What happens with existing EU trademarks and Community designs or applications for the same if the UK crashes out of the EU in March 2019 without an exit deal or transition period? This outcome, which had previously seemed unthinkable, is now a distinct possibility. Both IP attorneys and in house IP managers need to start planning, and assessing strategy for a no-deal Brexit.
Where do things stand right now? The UK statement of 24 September 2018
The tidiest outcome for resolving the protection of EU rights in the UK would have been a bilateral agreement between the UK and the EU – as part of a Brexit deal. However, the negotiations between Brussels and London on a Brexit treaty have floundered due to difficulties in resolving the Irish border issue. While there has been little disagreement over IP, there is a distinct possibility that the protection of EU trademarks and Community designs in the UK, as well as the upcoming pan-European Unified Patent/Unified Patent Court might end up as collateral damage to the failed negotiations. This means that a bilateral solution is becoming increasingly unlikely.
However, even in the absence of a deal, the UK government can unilaterally decide to give protection to EU trademarks and Community designs after Brexit. Indeed, the UK government has issued a statement on 24 September 2018 on what will happen to EU trademarks and designs in the event of a no deal Brexit.
The statement looks pretty good, setting forth a regime for protecting both existing EU design/trademark registrations and applications that are still at the prosecution stage. The UK assures rights holders that in the event of a no deal Brexit, it will give holders of existing EU registrations protection with corresponding national UK marks/designs, and the possibility of filing for UK design/trademark protection for EU design/trademark applications, so that they will enjoy the original priority date of the EU application.
- In other words, the system for EU registrations will be opt-out (you will receive a UK registration unless you opt-out) and the system for EU applications will be opt-in. The holder of EU trademark/design applications will have to actively request the protection of its rights in the UK during a nine month transition period starting from the date of Brexit (29 March 2019).
So… that’s all settled then?
Not really. The statement is short and rather vague, and leaves open many details, most crucially the question of costs – will the holders of EU registrations/applications have to bear the costs of failing to opt-out (with respect to registrations) or opt-in (with respect to applications), and if so, how high will these costs be set?
Furthermore, this statement should be taken with a grain of salt. If the climate of negotiations between the UK and EU gets even worse and the UK crashes out on bad terms, then this amicable and reasonable position adopted in the UK in its 24 September statement might be abandoned.
Furthermore, the UK might be expecting something from the EU in return – what happens if they do not get it? For one, the UK and UK attorneys associations have consistently requested that UK attorneys would also in the future have the right to file for EU rights and to represent clients before the EUIPO. This, to my mind, seems like “having your cake and eating it too” – i.e. walking away from the EU system while still remaining part of it. If the UK leaves the EU and the Single Market and refuses to recognise the jurisdiction of the EU Court of Justice, then it seems impossible that UK attorneys would continue to function as part of the EU trademark and Community design system, which are integral parts of the Single Market, and entirely built upon EU Regulations and the jurisprudence of the Court of Justice.
- That said, if no unilateral or bilateral system is set up for continuing protection of EU rights in the UK after Brexit, trademark holders will probably be safe – they can, after all, apply for national protection in the UK even without priority from their existing EU application/registration.
- Design holders will face more problems, as designs have a requirement of novelty and individuality. After the priority period has ended, the design cannot be protected in new jurisdictions, as the applicant’s own EU design will be an obstacle to their later UK application. This means that design holders probably will not be able to secure protection for any existing registration that is over a year old in the UK, unless some bilateral or unilateral system is set up to allow for such protection.
What should EU rights holders be doing right now? Strategies for mitigating Brexit risk
Much remains uncertain when it comes to Brexit and the protection of EU rights in the UK after Brexit, but one thing is clear: EU rights holders need to be active. They cannot simply sit and wait and trust that EU rights will automatically be protected in the UK after Brexit. Whatever happens, securing continued protection in the UK may require active measures, as otherwise the rights holder risks missing any transition deadlines that the UK might set for continued protection.
There is also the question of timing – while the UK might set up transitional arrangements for continued protection of EU rights in the UK, the transition might lead to delays. If the UK really is going to offer protection for the hundreds of thousands of EU trademarks/designs and applications, then this might lead to delays in securing rights in the UK. The holders of time sensitive trademarks/design registrations or applicants might want to apply for protection even before the transitional period, so they are able to “jump the queue” before the UK office becomes swamped with requests from other rights holders.
Given the above, EU rights holders should already at this point start to form their strategy for continued protection of their rights in the UK after Brexit. The best strategy depends on how much risk the rights holder is willing to bear as opposed to the costs incurred:
Lowest risk, highest cost:
New applications: applying for parallel protection in the EU and UK before Brexit (designs and trademarks)
Existing applications/registrations: applying for parallel protection in the EU and UK before Brexit (trademarks – not possible for designs if priority period has ended)
Balanced risk and cost:
New applications: applying for parallel protection in the EU and UK before Brexit for most important rights, relying on transition arrangement for less important applications (designs and trademarks)
Existing applications/registrations: wait and see with Brexit, use transition period to secure protection in the EU and UK as needed (designs and trademarks)
Highest risk:
New applications: applying only for EU protection (designs and trademarks)
Existing applications/registrations: remain passive, seek UK protection if and when it becomes relevant (and risk missing out on the transition period)