Implication of Brexit on intellectual property rights
EU IP law will continue to apply in the UK until the end of the transition period on 31st December 2020. From 1st January 2021, the intellectual property landscape across the EU and UK will look very different.
The primary change is that harmonised IP rights currently covering the entire EU, including the UK, will continue to provide protection only in the EU27 countries.
Relevant date of registration
An important point for EU Trademark (‘EUTM’) holders to note is that existing EUTM registrations will cease to have effect in the United Kingdom after 31st December 2020. The UK element will be automatically ‘cloned’ (from the registered EUTM) into a UK national trade mark with the same filing and priority dates as the EUTM. The result will be that trade mark owners will have two registered trade marks where they previously had one: an EUTM covering the 27 EU countries and a national trademark covering the UK.
EUTMs pending on 31 December 2020 (i.e. EUTM applications) will not be cloned. Instead, the rights holder will have until 30 September 2021 to file an application for a UK national mark with the same filing and priority dates as the EUTM (provided the UK application corresponds with the EUTM application). Rights holders should make a careful note of this date to ensure it is not inadvertently missed.
How to avoid the risk of losing trade mark protection
There are some best practice steps that rights holders can take to ensure that their trade mark protection across the EU and in the UK is maximised and not lost once the transition period ends. Applicants for new trade marks should make dual filings for both EUTM and national UK protection. Although dual filings are not legally required until 1st January 2021, EUTM applications filed between now and 31st December 2020 will not proceed to registration before the end of 2020. The pending application will not be cloned and this means that businesses will be required, within the nine month period, to apply for UK national trade mark protection in any event. Applying for that now will avoid that additional administrative step next year. It will also reduce the risk of missing the nine month deadline and also, therefore, the ability to take advantage of earlier filing and priority dates. Rights holders must also take care with regard to renewals.
If the deadline for renewal of an EU trademark is after 31 December 2020, then steps will need to be taken to renew the protection of the ‘cloned’ UK national trademark, regardless of the renewal of the EU trademark itself. This will be necessary even if the renewal of the relevant EU trademark is done earlier (before 31 December 2020). This is a potential pitfall for right holders and it is likely that this nuance in the new rules may get missed.
However, the UK Intellectual Property Office has indicated that it will not charge a fee for late renewals for the first six months following exit day. This will offer some comfort to rights holders but should viewed only as a position of last resort.
Management systems will help
Rights holders who do not wish to obtain an cloned UK right that mirrors the existing EUTM at the end of the transition period can seek to opt-out. This is possible in certain circumstances and advice should be sought from a trade mark expert on whether that is possible in any particular case.
Rights holders must also assess the impact of the end of the transition period on ongoing EU disputes with a UK connection e.g., EUTM oppositions based on any UK prior rights, as it may not be possible to rely on those UK rights any more once the transition period ends.
Given the deadlines that rights holders must comply with as part of the trade mark transition arrangements (and the need to audit cloned marks to ensure that they are accurate in scope), it is crucial that rights holders put in place good trade mark portfolio management systems, utilising available technological solutions if possible. This is particularly so for large portfolios where keeping track of rights being cloned and rights needing to be refiled using a more traditional ‘spreadsheet’ method will be just too complex, and could result in costly portfolio management mistakes being made (by rights being lost).
The UK Intellectual Property Office has announced that parties involved in procedures before the UKIPO will, after 1 January 2021, require a UK address. For businesses without a UK presence this means, in practice, that they will need to instruct UK lawyers/trade mark attorneys to represent them. This will provide protection for rights holders by ensuring that representatives with experience before the UKIPO will be acting on their behalf, ensuring the best possible outcome to the application, opposition or invalidation proceedings, as the case may be.
Proceedings before UK courts
Where proceedings are pending before a UK court on the basis of an existing EUTM registration or EU designating international registration on exit day, the proceedings will continue with rights which are the subject of the proceedings being replaced by the ”cloned” trade mark effective in the UK. The UK court may within the proceeding issue injunctions or revoke and declare invalid the asserted rights as a result of a counterclaim, but only in relation to the UK. This differs from the current situation, whereby an EU Trademark being revoked or declared invalid within the proceeding before UK courts would be effective in all EU countries. Existing pan-European injunctions on exit day will continue to be enforceable.
The Withdrawal Agreement provides that where a revocation, cancellation or invalidity action is pending against a registered EUTM at the end of the transition period, and the EUTM is subsequently declared revoked or cancelled as a result of the action, the cloned UK right shall also be declared revoked or cancelled (provided that the grounds for invalidity apply to the UK). The UK Intellectual Property Office has confirmed it will honour this provision.
Exhaustion of rights
The exhaustion of IP rights refers to the loss of the right to control distribution and resale of a product covered by an IP right after it has been placed on the market within a specified territory by, or with the permission of, the right holder. The UK is currently part of a regional European Economic Area (EEA) exhaustion scheme, meaning that IP rights are considered exhausted once the product has been placed on the market anywhere in the EEA with the right holder’s permission. This means that, for example, if a product covered with a protected EUTM was sold by the right holder (or authorised licensee) in the UK – the product might be then transferred to Poland and further re-sold in Poland without the necessity of obtaining permission from the rights holder.
The position under the Withdrawal Agreement is that those IP rights which were exhausted before the end of the transition period (31st December 2020) remain exhausted both in the EU and in the UK. The UK will continue to recognise the EEA regional exhaustion regime from “exit day” (the end of the transition period on 31st December 2020) i.e. the UK will consider the IP rights in a product which is placed on the market in the EEA as exhausted. This means that an importer may continue importing products from EEA countries into the UK without the IP right holder’s permission (provided the product was placed on the market in the EEA with the right holder’s permission in the first place).
However, according to current legislation – such exhaustion will not have affect in the reverse situation, i.e. where the product was placed on the market in the UK, but would also be imported to other EEA countries. Without changes to the current rules, the placing on the UK market will not be recognised in the EEA as triggering exhaustion. This means that a supplier of goods which are imported to or first placed on the UK market and then further moved to the EEA would require the IP right holder’s consent in order to avoid a possible infringement action.
The UK government is currently considering options for how the exhaustion regime should operate after the transition period, which means that further changes to the exhaustion regime are likely. The UK government intends to launch a formal consultation on this issue during early 2021.
For the avoidance of risk, every entrepreneur should check whether the current importing of IP-protected goods to the EEA (for example, goods branded with a trade mark) that have already been placed on the EEA market and where the rights holder’s permission to export those goods is not currently required.
It may be necessary to contact the rights holder to get permission to import goods bought in the UK after 1st January 2021 to the EU, and the IP rights holder may not provide permission for their IP-protected goods to be parallel exported from the UK to the EEA. Business arrangements may need to be reviewed, and business models or supply chains should be established based on the outcome of the discussion with the IP rights holder.
According to the authors
Replacing EUTMs with equivalent UK national trade marks will undoubtedly result in the necessity to incur additional actions to properly maintain the effectiveness of trademarks within the UK. It is advisable to engage UK trademark specialists, to ensure that UK national trademarks “cloned” from EU Trademarks are properly protected and managed. It is extremely important that the trade mark holders check that their registrations have been correctly transferred to the UK registry once the transition period ends. We also recommend dual EU and UK filings for new applications for registered EU trade marks. Brexit will undoubtedly have an effect on the exhaustion of rights to trademarks, which may have further consequences for trade partners from Poland and the United Kingdom.
With the exception of the exhaustion of rights position which has yet to be finalised, all of the changes to the IP landscape described above will come into effect on 1 January 2021, regardless of whether the EU and UK agree a trade deal by the end of the transition period. These changes have already been agreed and implemented in the UK by legislation.
Rules of proceedings
After 31st December 2020 the UK element will be automatically ‘cloned’ (from the registered EUTM) into a UK national trade mark with the same filing and priority dates as the EUTM. The result will be that trade mark owners will have two registered trade marks where they previously had one: an EUTM covering the 27 EU countries and a national trademark covering the UK.
Trade marks in the course of registration
EUTMs pending on 31 December 2020 will not be cloned. Instead, the rights holder will have until 30 September 2021 to file an application for a UK national mark with the same filing and priority dates as the EUTM.