Whilst many of us have resisted the temptation to over speculate as to the potential ramifications of a variety of possible Brexit outcomes, as the deadline for Brexit draws ever closer businesses now need guidance as to the impacts they may face. This insight considers the potential effects on European trademark rights ("EUTMs") in the event of some form of Brexit deal versus the no deal scenario.
A Brexit Deal would most likely see the UK and EU enter into the Withdrawal Agreement in some form. It would mean that a transition period would begin on 29 March 2019 until 31 December 2020 (subject to agreement on the specific date). During the transition period the UK will continue to be bound by EU laws. EU laws would cease to have an effect from 31 December 2020, exit day.
No Deal would mean that the UK leaves the EU on 29 March 2019 (exit day) without any agreement between the UK and EU as to how EUTMs will be treated in the UK after 29 March. The government has published draft legislation in the form of The Trade Marks (Amendment etc) (EU Exit) Regulations 2018 (the "Regulations") which make provision for the treatment of EUTMs in the UK after 29 March 2019.
So what does this really mean for trademark owners?
Will I need to file a UK trademark application to protect the UK rights in my existing EUTM registrations?
No. In the event of a Deal, all EUTMs registered as at 31 December 2020 will automatically be protected as "cloned" UK trademark registrations without any loss of priority, filing or seniority dates. The UKIPO has confirmed that at this date all existing registered EUTMs will be cloned into the UK at no cost. The new UK right will have a prefix to indicate that it is cloned and will require its own separate renewal.
In the No Deal scenario, all EUTMs registered as at 29 March 2019 will automatically be protected as "cloned" UK trademark registrations. The UKIPO has confirmed that at 11pm on 29th March 2019, all existing registered EUTMs will be cloned into the UK at no cost as above. The UKIPO has said that it will also waive the "late payment" charges for these registrations for the first six months. There is a provision for EUTM owners that do not wish to have UK protection to opt-out of this cloning but it is not possible to opt out if the mark in question is subject to an interest such as a licence, assignment or security or if it has been used in the UK on or after exit day or there are legal proceedings in relation to the EUTM. It is unclear what the position will be where rights are the subject of legal proceedings in the UK at the time of exit. The government has said that it will provide further guidance prior to exit.
Do I need to file new applications in the UK and the EU now?
In the event of a Deal, there is no need as any application made between now and 29 March 2019 should proceed through the usual EU process during the transition period and a cloned UK trademark will be created automatically as described above. Applying for a UK mark now as well as an EU mark may simply incur unnecessary cost. Separate trademark applications will be required in the UK and EU after 31 December 2020.
If there is No Deal, owners of EUTM applications pending on 29 March 2019 will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing or seniority dates. An application will need to be made in this nine month period in order to secure protection. Given that there may be delays at the UKIPO after 29 March 2019 in the event of No Deal, if UK protection is required urgently then it may be wise to commence a separate UK application now. After 29 March 2019, separate trade mark applications will be required in the UK and EU.
What about my current EUTM applications that will not have been granted by 29 March 2019?
If a Deal is done, these will follow the usual EU process to grant and on 31 December 2020 will automatically be protected as described above if they have been granted. If any EUTM application is still pending as at 31 December 2020 the applicant will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing or seniority dates.
In the event of No Deal, applicants with EUTMs applications pending on 29 March 2019 will be given nine months in which to apply for the same mark in the UK without any loss of priority, filing and seniority dates. This means that any objections or oppositions will have to be dealt with again in the UK even if they have already been dealt with as part of the EU process.
Is the validity of my EUTM at risk for non-use if I have only used it in the UK prior to 29 March 2019?
In the event of a Deal, the EUTM will not change until 31 December 2020. The EU has said that use of an EUTM in the UK before 31 December 2020 is likely to count as use of the EUTM going forwards if it is within the relevant five year period but ultimately the issue will need to be determined by the CJEU. If the EU is correct, then an EUTM would not be revoked for non-use unless and until five years after last genuine use took place in the UK. However the position is not certain.
The same will apply in relation to a No Deal scenario but the timing will run from 29 March 2019.
If an EUTM is around five years old and has only been used in the UK, given the uncertainty, the owner should consider the likelihood of it using the mark in the EU in the future and the potential encroachment on those EU rights by third parties if it were to become vulnerable for non-use. The safest approach may be to refile the mark in the EU in order to safeguard the EU rights for a further five year period.
Is the validity of my new cloned UK mark at risk for non-use if, as an EUTM, I did not use the mark in the UK prior to 29 March 2019?
Under a Deal or No Deal, the UK has agreed that UK cloned registrations will not be revoked on the basis that they have not been used in the UK before exit day. Use in the EU in the five year period prior to exit will support the UK cloned registration. The UK cloned registration will only become vulnerable if it has not been used in the UK or EU in the preceding five year period.
What about International trademark registrations designating the EU?
Regardless of whether there is a Deal or No Deal, the UKIPO has said that the same cloning provisions described above will apply to international trademarks in the event of No Deal and that these too will clone into standalone national UK rights, rather than designating both the EU and the UK.
Will UK applicants still be able to file for international registrations based on EUTMs?
In order to file an international registration based on an EUTM, the applicant must have a real and effective place of business in the EU. If a UK applicant has a real and effective place of business in the EU then they can continue to file international registrations based on EUTMs regardless of whether there is a Deal or No Deal. However, any new international registrations which are to use an EUTM as the base registration and where the applicant's only real and effective place of business in the EU is in the UK, should be filed before 29 March 2019 in order to avoid the risk of No Deal.
What about parallel imports and exhaustion of rights?
Regardless of whether there is a Deal or No Deal, intellectual property rights which were exhausted both in the EU and in the UK before exit day shall remain exhausted in the EU and in the UK.
If there is No Deal, the UK government has said that it will continue to recognise exhaustion of rights in the UK and the other 27 EU countries but the EU has not made a similar statement.
The long term exhaustion regime in the UK has yet to be determined.
So what do I need to do?
- Consider what use you will be making of your trademarks going forward and where. Review your strategy with your trademark attorney to avoid future duplication of rights or, conversely, gaps in protection.
- Ask your trademark attorney to check your renewal dates for your EU registrations as there may be UK renewals due on your cloned rights immediately after exit day.
- Going forward, your UK and EUTM renewal dates are likely to differ. Your trademark attorney should have a record of these.
- If you are in the process of seeking an EUTM but protection is needed urgently in the UK, consider making a separate UK application now.
- If you have ongoing EU oppositions which are based solely on UK rights, you will want to conclude them before the exit date if possible or your prior rights may no longer be valid.
- Consider the labelling of goods sold in the UK which currently bear a reference to an EUTM. After exit day they will need to refer to the UK cloned right.
- After exit day you can no longer rely on your UK national rights against third party EUTM applications and registrations. Consider whether you need to broaden your EUTM portfolio.
- How do your existing agreements define governing law, jurisdiction and territories? Any use of EU as a definition after exit day will not include the UK.
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