“Over and out” – Brexit update on trade marks and designs after the end of the transition period

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The transition period expired December 31, 2020 and UK now finally left the EU. Even though the negotiating parties came to a free trade and cooperation agreement on December 24, 2020, the rules from the Withdrawal Agreement remain in place and will regulate the covered IP rights going forward. We provide a refresher and update as to what this means for trade marks and designs.

Even though the EU Commission and the UK government agreed on the outlines of a free trade and cooperation agreement on December 24, 2020 which has been confirmed by EU and UK, respectively, in the meantime, this does not change the fact that, as of January 1, 2021, EU rights such as, in particular, EU trade marks and Community designs have lost their effect in the UK. The same applies to their counterparts under WIPO administration, i.e. International Registrations under the Madrid Protocol and the Hague Agreement. We have already provided detailed information about this on other occasion.

Here now, very briefly, are the main and updated implications since January 1, 2021, as they follow from the Withdrawal Agreement.

Cloning of registered EU rights

Registered EU trade marks and Community designs will be copied – cloned – completely, fully automatically and free of charge into the national register of the United Kingdom. In this respect, nothing further is required. The same applies to collective marks and certification marks. In view of the large number of IP rights, the process will take some time. We will keep the owners of IP rights represented by us apprised of any development and details.

Right of refiling for pending applications

Until September 30, 2021, it will be possible to file a fee-based national application for a pending IP right as a trade mark or design, and in particular to claim the priority of the EU application. The effect of this is that no third party could have acquired an IP right with better priority in the UK since the EU application was filed. We will work out a suitable IP strategy with the owners of IP rights represented by us.

International registrations of trade marks and designs

If international registrations designate the EU, the process described above will generally apply the same way. The IP rights are cloned into the United Kingdom or establish a refiling right in the national register. In any case, this means that these rights will initially leave the international regime under the administration of WIPO and become purely national rights. We will work with the owners of IP rights represented by us to find solutions to any related problems.

Unregistered IP rights

Unregistered Community designs will continue as “Continuing Unregistered Designs” for their remaining term of protection. In addition, a “Supplementary Unregistered Design” will be established for first publications in the United Kingdom, which will only be valid there. Unregistered trade mark rights are generally not recognized under EU law. However, the United Kingdom, like some other national legal systems of the EU member states, offers a fallback option, the so-called “passing off”, which, however, regularly depends on use in the United Kingdom (“goodwill”).

Continued identification of a clone

IP rights derived from EU rights will remain permanently identifiable by their registration numbers. They will continue in the UK with the original registration numbers and add national prefixes.

Ongoing proceedings and contracts

Pending proceedings in the UK based on an EU right will continue with the clone. The reverse does not apply: National UK rights lose their protection against EU rights. Proceedings are concluded automatically.

Existing treaties concerning the EU may have to be interpreted as to whether they continue to apply to the UK. We advise on how to avoid pitfalls and how to share any financial burdens between the parties appropriately.

Genuine use and reputation

Use of an EU trade mark in the UK will no longer maintain an EU right as of January 1, 2021. If there is no genuine use in the EU, the EU trademark will be subject to cancellation at the end of 2025. The reputation of an EU trade mark in the UK will already be definitively disregarded in the EU as of January 1, 2021.

Renewal and representation in the register

National clones are subject to the same expiration dates as EU rights. They can be renewed, and in some cases must be renewed in the short term. This also applies to those EU rights for which the fees have already been paid before the expiration of protection, but the expiration of protection is not until 2021. The fees must be paid again for the clones. The moderate costs for renewal have already been fixed by the UK Office. We will inform the owners of the IP rights we represent about deadlines and payment dates.

We will continue to represent the clones in the UK Register. This also applies to refilings.

Opt-out and strategic advice

IPR owners are not obliged to make use of the above options. Cloned IP rights can be abandoned by simple declaration (“opt-out”) free of official fees. The deadline for filing a subsequent application can remain unused. However, it is useful not only to consider each individual case but to develop an overall strategy for the UK. This may include adjusting the filing strategy overall. We advise with the aim of optimizing the administration and costs for the owners of IP rights.

Impact of the UK leaving the EU – the upcoming end of the transition period on 31 December 2020

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On 1 February 2020, the United Kingdom left the European Union. The Withdrawal Agreement provides for a transition period ending on 31 December 2020. On that date, the Brexit will have an immediate impact on EU trade marks or International Registrations designating the EU.

In brief, first of all:

  • With regard to already registered EU trade marks or International Registrations designating the EU where the protection has already been granted in the EU, an equivalent UK trade mark will automatically be created. No further action is required at this stage unless this UK trade mark right has to be waived.
  • For EU trade mark applications and/or International Registrations designating the EU which are still pending on 31 December 2020, it is possible to apply for an equivalent UK trade mark, provided that the application is filed by 30 September 2021.

1. EU trade marks which are registered on or before 31 December 2020 or International Registrations designating the EU which have been granted protection on or before 31 December 2020

All EU trade marks already registered on or before 31 December 2020 or all International Registrations for which protection has been granted in the EU on or before that date will automatically receive an equivalent UK trade mark. The United Kingdom Intellectual Property Office (UKIPO) will automatically generate this equivalent UK trade mark on the basis of the database of the European Union Intellectual Property Office (EUIPO) or the World Intellectual Property Organization (WIPO) without the need for the trade mark owner’s involvement.

When the equivalent UK trade mark is due for renewal, the owner can decide whether to keep the equivalent UK trade mark by paying the renewal fees or whether to allow the trade mark to lapse due to non-payment of the renewal fees If the trademark owner is already sure that the UK trade mark will not be needed, an opting-out can be declared at any time.

An equivalent UK trade mark is automatically created for either an EU trade mark which is registered on or before the end date or an International Registration with protection in the EU where the protection has been granted in the EU on or before the end date; therefore no further action is required.

2. EU trade marks applications and/or International Registrations designating the EU which are still pending at the end of the transition period

The situation is different for EU trade marks that have not yet been registered on 31 December 2020and for pending International Registrations designating the EU. Equivalent UK trade marks are not automatically generated on the basis of these pending rights; instead, trade mark owners must take action if they wish to obtain trade mark protection in Great Britain as well. Within a period of nine months, i.e. until 30 September 2021, trade mark owners can file an application in Great Britain at the UKIPO by using the basic data of the corresponding EU application/EU designation, i.e. in particular the filing date. For these applications, additional fees will be charged and a normal application procedure for a UK trade mark will be initiated.

No equivalent UK trade mark will result from a pending EU trade mark application or International Registration with protection not yet granted in the EU at the end of the transition period. If trade mark protection for Great Britain is sought, one must actively file an application for a UK trade mark on the basis of the data in the EU trade mark application/EU designation by 30 September 2021.

3. Special aspects for upcoming renewals

However, there are special aspects in view of the upcoming renewals of EU trade marks or International Registrations with EU protection.

Those trade marks due for renewal before 31 December 2020 and renewed before that date will automatically be renewed for the equivalent UK trade mark.

EU trade marks or International Registrations with EU protection which are due for renewal only from 1 January 2021 onwards will not automatically be renewed for the equivalent UK trade mark, even if renewal of the corresponding EU right has already been arranged before that date.

There is a further aspect to be considered regarding International Registrations where the EU was designated subsequently. In such cases, the term of protection of equivalent UK trade marks is not, as one would expect, based on the term of protection of the International Registration itself, it is based solely on the date of the subsequent designation of the EU. The term of protection then ends 10 years after the date of the subsequent designation.

Renewals of EU trade marks or International Registrations with EU protection completed in 2020 will automatically apply to the equivalent UK trade mark. In contrast, EU trade marks or International Registrations with EU protection that are due for renewal in 2021 must be renewed separately for the equivalent UK trade mark.

Brexit is there – no changes yet!

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On January 31, 2020, 11 p.m. GMT, the UK has left the European Union. However, with no changes for businesses and consumers as of now. The Withdrawal Agreement includes a transitional period until December 31, 2020 within which EU laws fully continue to apply in and towards the UK.

It is generally possible to jointly extent this transitional period. EU bodies and the UK will use the transitional period to conclude an agreement to regulate their future relations.

We will continue to keep you updated regarding your rights and options following Brexit. For the time being, we may refer to our previous newsletters and client communications on our homepage, see here.

Post-election Brexit update on trade marks and designs

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1. What is the current situation?

Brexit is approaching but the Agreement remains to be ratified and transformed into UK laws.

On October 28, 2019 another extension has been agreed until January 31, 2020 the latest. Until then, the UK remains full member of the EU with all rights and obligations. There are no immediate changes for right owners at this time.

It was not possible to finalize the political compromise reached on October 17, 2019 between EU and UK towards a final positive vote in UK Parliament. The extension also related to the General Election which was now held in the UK on December 12 2019. On substance, we will thus likely see furhter progress only after the election and assenbmbly of the Parliament probably by early January 2020.

On substance, we will thus likely see further progress only after the election and assembly of the Parliament, probably by January 2020.

2. What are the consequences of Brexit for trade marks and designs?

With Brexit, all European Union trademarks and Community Designs will cease to have effect in the UK. This will likewise apply to the equivalents under International Registrations.

Further background can be found in previous newsletters relating to Brexit.

Mechanisms and comprehensive statutory framework have been set up to reduce negative effects for right owners.

a) European Union Trademarks

All registrations not finally expired will be cloned on the UK register, by automatic data transfer from EUIPO, without examination, free of charge and fully identical to the EU right.

Pending applications will cause a 9 months` period to re-file in the UK register. Such applications will be identical to the EU right but will be examined by the UK Office and cause standard fees.

b) Registered Community Designs

All registrations not finally expired will be cloned. Pending applications cause the same 9 months` period to re-file. Applications with deferred publication will be granted a deferred publication in the UK register for 12 months from re-filing.

Unregistered Community Desings will continue as Continuing Unregistered Design in the UK for the remaining period of protection. There will be an additional Supplementary Unregistered Design but it is limited to the UK in territorial scope.

c) International Registrations

Trademarks and Designs designating the EU will be cloned or cause a right to re-file, both, however, only as a national UK rights. By incurring further costs and accepting another examination process, it is possible to replace this national right and reintegrate it into the International Register by subsequent designation.

3. Is there immediate need for action?

No. The solutions found shall apply with or without Agreement. But: Clones and Re-filings can double the portfolio when the EU level of protection shall be maintained.

It is thus sensible to review the portfolio soon and decide at an early stage which parts of the portfolio are useful or required for the UK. We will send a full report about relevant IP rights as represented by us.

Redundant rights can be abandoned (opt-out), re-filings can be provisionally instructed (opt-in) and relevant priority and renewal deadlines are addressed separately.

No new local representative will be needed. We will be entitled to represent the clones and re-filings at the UK Register which we currently represent at EU level. It is the goal of the United Kingdom to cause no further disruption to right owners in this regard. We are accepted as address for service and will be able to competently represent interests in a number of proceedings.

4. How about further information?

IP-related contracts, exhaustion and channels of distribution, and other less pressing issues will be subject of further newsletters.

Brexit and Data Protection Law – if the UK becomes a third country without a deal

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In case of an unregulated hard Brexit, the European Data Protection Law would also come down with full force: The United Kingdom would become, from one day to the next, a “normal” third country and would also be treated as such by the EU Data Protection Law. The transfer of personal data from the EU to the United Kingdom would only be legitimate if and as long as specific conditions are met.

The EU General Data Protection Regulation (GDPR) establishes a uniform level of data protection throughout the European Union which allows free data exchange within the EU: Since the same Data Protection Law (in principle) equally applies in all EU Member States, personal data may be transferred within the Union across the internal frontiers without any special requirements or conditions, as they are equally well protected in all Member States via the GDPR.

Data transfer to third Countries only under special conditions

As soon as the United Kingdom leaves the European Union, it will become a third country from one day to the next. Under the GDPR, personal data may be transferred to a third country only if specific conditions are met, as described below.

If the Brexit is unregulated, i.e. without any special agreement between the Union and the Kingdom, the aforesaid also applies to the UK – immediately and directly, as of 29 March 2019 at 00:00 CET, without any grace period, as provided for in Art. 71 of the Draft Agreement of 14 November 2018 which was rejected by the House of Commons on 15 January 2019: It was planned therein that the GDPR should continue to apply to the UK until the end of 2020. For the time thereafter, a national UK Data Protection Law was to be established to provide essentially the same level of data protection in the UK as within the European Union.

What does that mean for companies established in the EU?

In terms of data protection, an unregulated Brexit particularly affects the “remainers” in the EU, namely, the EU-based companies that wish to exchange data with UK-based companies. The EU companies are then so-called “data exporters”, and they therefore have to set the stage for data transfer that is compliant with EU data protection law. If the requirements are not met, data must not be transferred to the third country. If data are transferred nevertheless, the EU-based companies are committing a data protection violation. It is therefore in the direct interest of EU-based companies to comply with the GDPR requirements for transfers to third countries.

The goal of special provisions of the GDPR for exporting data to third countries is the best possible protection of personal data and the persons to whom they relate in the third country. Data transfer to a third country is permitted only if

  • the European Commission has decided, by means of an adequacy decision, that the third country ensures an adequate level of protection,
  • or appropriate safeguards have been provided
  • or the transfer can be justified by one of the derogations set forth in the GDPR.

In detail:

  • Adequacy decision of the Commission

    With regard to some third countries, the European Commission did confirm that an adequate level of data protection does exist in these countries. These include, inter alia, Canada, Japan, Switzerland and Israel., Personal data may be transferred to these countries without establishing additional safeguards.
    With regard to the UK, however, there is no such decision, and it is unlikely that such a decision will be taken in the near future. In a notification of 14 November 2018, the Commission in this regard simply stated:
    “(…) the adoption of an adequacy decision is not part of the Commission’s contingency planning.”

  • Providing “appropriate safeguards

    ”The export of data to third countries may take place if the data exporter provides “appropriate safeguards” to ensure an adequate level of data protection. In particular, this includes the use of the so-called “Model Clauses” which were previously approved by the Commission. These Model Clauses are currently still applicable in principle, in modified form, but are not unchallenged. In fact, they are currently under review in the context of proceedings pending before the European Court of Justice. It cannot be ruled out that these Clauses may suffer the same fate as the Safe Harbour Agreement, which was declared invalid by the ECJ.
    “Appropriate safeguards” also include binding corporate rules (BCR) within groups of undertakings, which, however, must be approved beforehand by the supervisory authorities.

  • Derogations for specific situations

    The GDPR provides a number of “derogations for specific situations” in which a transfer of data to a third country is permitted even without an adequacy decision and without “appropriate safeguards”. This includes, in particular, the case where the data subject has explicitly consented to the proposed transfer after having been informed of the possible risks of such transfers. Personal data, as another example, may also be transferred to a third country if this transfer is necessary for the performance of a contract concluded with the data subject or concluded in his/her interest.
    Whether the data transfer is covered by one of the derogations must always be carefully examined on a case-by-case basis.

It is important to keep in mind that ensuring compliance of the third country transfer alone is not sufficient; in addition, the obligation to provide information must be fulfilled. The data subjects must be given information about the intention to transfer personal data to a third country and also about how the adequate level of data protection will be ensured.

What does that mean for UK-based companies?

The GDPR is European Union Law and applies directly in all EU Member States. One would think that the GDPR therefore does not have any relevance for UK-based companies after the UK’s withdrawal from the EU. But this is not the case: Companies established in third countries are also fully subject to the rules of the GDPR if they offer goods or services to individuals in the Union and in this context process personal data of persons residing there. For example, a British online shop that offers and sells goods to the EU, is subject, without restrictions, to the rules of the EU Data Protection Law. The same applies where the behavior of individuals residing in the European Union is monitored out of the third country (e.g. via web tracking).

For such UK companies, the unregulated Brexit therefore means that they are subject to the strict EU data protection regulations due to their activities in the EU, but (being companies in a third country) no longer benefit from the principle of the free transfer of data.

Do not forget assessment Stage 1

The question whether and under what conditions the transfer of data to a third country is compliant with the GDPR concerns Stage 2 of the assessment of whether the personal data may be transferred from one body to another. Irrespective of whether the recipient of the data is located inside or outside the EU, companies must first assess whether or not the data transfer to a third party is GDPR-compliant at all, which requires applying a specific legal basis.

Conclusion

In particular, EU-based companies that intend to transfer personal data to the United Kingdom must be prepared for an unregulated Brexit. It must always be assessed on which legal basis the transfer of personal data to the UK can take place as of the Brexit reference date, and appropriate measures must be taken to ensure an adequate level of data protection.

Update Brexit and trade marks – Madrid System set aside for International Registrations

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The UK Government has laid to Parliament on 31 January 2019 additional draft regulations for Brexit (The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019). Further to the documents regarding European Union Trade Marks – see our Special Bulletin of 18 January 2019 – the Government now, among others, addresses International Registrations designating the European Union.

The concept stays the same: International Registrations are cloned onto the national register and are treated as UK trade marks. They will be called comparable trade marks (IR). Remember: Cloned EUTM will be called comparable trade marks (EU).

British Government has thus chosen to leave the Madrid System as administered by WIPO. So far, rumors went that EU designations could continue as UK designations within one and the same International Registration; this concept is called „continuation of effect“ and has been seen in history (when Montenegro departed from Serbia-Montenegro). Now it is clear that a strictly national solution is preferred.

As soon as practically possible after Exit Day, „registered“ EU designations will be cloned automatically and free of charge with application date, priority, seniority, and all goods and services onto the national register, just like EUTMs will be cloned. „Registered“ means that the EU designation received the grant according to Art. 189 (2) EUTMR so that there is no (longer a) refusal of protection pending. Opting-out is possible as long as third party interests do not stand opposed. With expiry of the International Registration within six months after Exit Day, the Office will contact right owners by setting a grace period of renewal without surcharge of another six months. Infringement proceedings will continue with the cloned trade mark. A new grace period of non-use will not be granted.

For „pending“ EU designations, there will be a fresh application period of nine months. Exit Day is not relevant here but either the day of international registration at WIPO or the day of subsequent designation, each relating to the EU designation. The clone will run through normal examination at the Office, at standard fees. According to this system cloning will not be permissible if and to the extent the pending EU designation has been refused protection by EUIPO prior to Exit Day, and such refusal is not subsequently lifted.

Brexit and Data Protection Law – if the UK becomes a third country without a deal

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In case of an unregulated hard Brexit, the European Data Protection Law would also come down with full force: The United Kingdom would become, from one day to the next, a “normal” third country and would also be treated as such by the EU Data Protection Law. The transfer of personal data from the EU to the United Kingdom would only be legitimate if and as long as specific conditions are met.

The EU General Data Protection Regulation (GDPR) establishes a uniform level of data protection throughout the European Union which allows free data exchange within the EU: Since the same Data Protection Law (in principle) equally applies in all EU Member States, personal data may be transferred within the Union across the internal frontiers without any special requirements or conditions, as they are equally well protected in all Member States via the GDPR.

Data transfer to third Countries only under special conditions

As soon as the United Kingdom leaves the European Union, it will become a third country from one day to the next. Under the GDPR, personal data may be transferred to a third country only if specific conditions are met, as described below.

If the Brexit is unregulated, i.e. without any special agreement between the Union and the Kingdom, the aforesaid also applies to the UK – immediately and directly, as of 29 March 2019 at 00:00 CET, without any grace period, as provided for in Art. 71 of the Draft Agreement of 14 November 2018 which was rejected by the House of Commons on 15 January 2019: It was planned therein that the GDPR should continue to apply to the UK until the end of 2020. For the time thereafter, a national UK Data Protection Law was to be established to provide essentially the same level of data protection in the UK as within the European Union.

What does that mean for companies established in the EU?

In terms of data protection, an unregulated Brexit particularly affects the “remainers” in the EU, namely, the EU-based companies that wish to exchange data with UK-based companies. The EU companies are then so-called “data exporters”, and they therefore have to set the stage for data transfer that is compliant with EU data protection law. If the requirements are not met, data must not be transferred to the third country. If data are transferred nevertheless, the EU-based companies are committing a data protection violation. It is therefore in the direct interest of EU-based companies to comply with the GDPR requirements for transfers to third countries.

The goal of special provisions of the GDPR for exporting data to third countries is the best possible protection of personal data and the persons to whom they relate in the third country. Data transfer to a third country is permitted only if

  • the European Commission has decided, by means of an adequacy decision, that the third country ensures an adequate level of protection,
  • or appropriate safeguards have been provided
  • or the transfer can be justified by one of the derogations set forth in the GDPR.

In detail:

  • Adequacy decision of the Commission

    With regard to some third countries, the European Commission did confirm that an adequate level of data protection does exist in these countries. These include, inter alia, Canada, Japan, Switzerland and Israel., Personal data may be transferred to these countries without establishing additional safeguards.
    With regard to the UK, however, there is no such decision, and it is unlikely that such a decision will be taken in the near future. In a notification of 14 November 2018, the Commission in this regard simply stated:
    “(…) the adoption of an adequacy decision is not part of the Commission’s contingency planning.”

  • Providing “appropriate safeguards

    ”The export of data to third countries may take place if the data exporter provides “appropriate safeguards” to ensure an adequate level of data protection. In particular, this includes the use of the so-called “Model Clauses” which were previously approved by the Commission. These Model Clauses are currently still applicable in principle, in modified form, but are not unchallenged. In fact, they are currently under review in the context of proceedings pending before the European Court of Justice. It cannot be ruled out that these Clauses may suffer the same fate as the Safe Harbour Agreement, which was declared invalid by the ECJ.
    “Appropriate safeguards” also include binding corporate rules (BCR) within groups of undertakings, which, however, must be approved beforehand by the supervisory authorities.

  • Derogations for specific situations

    The GDPR provides a number of “derogations for specific situations” in which a transfer of data to a third country is permitted even without an adequacy decision and without “appropriate safeguards”. This includes, in particular, the case where the data subject has explicitly consented to the proposed transfer after having been informed of the possible risks of such transfers. Personal data, as another example, may also be transferred to a third country if this transfer is necessary for the performance of a contract concluded with the data subject or concluded in his/her interest.
    Whether the data transfer is covered by one of the derogations must always be carefully examined on a case-by-case basis.

It is important to keep in mind that ensuring compliance of the third country transfer alone is not sufficient; in addition, the obligation to provide information must be fulfilled. The data subjects must be given information about the intention to transfer personal data to a third country and also about how the adequate level of data protection will be ensured.

What does that mean for UK-based companies?

The GDPR is European Union Law and applies directly in all EU Member States. One would think that the GDPR therefore does not have any relevance for UK-based companies after the UK’s withdrawal from the EU. But this is not the case: Companies established in third countries are also fully subject to the rules of the GDPR if they offer goods or services to individuals in the Union and in this context process personal data of persons residing there. For example, a British online shop that offers and sells goods to the EU, is subject, without restrictions, to the rules of the EU Data Protection Law. The same applies where the behavior of individuals residing in the European Union is monitored out of the third country (e.g. via web tracking).

For such UK companies, the unregulated Brexit therefore means that they are subject to the strict EU data protection regulations due to their activities in the EU, but (being companies in a third country) no longer benefit from the principle of the free transfer of data.

Do not forget assessment Stage 1

The question whether and under what conditions the transfer of data to a third country is compliant with the GDPR concerns Stage 2 of the assessment of whether the personal data may be transferred from one body to another. Irrespective of whether the recipient of the data is located inside or outside the EU, companies must first assess whether or not the data transfer to a third party is GDPR-compliant at all, which requires applying a specific legal basis.

Conclusion

In particular, EU-based companies that intend to transfer personal data to the United Kingdom must be prepared for an unregulated Brexit. It must always be assessed on which legal basis the transfer of personal data to the UK can take place as of the Brexit reference date, and appropriate measures must be taken to ensure an adequate level of data protection.

Brexit and trade marks – what’s next?

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The political situation remains exceedingly difficult. However, as we have at hand the UK government’s surprisingly comprehensive and distinct proposals for the future fate of European Union Trademarks following Brexit, we can present these in a special bulletin. With all due caution, these proposals will very likely be final, also in case of a no deal scenario.

In a nutshell: European Union Trademarks will be cloned, and contracts, proceedings, rights and pleas in relation therewith will continue to have effect in the United Kingdom. A piece of legislative art, a bit coarse indeed but at long last, offering desired ideas and answers.

„The Noes have it!“

On 15 January 2019 the draft Withdrawal Agreement failed to succeed in Parliament. General Elections are unlikely an option because PM Theresa May just survived the vote of no confidence on 16 January 2019. At the same time, the EU seems to exclude re-negotiating the deal. In such deadlock situation, it is time to prepare for a no deal scenario and a hard Brexit. This represents standing recommendations from both EU Commission, national governments and relevant NGOs.

What are we up to in circumstances of a hard Brexit?

The UK will leave the Single Market and the Customs Union. The body of current EU law will first be transformed identically into UK law, following the European Union Withdrawal Act 2018 which received Royal Assent on 16 June 2018. Subsequently, it may be adopted to new requirements.

This will not apply for IP rights of pan-European scope. Following Brexit, they will lose effect in the United Kingdom, if and to the extent there is no transformation of whatever nature to inure to the benefit of right owners. This hiatus will hold true for pending proceedings, contracts and questions of genuine use or infringement.

Will trade mark owners be safe?

As things currently stand, we have to distinguish between European Union Trademarks (EUTMs) on the one hand and International Registrations designating the EU on the other. Only EUTMs are covered by the draft Statutory Instrument currently laid in Parliament, the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018.

This instrument comes with detailed and comprehensive provisions, offering answers to questions raised by counsel and owners ever since the Referendum in June 2016.

Following the rules of scrutiny of such secondary legislation under the Withdrawal Act 2018 (Schedule 7 thereto), amendments to the draft are almost impossible so that the provisions made are likely final. The most important specifications are as follows:

How does the regime look like?

Registered EUTMs will be cloned. With exit day, they will receive a UK counterpart, automatically and at no cost, and it will have exactly the same parameters – application date, priority or seniority, goods and services (in the official English version published by EUIPO); it all remains the same in a mere technical delivery process. They will, however, not be called UK marks, the little snappy title will be „comparable trade mark (EU)“ and they will have to enter onto the Register as soon as reasonably practicable after exit day. Hopefully, there will be little delay only.

The same mechanism will apply for Collective Marks and Certification Marks.

Terms and fees for renewal will be those applicable for UK marks, with one important exception: During a period of six months following exit day, UKIPO will, with expiry, send renewal reminders to the owners (not EU representatives) granting permission to renew the trade mark within 6 months upon receipt of such notice.

Genuine use or reputation of the mark in the EU before exit day will remain valid in the UK. After five years of non-use, the cloned trade mark will be subject to cancellation. Periods of use can be partly before and after exit day, with the consequence that the period after exit will require use in the UK. There will be no all new grace period of non-use, though.

Contracts, agreements and licenses will be presumed valid for the cloned right and in the UK, unless expressed will of the parties suggests differently. Securities granted in EUTMs will be valid against the cloned trade mark, too.

Pending court proceedings in the UK on the basis of an EUTM will continue with the cloned right swapped in but cannot any longer justify EU-wide court orders, particularly injunctions. Binding and final judgements of EUTM Courts will remain valid and enforceable in the UK. But, it goes only this way; where UK courts have granted EU-wide orders, these will likely be enforced only upon recognition in the Member State or under the rules of international agreements, absent provision in EU law to the contrary. Also, cases pending at UKIPO, especially oppositions, are not addressed by the present draft!

Right owners without interest in such cloned right may opt-out with the UKIPO at any time, unless the cloned right has been put to use in the UK after exit day, or has been made subject of agreement (including transfer of right) or security after exit day; if so, opting out is not permissible.

EU Trademark applications pending at exit day will be processed as UK trade mark applications only upon request by the owner and will run the ordinary course of examination at UKIPO. The request has to be filed within 9 months following exit day, and the then UK trade mark application attracts the ordinary fees. Only under such circumstances, the application date, priority and seniority date of the EU application will survive.

The concept of exhaustion of rights based on EU trade marks continues to have effect beyond exit day. An exhaustion that occurred before exit day in the EU continues thereafter in the UK. There is further provision that rights remain exhausted in the UK, when the product has been first put on the market in the EU or in the UK after exit day. Similar shall apply to Community designs and essentially to copyrights, see draft of The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018. However, no provision could be made that trade mark rights remain exhausted in the EU, when the product is first put on the market in the UK after exit day. This will remain for the EU legislator to define, or the Brexit parties to jointly agree.

These draft Regulations go well beyond what is included in the Withdrawal Agreement but questions and gaps to fill in remain:

Action required?

The Statutory Instrument does not at all address International Registrations designating the EU. There is express political will to find a comparable solution for this category of right with some 200.000 live trade marks but not more; there is no working paper or draft. Stay tuned! For those with a vivid interest in the UK, some deliberation with trade mark counsel is strongly suggested, to avoid any significant gap following exit day.

Pending cases at EUIPO against EUTMs do not prevent the registration to be cloned or an UK application with the same particulars be filed at UKIPO, resulting in potentially repeated or parallel proceedings at UKIPO, at least doubling the cost.

Currently, for register operations only an address for service within the European Economic Area is required by UKIPO, not a local address or representative. This is not very likely to survive for cloned rights so that time may be short to coordinate future administration of the portfolio.

What is due next?

IP right holders should review and analyze their portfolio to see which IP rights are particularly relevant to their business in the United Kingdom. Particularly relevant IP rights may encompass, for example, those with significant revenue or those expressly licensed for the territory of the United Kingdom. To the extent that such important intellectual property rights are not yet covered by the Regulations and thus a gap in protection may emerge, it may be worthwhile revising the filing strategy going forward, including for the applications that will require re-filing in the UK.

Right owners should also check on those IP rights that represent no relevant interest in the UK. Opting out might thus be prepared to prevent additional redundant administrative burden in the long run. Consider, however, the potential strategic benefits of having this cloned right with your counsel first. On top, opting out is not always permissible and therefore, particular attention should be paid to IP-related contracts and agreements of any kind.
When you are a licensee, make sure that your are on the same page with the licensor about the geographic coverage of the license and the licensed rights.

Update Brexit – Exit trig­gered on March 29, 2017

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The notification by the UK Government of March 29, 2017, delivered to the EU Council, is now setting the stage for the exit negotiations. These have to be concluded between the parties and ratified by the Member States and the British Parliament within a term of two years. The parties will have to consider multi-faceted issues, including IP, as we already reported in our Bulletin of July 1, 2016. Draft negotiating guidelines have been published by the Secretariat of the Council on March 31, 2017.

No breaking news yet

Nothing substantial has changed yet for IP owners but it is worthwhile to note that we seem to be getting a “hard” Brexit, meaning the UK will be withdrawing from the entire EU legal system and its freedoms in general, including the Single Market. We will provide regular updates and guidance from the perspective of a European firm serving many client interests in the UK. Brexit uncertainty is hitting business confidence, albeit not very hard so far: The number of UK trade mark applications increased by about 10 % compared to the years preceding Brexit, as recently reported by UK IPO. Numbers at EUIPO have also increased, however. Also, there has been a slowdown in business investment in the UK which fell by 1 % by the end of 2016 compared with the three months up to the end of September, according to the UK Office for National Statistics. Economy in general and IP owners more specifically apply a “wait and see”-approach which seems reasonable for the time being.

No news is not good news

However, due to political dispute and measures taken by the parties, the starting point for exit negotiations is not promising. Even though all stakeholders seem to agree that IP rights are too important to lose sight of, we do not know how EU Trade Marks, Registered Community Designs and Plant Varieties will be addressed and “converted” into the national UK legal system and what costs the right owners will have to incur. Different approaches are discussed by stakeholders, including

  • entering EU rights into the UK registers automatically by Brexit instrument,
  • entering them upon right owners’ request only, or
  • establishing continuation of effect of EU rights and legal framework in the UK,

to name the most popular. These are models that have been seen in the past and which should not cause many implementation issues. Some augurs predict a “dirty” Brexit without a formal agreement with the EU. This would almost certainly exclude the models 1 and 3 above, and model 2 would be available upon payment of a fee. But there is little evidence so far to suggest that a dirty Brexit is going to happen. The far more relevant practical issues for right owners post-Brexit include

  • Extent of “conversion” – all registered and unregistered EU rights covered?
  • Limitations on free movement of goods with the UK potentially leaving the Common Market entirely?
  • Extended territorial scope of EU licenses and IP rights agreements?
  • Enforcement of EU judgments in the UK with European courts losing authority, and vice versa?
  • Further prosecution of pending cases at EU institutions and UK IPO, with loss of registrations?
  • Transitional periods for IP owners to adapt to new situation post-Brexit?
  • procedural issues considered, e.g. re-examination required, grace period of non-use transferred or renewed, novelty grace periods considered, priorities and seniorities accepted, domicile rules met and professional representation possible?

Patience required – and keeping track of developments

Whatever the outcome may be, right owners are well advised to accept that there will be no quick fix to these complex issues and that the best part of the two years’ term may very well have expired before these issues become clearer. In most cases, a down-to-earth analysis from the more neutral European perspective will do for the time being. Do not make hasty decisions by over-nationalizing your portfolio. However, where there are pending projects that may emphasize the UK, it is sensible to seek advice on how to best navigate the situation and obtain the best possible result for your IP portfolio and IP contracts.

Checklist

  • do not risk a territorial gap in filing and watch services,
  • do not abandon existing trade marks,
  • check existing IP-related contracts,
  • check use situation,
  • check legal basis of pending matters,
  • secure useful domains,
  • verify residence/representation in EU/the UK.

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