Withdrawal of the UK from the EU ("Brexit"): Implications for Trade Marks
On 23 June 2016, the United Kingdom (UK) held a referendum on whether to remain a part of the European Union (EU). The result of that referendum was a 52%-48% view that the UK should end its membership of the EU (a view supporting British exit or “Brexit”).
However, there is no immediate effect. It is not possible to say exactly when the UK’s withdrawal from the EU will be concluded. The next step will be the beginning of a negotiation process between the UK government and the remainder of the EU to work out the future relationship between the UK and the EU. It is expected that these negotiations will take at least two years and may take much longer. Indeed, the formal withdrawal notice has not yet been given by the UK government, and is not expected until 2017.
Until withdrawal has taken effect, the UK remains a full member of the EU. In particular, existing EUTM1 rights continue unaffected, even during the Brexit negotiation period.
The nature of the future legal relationship between the UK and the EU is not yet known. Of particular relevance to trade mark and other IP matters is whether the UK will remain a member of the European Economic Area (EEA) – the so-called “Single Market”. Consideration of whether one or more parts of the UK, for example Scotland, might remain in the EU or leave the UK and join the EU separately are beyond the scope of this note.
1 Previously known as a Community Trade Mark (CTM)
Trade marks can currently be registered in the UK by the national route, which provides protection in the UK only, or by filing a European Union Trade Mark (EUTM), a unitary right that provides protection in all Member States of the EU, or by designating the UK or EU via the Madrid Protocol international trade mark system.
We do not believe that EUTM applications filed after the UK has actually left the EU will continue to cover the UK. However, for EUTM applications and registrations filed before the UK leaves the EU, we are confident that the UK will enact transitional provisions for the recognition of the UK portion of existing EUTMs or for their conversion to UK registrations, in order to ensure that existing protection is not lost. It is not yet clear whether this will be automatic or require positive steps to be taken by the EUTM owner.
For now, we consider the best course of action to be a continuation of current practices. We expect a clearer picture of any recognition or conversion system for EUTMs in the UK to emerge well before the UK leaves the EU.
However, for important marks and marks where the UK is a main market, we appreciate that some applicants may wish to consider filing national UK applications now, at the same time as applying for EUTMs, for additional reassurance. Please refer to the next page for details of a discount for UK applications that we have introduced to assist applicants in this regard.
There are numerous scenarios about how existing EUTM registrations might be extended, converted or re-registered in order to give protection in the UK.
The Chartered Institute of Trade Mark Attorney, the UK’s professional association (“CITMA”), has led the discussion about the various conversion options to be considered, highlighting seven possibilities in particular (more information on these scenarios can be found on the CITMA website at www.citma.org.uk). CITMA has stated that it favours an outcome which minimises the cost and resource burden to business while maximising legal certainty, something that we endorse at Mewburn Ellis. It is still too early to anticipate which option the UK Intellectual Property Office will ultimately propose. Each scenario has particular strengths and weaknesses, relating to timing, cost to trade mark owners, IPO resources, conflicts with ‘legacy’ rights and legal certainty.
There is also the uncertainty about how much it will cost (in terms of both official fees and attorney costs for preparing and filing documents). Some form of official fee, even if it is perhaps just token, seems likely in order to cover the additional administrative costs of the EUIPO and UKIPO associated with managing the process.
As mentioned before, some applicants may wish to consider filing national UK applications at the same time as applying for EUTMs for additional reassurance, particularly for important marks and for marks where the UK is a main market. This tactic would secure the certainty of their rights and avoid any complications or rush in ‘converting’ in the future.
Indeed, we are already starting to see some evidence of this kind of dual-filing by some trade mark clients. Recent statistics from the UKIPO reveal that such a ‘dual-filing’ strategy already appears to have been adopted by many applicants, especially amongst Chinese, Korean, Japanese, US and German parties, since the number of UK filings has recently increased dramatically with corresponding EUTM applications being identified by the UKIPO examiner’s search of earlier rights.
A practical implication of the increase in UK filings is that examination and prosecution speeds are expected to decrease, as resources at the UKIPO face increased workload. Applicant’s expectations in this regard should therefore be managed accordingly.
We recognise that trade mark owners now face a period of some uncertainty, particularly in relation to the long-term scope of protection offered by EUTMs in the UK.
To assist those clients who are interested in obtaining the security offered by UK trade mark rights alongside EUTM protection, we are offering a 50% reduction to our usual service charges for an identical UK trade mark application if this filing is instructed within 1 week of our acknowledgement of EUTM filing instructions. This reduces our basic charge for filing a UK TM application in a single class to £140. The official fee for a UK TM application in a single class is £170. The 50% discount also applies to our extra class and priority claim service charges.
If you wish to take advantage of this offer, please contact the attorney handling the EUTM application or email@example.com.
We would like to reassure our clients, colleagues and friends that European intellectual property services provided by Mewburn Ellis continue uninterrupted. We plan to open a new Mewburn Ellis office in Munich, Germany. This office will open before the completion of the negotiations between the UK government and the remainder of the EU. This will ensure in particular that we continue to offer our full range of European trade mark and design services, regardless of whether the UK retains membership of the EEA or not.
Furthermore, we are also investigating the possibility of our experienced team of trade mark attorneys qualifying in another EEA and/or EU jurisdiction as an additional option and to give us maximum flexibility with regards to representing our clients and their rights.
As a reminder, companies and persons from outside the EEA are required to be represented before the EUIPO2. Post-Brexit, this would mean that UK companies must also be represented, unless the UK retains EEA membership. Representatives before the EUIPO (i.e. European trade mark attorneys) are required to satisfy a triple requirement of EEA nationality, place of qualification and place of business3.
2 Article 92(2) Council Regulation EC 207/2009 | 3 Article 93(2) Council Regulation EC 207/2009
We do not expect any immediate change to the regime for registering and enforcing national trade marks in the UK as a result of Brexit.
Post-Brexit, the relevant EU directives would no longer apply to the UK, potentially allowing more legislative freedom. Similarly, the decisions of the CJEU (including referrals from courts of EU member states on questions of law) would almost certainly cease to apply to the UK, thus meaning that UK courts would no longer be bound to interpret UK trade mark law in accordance with rulings of the CJEU. Therefore, although UK and EU trade mark law is currently harmonised, one could envisage a gradual divergence over time.
Since the scope of an EUTM, post-Brexit, would not include the UK, enforcement action brought in an EU court, and any resulting injunction, would not be effective in the UK. Where infringement is occurring in the EU and the UK, separate enforcement actions would be required. Moreover, UK-based companies accused of infringement in the EU would no longer be sued in their home jurisdiction, but in the court of an EU state. Furthermore, it should be noted that the UK court system would no longer have EU trade mark courts.
EU law currently applies the principle of exhaustion of rights to the first sale in the EEA that takes place with the trade mark owner’s consent4. It is not known whether, post-Brexit, the UK would apply exhaustion in the UK only, the EEA and UK, or internationally (i.e. anywhere in the world). International exhaustion would make it more difficult for trade mark owners to prevent parallel import and re-sale in the UK of genuine branded goods legitimately sold elsewhere in the world. UK-only exhaustion, on the other hand, would allow UK trade mark owners to prevent parallel imports from the EU for re-sale in the UK.
4 Article 13 Council Regulation EC 207/2009
Where a EUTM has a valid UK seniority claim, we anticipate that there should be an option to reinstate the UK mark on the UK trade mark register if it had been allowed to lapse. It is also expected that any process of conversion or recognition of EUTMs in the UK will also acknowledge valid seniority claims. Please refer to our briefing sheet on Seniority Claims for more information about that subject.
It is not known whether the owner of an EUTM would need to show that the mark is in use in the UK (or that there is a bona fide intention to use in the UK) as is required for UK registration5. Conversely, it should be noted that EUTMs that are currently only used in the UK may in due course become vulnerable to cancellation for non-use in the EU6. Furthermore, the anticipated conversion of EUTMs to some kind of UK right gives rise to uncertainties relating to the possible vulnerability of the UK right to non-use cancellation if the ‘parent’ EUTM has only been used outside of the UK (but within the EU) to date.
5 Section 32(3) UK Trade Marks Act 1994 | 6 Article 51 Council Regulation EC 207/2009
Both the UK and EU are parties to the Madrid Protocol for international trade mark registration. It is therefore expected that the Madrid system will continue to be available for trade mark registration in the EU and the UK, post-Brexit.
The effects of the UK’s withdrawal from the EU will be different for other IP rights. Please refer to our other Brexit briefing notes for more information.
We expect a number of the areas of uncertainty discussed above to become clearer in the coming months, and plan to provide updates accordingly. In the meantime, we would like to reassure you that after the UK leaves the EU, it will be business as usual for Mewburn Ellis. In particular we will continue to offer our full range of European trade mark services. For more information please get in touch with your regular Mewburn Ellis contact.
For more information on Mewburn Ellis LLP and other intellectual property matters, please visit our website at www.mewburn.com. If you have the name of a contact email firstname.lastname@example.org or email@example.com.
This information is simplified and must not be taken as a definitive statement of the law or practice.