Brexit: the immense impact on trademark and design law

The first dust has settled following the UK’s vote in favour of leaving the EU and one thing has become clear despite concerns about uncertainty: the impact on EU trademark and design law will be immense. It goes far beyond what is predicted for many other areas of law. Even more important, owners of trademarks and designs may have to reconsider their current strategies before Brexit has been executed. This is particularly true for filing strategies that mainly rely on European Union trademarks (EUTMs) and registered Community designs (RCDs).

The response to Brexit in the trademark community has been diverse. We have seen calls for calm as well as advice to take immediate action and initiate national filings in the UK. It is true that the outcome of the referendum has no immediate consequences. The vote itself does not affect the legal position of the UK as an EU member state. For the time being, EUTMs and RCDs will retain their scope of protection in the UK.

There is no doubt that IP will be one of the topics covered during the exit negotiations. As for any other issue, much will depend on the outcome of those negotiations. But in contrast to several other legal disciplines, it is certain that the result of the discussions will not alter one consequence: the scope of protection of EUTMs and RCDs will no longer cover the territory of the UK after the exit. Both these IP rights must have unitary effect and cover the territory of the EU.

This has led to a significant territorial expansion in the last 20 years. Since the introduction of the EU trade mark system (formerly Community trademark system) the geographic coverage of EUTMs has grown to the impressive number of 28 member states. Not many people will have considered the EU may take another direction in terms of size.

Scope of protection

Since a majority of the people who voted chose in favour of Brexit, the EU will shrink and with it the geographic coverage of EUTMs and RCDs. This will apply irrespective of the status of these IP rights. To many people’s surprise, EUTMs and RCDs that have been registered for a long time will be affected, as well as pending and entirely new applications.

The UK will not be the first country to leave the EU or its predecessors but it will be the first country to leave after the introduction of EUTMs and RCDs. A lot has been said and written about what may happen once EUTMs and RCDs lose their scope of protection for the UK. Although it’s not absolutely certain, it is very likely the UK will permit owners of such EU rights to convert or rather re-file their EUTMs and RCDs. Such national UK registrations may also retain the original filing date of the EU rights.

Beyond these assumptions, a lot appears unclear at the moment. Will the UK Intellectual Property Office (IPO) simply accept the list of goods and services of the prior EUTM? Which fee structure will be applied for the re-filing procedures of trademarks and designs? What is going to be the timing for the re-filing, and may any of those national trademarks be subject to (another) opposition period? The IPO may also ask for proof of use or request the applicant to declare a bona fide intention to use the mark, as currently required when applying for a UK trademark.

What next?

Given all these questions and uncertainties it comes as no surprise that owners of EU IP rights wonder if they may have to take action before Brexit. Those who make use of national filing systems in EU member states in parallel to the EU systems can relax. Those who have no parallel registrations in place and regard the UK market as relevant for their activities are wise to think about their future filing strategies.

To start with the good news for anybody who relied on EUTMs and RCDs: those protection mechanisms will remain the most cost-effective way to obtain trademark and design protection across the EU. Even when the UK has left, the geographic scope of protection will cover the impressive number of 27 countries. Further to this, the UK continues to be protected by EUTMs and RCDs for now and some kind of “conversion” mechanism is almost certain to be implemented.

Some concern has been raised about whether EUTMs become subject to non-use cancellations once Brexit has been executed. If yes, this brings in another argument to take timely action. A natural response will be to consider fresh registrations not only in the UK but—depending on the portfolio and previous use—also for the EU. Although a change is currently being discussed, use of an EUTM (only) in the UK may suffice for meeting the use requirement for now.

Will those EUTMs be vulnerable to non-use cancellations once the UK is no longer part of the EU? The answer to this question is ‘yes’ but the effect will not occur immediately. Non-use under EU trademark law is defined by a lack of genuine use of the trademark in the last five years within the EU. The understanding of the terms ‘EU’ or ‘European Union’ as laid down in the law is flexible. As the UK is a member of the EU until Brexit has been executed, any genuine use in the UK until that date should be considered. This evaluation will of course change as time passes and this is something trademark owners may have to keep in mind for further strategic considerations.

Despite these general considerations, there are circumstances that make new filings appear appropriate. Whenever the UK is of particular interest and no, or insufficient, national UK registrations are in place, it seems advisable to consider the filing of national UK trademark registrations—at least for key trademarks of the portfolio. Those national registrations will avoid having to rely on a conversion mechanism later.

For applications filed with the European Union Intellectual Property Office within the last six months, brand owners may even consider filling the UK application claiming priority from the EUTM application. Such a strategy will also ensure that no protection gap appears and brand enforcement will not suffer, in particular during the transition period. National UK filings based on the prior EU registrations may go through smoothly.

However, given the number of trademarks that will be subject to re-filings it may take some time to obtain a national UK registration. The prior filing of new UK trademarks may lead to additional costs but will ensure a consistent enforcement of the trademark in the UK. If applied in consideration of the importance of the mark, it appears appropriate for brand owners to follow that path.

Design rights

The situation is slightly different for RCDs. Other than trademarks, RCDs as well as national UK design registrations require the design to be novel. As soon as the design has been disclosed for more than a year it will be vulnerable to cancellation when challenged. This will make it impossible in most cases to initiate solid registrations before the UK’s exit.

Registrants will have to rely on the implementation of equivalent UK laws that clarify the novelty requirement under the circumstances. For any new designs or designs that are still within the 12-month-grace period, a parallel UK application is still an option but will usually only make sense under the circumstances outlined for EUTMs.

Once the UK has left the EU brand owners will have no other choice than to change their present filing strategies if they require protection in the UK. Trademarks may be secured either by international registrations or national UK filings.

The same flexibility does not yet apply for designs. Designs can be secured by national UK filings. The UK is not currently a member of the Hague System. This may change, but it leaves registrants with national filings as the only option to pursue design protection in the UK.

Ulrike Grübler is a partner at  DLA Piper in Hamburg. She can be contacted at:  ulrike.gruebler@dlapiper.com