Developments in Brexit negotiations and recent UK government guidance suggest the UK government is likely to attempt to ensure EU registered trade marks will continue to be protected in the UK when it leaves the EU, at minimal cost and administrative burden to rights holders. However, some uncertainty will remain until a full Brexit deal is reached, and those with pending EU trade mark applications or fighting protracted EU oppositions should monitor the transitional period and apply for new UK trade mark applications if and when appropriate.
Background
On 29 March 2017, the UK served formal notice of withdrawal from the EU by triggering Article 50(2) of the Treaty on European Union, meaning the UK is currently due to officially leave the EU on 29 March 2019.
Due to the unitary nature of EU Intellectual Property Rights covering only EU countries, trade mark owners were initially left uncertain about what would happen to the UK portion of EU trade mark rights once the UK left the EU.
Several possible models for ongoing protection of UK rights were put forward, and there has been uncertainty around whether EU trade mark owners would need to take active steps to elect to have a separate UK right created, whether the new right would be re-examined, whether a payment should be made by the owner to obtain a parallel UK right, or whether it should be created automatically.
The draft agreement on the withdrawal of the UK from the EU[i] (“Draft Agreement”), published on 19 March 2018 (in which UK and EU negotiators have agreed on some key terms), and the UK Government’s recent update to its guidance on Brexit in the event of a “no deal” scenario, have helped provide some welcome clarity.
What are the agreed terms?
Transition period
A transition period will run from the date the UK leaves the EU (currently, 29 March 2019) until 31 December 2020. During this time, the law relating to EU trade marks will continue to apply in the UK, such that EU trade mark rights will be unaffected.
Registered rights
The transition terms agreed under the Draft Agreement ensure that a cloning process is undertaken, automatically creating an identical UK registration at the UKIPO in respect of any EU registered trade marks existing at the end of the transition period. The UK right will be automatically granted without any action from the owner, and will maintain the same filing date and priority date as the original EU trade mark without re-examination.
The UK government has more recently confirmed the conversion will take place without charge to the right owner, and that rights holders will have the opportunity to opt out of receiving the new UK converted right.
Any newly created UK trade mark registrations will not be liable to revocation on the ground that the corresponding European Union Trade Mark had not been put into genuine use in the territory of the United Kingdom before the end of the transition period (31 December 2020).
If an EU trade mark registration was declared invalid or revoked in the EU as the result of an administrative or judicial procedure which was ongoing on the last day of the transition period, the corresponding right in the UK shall suffer the same fate. However, this applies only if the ground for invalidity or revocation of the European Union trade mark applies in the UK.
Pending applications
The Draft Agreement states that any EU trade marks that are pending at the date of the end of the transition period (31 December 2020), will cover only the remaining 27 EU countries (i.e. not the UK) when registered. The Draft Agreement transition terms envisage a nine month priority period (compared to the usual 6 months) from the end of the transition period during which the owner has a right to file a UK national application and claim the filing date from the parent EU trade mark registration.
It has not yet been agreed what happens to trade mark applications under opposition.
Exhaustion of rights
Rights exhausted in the EU and UK under EU law will remain exhausted both in the EU and UK if exhausted prior to the transition period. What happens after the transitional period will depend on the specific deal that is reached and whether the UK remains a member of the European Economic Area (EEA).
What does this mean in practice?
As most EU trade marks in the pending phase now, or filed between now and the end of the transition period, will be registered by 31 December 2020, this effectively means that the majority of EU trade mark rights will automatically cover the UK by the transition date due to the cloning process.
If EU applications are filed late into the transition period, or other substantive issues with EU applications present themselves (including protracted oppositions) meaning that they will not be registered by 31 December 2020, owners should apply for their corresponding UK application before 30 September 2021 if they wish to maintain their priority date in the UK.
In terms of enforcement, the UK courts will have jurisdiction to apply EU law relating to EUTMs prior to the end of the transition period. This means that they can continue to grant relief extending to countries of the EU, and vice versa.
In terms of exhaustion of rights, those that trade in the UK and EU will have to keep an eye on the developments on the deal reached with respect to the period after the transitional period ends, as the outcome depends on whether the UK remains a member of the EEA, or there is a specific deal that recognises exhaustion. Brand owners should be aware, however, that they will be required to file a separate UK customs application for the detection of counterfeit goods at the border. This is because the UK will no longer be covered by the EU wide customs application.
We need to bear in mind that the Draft Agreement is still in draft form and, as such, the above terms come into force only if the whole agreement is entered into. While the above is good progress, there are still several outstanding matters the EU and the UK must negotiate before this Draft Agreement becomes a reality.
Therefore, we recommend that brand owners continue to consider filing separate UK and EUTM registrations to exercise caution.