The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Parvis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Monday, 15 May 2017

Br*x*t and brands – out of the EU in 680 days

Don't even say the b-word ...
What will happen to IP rights in a post-Brexit world? This is a question that has been daunting IP professionals for a few months now ... and to which no firm response has been provided yet.

The IPKat is delighted to host the musings of former guest Kat Darren Meale (recently promoted to partner at Simmons&Simmons) on this matter.

Here's what Darren writes:

"This one is about the UK leaving the EU. Having had enough of this millennium’s most reckless political decision, this occasional IPKat contributor cannot bring himself to say Br*x*it without an asterisk or two to cool his ire. In any event, have you thought about the implications for trade marks and designs, as well as the businesses that use them and the practitioners who make their living from them? Allow me to give you some food for thought (or perhaps a snack – this is by no means a comprehensive guide to the many issues).

Trade marks

In all likelihood, on 29 March 2019 (B-Day), well over a million EU trade mark registrations will cease to apply in the UK. This may be the largest removal of intellectual property rights in history. Here are nine things you should know.

1.     Although we are in entirely new territory, there is a widespread confidence amongst the UK IP profession that the UK government and the UKIPO will create a dedicated process by which owners of EUTMs can secure continued protection for their marks in the UK. Two models appear the most likely. The first option is for all EUTMs to be automatically granted separate protection as UKTMs carrying the same benefits as their parent EUTMs (including filing and registration dates). CITMA calls this the Montenegro Model. The second is for owners to have the option to elect for this separate protection, most likely by filing a request at the UKIPO and paying a fee. CITMA calls this the Tuvalu model. CITMA has more on the options here. Something will need to be done about International Registrations designating the EU too.

2.     Be careful calling the above process “conversion”, which is an option already available by which an EUTM can be given up and turned into applications for national marks in EU Member States. Perhaps “division” would better serve – EUTMs previously covering 28 countries should be (one way or another) divided into an EUTM covering 27 and a UKTM covering 1.

3.     The bad news is that we do not expect to find out exactly what option will be chosen and how it will be executed until fairly late in the process. Civil service time within the UK government is in short supply at present, and that will only get worse as B-Day approaches. For that reason we do not expect to see a public consultation issued by the UK government. These commonly precede major, and not so major, changes in IP law in the UK (such as the new copyright exceptions introduced in 2014) and provide the IP community an opportunity to kick the tyres of proposal and point out all the flaws. Any flaws in the plan this time will have to be sorted out after the event.

4.     EUTMs are subject to use requirements five years after they register. It would make sense that use in the UK prior to B-Day would count as use in the EU so far as proof of use is concerned, but not after it (but the former may be a question for the EUIPO and Court of Justice of the EU). Going forward, however, businesses which only really operate in the UK will not be able safely to maintain EUTMs beyond their initial five year registration period (after which the use requirement kicks in).

5.     When an EUTM is filed, there is no need for the applicant to intend ever to use the mark for the goods and services claimed. In the UK, applicants must sign a declaration of intention to use. What of divided marks? Will owners have to declare they did intend to use in the UK, that they have used or that they will soon?

... wishing a happy B-day ...
6.     There is a raft of impacts on brand enforcement. A UKTM will no longer be able to block the registration of an EUTM. Unregistered rights protected by passing-off in the UK will no longer be able to block an EUTM either. On the flipside, clearing a brand in the UK may get easier because there could be many fewer earlier rights to worry about (subject to how the division process works). Goods on the market in the EU may not be “exhausted”, making it easier for brand owners to keep parallel imports out of the UK.

7.     Some of the biggest headaches are likely to involve EUTMs and EUTM applications pending before the EUIPO where opposition or cancellation procedures (which can take years at the EU level) are ongoing. If you are three years into litigation relying on passing-off and/or a UKTM, will your challenge suddenly fail? If an EUTM under challenge is divided to the UK, will you have to start proceedings afresh before the UKIPO? Will a UK High Court infringement action based on an EUTM need to be struck out? What will happen to pan-EU injunctions already in force, especially those ordered by a UK court? We’ll also see the death of the celebrated EUIPO/Alicante Torpedo.

8.     UK IP professionals will be worried about their rights to represent before EU institutions, including the EUIPO and the EU General Court. EU IP professionals may have the same concerns about working in the UK. Trade mark attorneys look to be in a worse position than solicitors at present (for those unfamiliar with the UK system, these professions are quite distinct), because (as I understand it) re-qualifying to practice in a remaining EU Member State (which may be required) is harder for attorneys than solicitors (hello Law Society of Ireland!). There is also a place of business requirement, which is unlikely to trouble those of us working in practices which span Europe, but which will disadvantage UK-only firms. On the plus side, EU businesses are likely to need UK IP lawyers to help them with all of their new divisional UKTMs.

9.     What do brand owners need to do now? Opinion is divided: file new UKTMs now? Wait for the division process? Pack it all in and emigrate to the moon? Talk to your colleagues, advisors or talk to me, as the answer most likely depends on your business, portfolio and your plans.

Designs

The story is very similar for the more than 700,000 Registered Community Designs (RCDs). Again CITMA has produced some very helpful material on the possible options, which closely mirror those for EUTMs. See here and here.

There will be both similar and different complications with RCDs, some of which no one may even have thought of yet.

Unregistered design rights will be impacted heavily. Unregistered Community Design right, which is very similar in protection to RCDs but is available without registration and lasts for three years, will no longer cover the UK. The UK still has its own UK unregistered design right, but it is quite different and does not protect, for example, surface decoration. The fashion industry is thought to be the biggest loser here, but we may see a new or updated UK designs law in due course to plug the gap (although I’m not confident we’d get it before B-Day). Unregistered Community Design right will continue to apply in the remainder of the EU, of course, but there are issues around disclosure of designs which are first disclosed to the public in the UK (at London Fashion Week for example).

... thinking about B-day
And there’s more

Exhaustion of rights has been mentioned above in the context of TMs but there will be a more general impact across IP. There are some lesser known IP rights which will be impacted – plant variety rights for example. Protected geographical indications (PGIs) and protected designations of origin (PDOs) may no longer be honoured in the UK (Parma ham from Paisley anyone? Champagne from Chatham?). You might need a new plan, too, if you operate from a .eu domain name. Copyright, as if it isn’t complicated enough, will also probably throw up some surprises, but at least we may be given a respite from reading any more Court of Justice decisions on communication to the public…

Never fear, we’re all still here

While the seismic political changes in the UK and the EU may create challenges and headaches, the UK has always been a leading jurisdiction for the practice of IP, including trade marks and designs. With so many dedicated UK IP lawyers in our community that is unlikely to change, and together we’ll solve any issues which arise. But you’d be best not to think that B-Day is years away – it's not – now’s the time to put a plan in place."

6 comments:

Anonymous said...

Another well-articulated example of HMG's current position involving a throwing over of its reputation for thoughtful policy-making on the basis of consultation, the creation of reliable and effective structures on which long term investment decisions can be made and the careful identification and resolution of issues in advance. Perhaps I am wrong about that and it is actually the God, King Henry V and St George-given will of the people as forseen in the Magna Carta and the mysteries which have been revealed to, amongst others, the Prime Minister and Martin Howe QC. The former not being an IP lawyer, perhaps the latter would comment as to how this is resolved?

Anonymous said...

Darren potentially understates the disparity of the treatment of lawyers and trademark attorneys following Brexit.

Article 93(1) of the Trade Mark Regulation provides that a legal practitioner qualified in one of the Member States of the EEA and having his place of business within the EEA may act as a representative before the EUIPO.

In contrast Article 93(2) provides that in order to the entered onto the list of Professional Representative, an individual must fulfil three criteria:

1) They must be an EEA national;
2) They must have a place of business or employment in the EEA; and
3) They must be qualified to represent parties before one of the EEA trademark offices.

So in addition to the hurdle of cross-qualifying in an EEA member state and establishing and maintaining a place of business in the EEA, unless an individual obtains a waiver from the office, continued registration as an EU trade mark attorney requires that the individuals in question have or acquire EEA nationality which, absent an appropriate (and fortuitous) accident of birth or ancestry, is likely to be a far harder hurdle to overcome than taking a few more exams to cross-qualify as a trade mark attorney in another EEA member state.

Interestingly, the Establishment Directive, which amongst other things determines who might have a right of audience before the General Court defines “lawyer” as a national of a Member State who is authorised to pursue professional activities under one of the a list of professional titles (such a barristers and solicitors in the UK or Ireland). So continued rights of representation before the General Court would also appear to be dependent upon obtaining (or retaining?) EU nationality.

RG said...

'...there is a widespread confidence amongst the UK IP profession that the UK government and the UKIPO will create a dedicated process by which owners of EUTMs can secure continued protection for their marks in the UK...'

I've a question - what is the basis for this widespread confidence?

Anonymous said...

When one sees the difficulties in dealing with trademarks, what could it be if UK would quickly ratify the UPC to exit the agreement at the end of Brexit.
All those who claim that UK could stay in the UPC, seem to take they wish for reality.

Anonymous said...

There are clear analogies between the UPC and the trademark/design issues raised by Brexit. However, they would seem to be much more manageable.

In contrast to the large number of existing EU trademarks and registered designs the Unitary Patent is not a reality (yet) and anyone who opts for a Unitary Patent will do so in the knowledge of Brexit. Assuming the UPC does come into effect there will need to be some kind of mechanism for dealing with Unitary Patents in existence on B-day. As with trademarks and designs there are a number of possible ways this might be dealt with. Probably the least destructive would be some kind of UK plus model where the Unitary Patent became a combination EU Unitary Patent combined with an inseparable EP(UK). Arguably there is a precedent for this in the combined Swiss/Liechtenstein patent and such a patent is expressly provided for by Article 142 of the EPC. Exactly what will happen, is, however anyone’s guess.

Assuming that the UK crashes out of the UPC without any amendment of the UPC agreement taking place, then the UK (as a non-EU country) would cease to be a “contracting member state” for the purposes of the agreement since the definition of “contracting member state” expressly requires membership of the EU. That would not cause the UPC to cease to exist. Rather UPC decisions would only have effect in remaining contracting states (although, of course the UK could unilaterally legislate to make decisions of the UPC binding if they so wished). UK judges would, however, cease to be qualified as UPC judges as they would no longer possess the qualifications for appointment to judicial offices in a “Contracting Member State”. This in turn would mean that any “English” Local Division would probably be no longer be able to sit as any panel in the “English” Division would need to include two UK nationals as judges which might prove difficult.

As far as representation rights are concerned, UK based EPAs who have IPREG litigation certificates (which is just about all of them) would retain their right to litigate before the UPC – the only requirement for EPAs to have litigation rights before the Court is that they must have “appropriate qualifications” which most UK based EPAs would have under the rules as currently drafted. UK solicitors and barristers, however, would cease to be EU “lawyers” under the Establishment Directive, as they would cease to be EU nationals or lawyers qualified in an EU member state and hence they would lose their rights to litigate before the UPC.

The above of course all assumes that the UK crashes out of the EU and no amendments to the UPC Rules or the UPC Agreement take place. If that indeed is the case then we will almost certainly have far more important things than the future of the UPC to worry about.

Christopher Morcom said...

Thank you, Darren, for a thoughtful piece, which is probably as helpful as could be, given the circumstances.

Might we have a competition to find an alternative for the dreadful 'B-word'?
How about 'LeaveEU' for a start. Equally needed is a new title to replace the over grandiose title 'Great Repeal Bill'. What about something straightforward like "The European Communities Act (Repeal) Bill"? Other ideas welcome!

Subscribe to the IPKat's posts by email here

Just pop your email address into the box and click 'Subscribe':