INTA Bulletin

July 1, 2016 Vol. 71 No. 11 Back to Bulletin Main Page

How the Brexit Vote Will Affect Brand Owners: A Q&A Guide

On June 23, 2016, the electorate of the United Kingdom of England, Wales, Scotland and Northern Ireland voted to leave the European Union by a majority vote of 51.9 percent to 48.1 percent. This unprecedented decision will result in a period of uncertainty for the business sector in general. IP rights holders and INTA will be examining the implications over the months to come.

For this preliminary review of the potential implications, set out below are answers to some of the immediate questions posed in relation to Brexit.

When will the UK leave the EU?

Nobody knows yet, but it is likely to be at least two years away. The UK government first has to formally notify the European Council of its intention to leave, which Prime Minister David Cameron indicated in his resignation speech should be done by his successor. Therefore, this will not happen until potentially October 2016. However, others are pushing for earlier notification. Formal notification will trigger a period of exit negotiations between the UK and the EU, which will have a two-year backstop date unless all the other EU Member States agree that additional time is needed.

Do EU laws still apply in the UK?

Yes. EU laws will continue to apply in the UK until the UK officially leaves the EU. Therefore, for example, the EU Trade Mark Regulation (EU) 207/2009 (as amended by Regulation (EU) 2015/2424) and the Community Designs Regulation (EC) 6/2002, as well as the various harmonizing directives, such as the Trade Marks Directive (EC) 2015/2436 or the IP Enforcement Directive (EC) 2004/48, all remain in full force and effect. The UK government has an excellent track record for ensuring that changes in IP legislation contain appropriate transitional provisions to help brand owners and other IP proprietors to adjust to any new regime. The UK trademark profession, as well as INTA itself, will no doubt get involved in the process at the relevant time, to ensure that this is the case.

Do EU Trade Marks (EUTMs) still cover the UK?

Yes. Until the UK actually leaves the EU, EUTMs still have full force and effect across the UK. EUTMs can currently and for the foreseeable future still be invoked against national UK trademarks and infringing use in the UK. But once the UK formally leaves the EU, newly filed EUTMs will no longer cover the territory of the UK (subject to any special extension arrangement that is made as part of the Brexit deal).

What are the consequences for existing EUTMs once the UK actually leaves the EU, and will protection in the UK be lost?

EUTMs will still cover the other (currently 27) Member States of the European Union and will continue to be administered by the EUIPO and governed by EU law. A mechanism will undoubtedly be provided to allow the continued protection or extension of pre-existing EUTMs to the UK post-Brexit. INTA will work with the UK government and UK Intellectual Property Office (UKIPO) to ensure that the process and transitional provisions to allow pre-existing EUTMs to be re-designated as UK national marks will be as smooth and easy as possible for rights holders. This should include maintaining the original filing and priority dates, and/or any relevant seniority claim.

How will the genuine use requirement be applied if the UK element of an EUTM is split off?

Where an EUTM has only ever been used in the UK, the “rump” EUTM following Brexit may eventually be vulnerable to revocation for non-use. It would be expected, however, that the EUIPO and EU courts would take into account use that took place in the UK while the UK was still in the EU. Similarly, there may be non-use issues for UK “spin-offs” from EUTMs that have not been used in the UK. Again, it would be fair to brand owners if use elsewhere in the EU while the UK was part of the EU could “count” in defense of a non-use attack, though such details will need to be worked out.

Do I now need to file UK applications to cover the UK?

From the date on which the UK formally leaves the EU, it will probably be necessary to file UK national applications (or designate the UK through an International Registration), as EUTMs will no longer cover the territory of the UK, unless some special arrangement is set up whereby an EUTM can be extended to the UK (rather like the way in which EUTMs currently extend to Jersey, despite the fact that it is not part of the EU). Until then, filing a national UK mark would simply duplicate protection. There should be no disadvantage to not filing UK applications that equate to a validly protected EUTM in the meantime.

What about International Registrations that designate the EU?

EU designations of International Registrations should be treated in the same way as EUTMs themselves, such that coverage of the UK will be maintained. Thus references to EUTMs in these Q&As apply equally to International Registrations designating the EU.

How will cross-border enforcement work? What about existing pan-EU injunctions?

In theory, once the UK leaves the EU, the courts in the UK will only have jurisdiction to grant injunctions and damages awards in relation to infringing activities within the UK; and national EUTM courts elsewhere will no longer have jurisdiction over infringing activities in the UK. However, it is not inconceivable that some sort of reciprocal arrangement may be set up whereby something close to the current system of pan-EU relief may be available with respect to equivalent EU and UK trademarks. This would no doubt depend on the UK deciding to adopt and follow judgments of the Court of Justice of the EU, which is debatable at this point.

It is unclear what will happen in cases where a national EUTM court has already granted an injunction prohibiting infringing activities across the EU. Will the enjoined party be able to ignore the injunction in the UK once it leaves the EU? And what if it was a UK court that granted the injunction? This is yet another detail which will need to be worked out when unpicking the current EU-wide arrangements.

Will trademark and other license agreements that mention the EU need to be redrafted?

IP owners and licensees should be reviewing their agreements to see whether they refer to the EU or to specific EU laws in a way that is unclear as to what happens when Member States leave (or join) the EU. This might be relevant to the geographical scope of a license or to a non-compete provision, for example, and each material agreement will need to be considered to determine whether it is clear that the UK will continue to be covered once it leaves the EU. Once again, the impact of Brexit will not apply until it takes effect, but it would be prudent to start the review process soon in order to avoid surprises in the future.

How will other IP rights be affected?

Like EUTMs, Registered Community Designs are unitary rights covering the whole EU. Provision will need to be made to ensure that Registered Community Designs continue to be afforded equivalent national protection in the UK when it formally leaves the EU. Whether or not Unregistered Community Designs will be given equivalent protection for the remainder of their term may be slightly more open to question, given that the UK has retained its own, separate, unregistered design right system.

Similarly, geographical indications are governed by an EU-wide regime, from which the UK element will need to be detached and protected on a national basis post-Brexit.

Copyright exists on a national basis within the EU and so UK copyright will continue unaffected pursuant to national legislation. Whether and to what extent this legislation will continue to be interpreted in accordance with EU harmonizing directives remains to be seen, but the courts will no doubt continue to look towards the Berne Convention and Universal Copyright Convention for guidance and so one would hope that the law will not diverge substantially from that in the rest of the EU.

The position for domain names is generally more straightforward, in that their registration is not EU related, and so, for example, UK-based individuals and companies that own .com, .net, or .uk domain names will not be affected by Brexit. The one exception is .eu domain names, which may only be registered by individuals who are residents of or businesses that are established in the European Economic Area (EEA). It is possible, but not at all certain, that the UK may become an EEA member once it has left the EU. If it does not, then arrangements will need to be made to determine whether existing registrants of .eu domain names may retain them.

As far as patents are concerned, the most significant immediate effect is likely to be a delay in the implementation of the new Unitary Patent and Unified Patent Court (UPC), which had been expected to be implemented in early 2017. As things stand, the UK will not be able to participate in the new UPC system once it leaves the EU, since EU membership is a pre-requisite to participation. On the other hand, the UK will remain a signatory to the European Patent Convention (EPC), and it will still be possible to obtain a UK patent via the EPC system.

What are the EUIPO and UKIPO saying about the post-Brexit arrangements?

At the time of going to press (July 1, 2016), neither the EUIPO nor the UKIPO has made any official statement in relation to the UK’s decision. No doubt, they will make their positions known soon, which will be reported to INTA members.

What do I need to do now?

Until timing and the picture of the UK’s future relationship with the EU post-Brexit become clearer, it is largely “business as usual.” That said, rights holders would be well advised to closely monitor the situation and perhaps conduct audits of existing protection, enforcement, and agreements concerning the UK, so as to be in a better position to make informed decisions when the time comes to do so. In-house counsel should also seek to ensure that IP issues are fully considered when wider commercial issues such as domicile, distribution models, and tax structures are being discussed within their companies.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

© 2016 International Trademark Association