BREXIT – Impact on UK and EU Trade Marks

On 23 June 2016 the UK voted to leave the European Union (“Brexit”). The UK is expected to enter into a negotiation period during which the terms of withdrawal from the EU will be settled. The actual exit date is not yet known, but the existence of a two year notice period for withdrawal from the EU suggests that the UK will not exit until 2018 at the earliest.

Many issues have yet to be resolved, but what is certain is that once Brexit happens there will be some significant changes in the world of IP, not least that EUTMs will no longer cover the UK. As such, it is sensible to start planning ahead now and considering what steps may be necessary to ensure your trade marks remain properly protected in what is one of the biggest markets in Europe.

GJE will be here to navigate you through this period of uncertainty and we welcome any questions you may have at brexit@gje.com. In the meantime, we have put together the following to address some of the most frequently asked questions.

How will Brexit affect trade mark protection in the UK?

Currently, there are two parallel systems for obtaining registered trade marks which cover the UK: a) UK registered marks, which are obtained through and administered by the UKIPO; and b) European Trade Marks (or “EUTMs”) which are obtained through and administered by the EUIPO. NB: Brexit will have no impact on UK registered marks.

However, once the UK formally leaves the EU, the strong likelihood is that EUTMs will cease to have effect in the UK. This means that after Brexit, the only way to obtain new registered trade mark protection in the UK will be to file a new UK trade mark. Protection for the rest of the EU will be possible by filing an EUTM as before.

What will happen to existing EUTMs? Will rights in the UK be lost?

While nothing is certain as yet, the expectation is that there will be some form of mechanism to ensure there is no loss of rights in the UK for owners of existing EUTMs. At present it is not clear what that mechanism will look like, although it is thought the most likely option is that EUTM owners will have the opportunity to pay a revalidation fee within a certain deadline to secure a corresponding UK registration with the effective date of the EUTM.

When will these changes happen?

While we do not yet know the exact timetable for Brexit, it is important to note that for now it is very much business as usual, since any departure will take at least two years to negotiate and effect. EUTMs will continue to provide protection in the UK as usual until then. We will of course continue to monitor the situation closely and update our clients as soon as details are available.

Is there any downside to filing new UK applications now, even if they are not strictly needed?

If a new application is seen merely as an attempt to buy a new non-use grace period it may be seen as a bad faith filing. Although case law on this point tends to be more favourable in the UK than in the EU, nevertheless the current uncertainty means this is a risk of any new application being vulnerable to an opposition or post-registration challenge to validity (for example if an EUTM owner now files a new UK application being aware that its EUTM has not been used in the UK).

Filing a new UK application now is also likely to cost more, both in terms of initial fees (which we expect to be higher than any revalidation fees) and also later on (in terms of maintenance fees, if the owner later also revalidates its EUTMs, thus resulting in duplicate protection).

Lastly, it is worth remembering that any new UK application filed now will be effective only from the date of filing, whereas we anticipate that any later revalidations will keep the effective date of the original EUTM which could be many years earlier.

Will UK companies still be able to protect and enforce their trade marks in the EU after Brexit?

Yes. Brexit will not prevent UK companies (or natural persons) from applying for and owning EUTMS, since the system does not require the holder of an EUTM to be from the EU. Indeed a large number of existing EUTMs are held by companies from outside the EU, such as the US and Japan. As such, UK companies (and persons) will still be able cost-effectively to protect their trade marks across the remaining Member States of the EU through a single EUTM application after Brexit. They will also still be able to enforce these rights against third parties.

What does Brexit mean for EUTM seniority claims?

From now on, we would recommend that companies do not let their national UK marks lapse, as they might previously have done in favour of recording a seniority claim against an EUTM. Instead they should continue to maintain their UK marks as separate IP rights.

What if our EUTMs have been used only in the UK?

At present, genuine use of an EUTM in a single member state is potentially sufficient to maintain an EUTM registration. Post-Brexit, however, if an EUTM has been used only in the UK then the EUTM could well be use-vulnerable, and hence cancellable and/or unenforceable. The only way to safe-guard the position in the remaining EU member states would be to bring the trade mark into use or potentially file new national applications in the EU member states (although again there may be bad faith issues to consider, as above).

What will happen to agreements which apply to “the EU”?

There are many agreements in the trade mark world, including undertakings and coexistence agreements to settle disputes, as well as licences and distribution agreements. Most of these will specify the geographical scope of the agreement, often referring simply to “the EU”. These may have to be reviewed to clarify their scope and to ensure the terms continue to apply in the UK post- Brexit. We also recommend that any agreements concluded between now and Brexit should include a specific reference to the UK and not just the EU.