Agreement, the UK agreed to take measures to ensure the protection of EU designations via the Hague System that were registered before the end of the Transition Period.

 b.     Unregistered Community Designs (“UCDs”)

UCDs are designs that, from the date on which they were first made available to the public within the EU, are protected under the Council Regulation (EC) No. 6/2002. The UCD protection lasts for a period of three (3) years. The Draft Agreement provides that the holders of UCDs that were made available before the end of the Transition Period will benefit from a UK Equivalent for the remaining period of protection. However, the UK still has to provide for the respective mechanism, as the UK’s current unregistered design right legislation does not offer the same scope of protection as that provided under the EU regime. In the UKGov News the UK stated it will establish new schemes, which “will preserve the full scope of the UCDs in the UK”.

4.      Community Plant Varity Rights (“CPVR”)

UK Equivalents relating to CPVRs benefit from the same principals common to all registered EU-IP, as discussed in Section 1 above. Additionally, the term of the UK Equivalent shall be at least equal to the remaining period of protection under EU law. Comparable to the provisions on pending EUTM and RCD applications at the end of the Transition Period, CPVR applications will not automatically be converted into corresponding UK applications. The applicant will instead have an ad hoc right of priority, meaning the right to file an identical UK application that secures the priority of the CPVR application for the UK application for the purpose of determining distinctness, novelty and entitlement to the right of such a UK application. However, the period to file a priority saving application in the UK is reduced to six (6) months only.

ACTIONS THAT CAN BE TAKEN NOW

Although the UK’s Prime Minister, Theresa May, recently announced that the EU and the UK still want a deal in place by October 2018, the UK, at several points in negotiations, has threatened to leave the EU without a deal. And, indeed, the possibility remains that topics other than IP prevent the UK from signing the final draft of the Withdrawal Agreement. IP owners may seek comfort in the July 19, 2018, announcement of the Parliamentary Under-Secretary of State for Exiting the European Union, Robin Walker MP, that stated: “We have agreed to protect all existing EU trade marks, community registered designs and unregistered designs in the UK as we leave the EU. In place of those EU-level rights, 1.5 million new UK trade marks and registered designs will be granted automatically and for free.

However, IP owners are also advised to bear in mind when planning their future IP strategy that none of this is certain as of yet. Even though each portfolio provides for unique challenges and measures should be assessed on a case-by-case basis. There are a number of general actions that could be considered at this stage:   

  • EUTM and RCD holders:
  • Review of Portfolio. Owners should review their portfolios for marks or designs that are protected solely by European or International Registrations with EU designation. With regard to important assets, thought could be given to filing a national UK application or an International Registration with UK designation for additional reassurance.
  • Dissimilar Protection. Likewise, if you hold protection under both the UK and the EU trademark regimes, you may want to make sure that the goods and services that your business offers, or will offer in the near future, are protected by both registrations equally – if this is not the case, you could consider filing a separate EUTM or UK trademark, as the case may be.
  • Existing UK trademarks. Owners of existing UK registrations are advised to consider a renewal of protection where necessary. 
  • New Filings. With regard to new filings for EUTMs or RCDs, important applications could be accompanied by a national UK application for additional reassurance.  
  • Pending EUTM Applications Subject to Oppositions. On the subject of pending EUTM applications that are subject to an opposition based on the earlier national right of countries remaining in the EU (i.e., trademark, company name, etc.), it may be advisable to push things forward, because, in order to profit from a UK Equivalent, the trademark must be registered at the end of the Transition Period. On the other hand, in relation to pending EUTM applications that are subject to an opposition based on an earlier UK right (e.g., by way of extending the cooling-off period), or pending UK trademark applications that are subject to an opposition based on an earlier EUTM, thought could be given to slowing down the opposition proceeding (e.g., by way of extending the cooling-off period). This is because, after the Exit Date or, respectively, the Transition Period at the latest, these earlier rights will likely not be a legal basis for an opposition against your application anymore. 
  • Sole Use of EUTMs in the UK. Owners of EUTMs that have been put to use exclusively, or almost exclusively, in the UK and are (or will soon be) subject to the use requirement may want to consider starting to use their rights more extensively in other EU countries or to register new national trademarks in important countries of the EU in order to benefit from a new grace period.
  • Breeders: With regard to applications not yet filed or likely not to be granted until December 31, 2020, breeders can expect to file applications in the EU and in the UK. Since the latter application will be required immediately following the Transition Period and will likely go hand in hand with double the paperwork and two lots of Distinctness, Uniformity, Stability (“DUS”) examinations, timely preparation will be an advantage.