Brexit focus UK: The tangled web of trademarks

For the UK to officially leave the EU, it has to notify the European Council of its intention to do so and trigger article 50.2 of the Lisbon Treaty, which provides for a maximum of two years for the withdrawal negotiations.

At the Conservative Party conference in October 2016, Prime Minister Theresa May stated that “Brexit means Brexit”. This is a statement of pure party politics. Nobody who voted in the EU referendum knew what they were ultimately voting for—it was guesswork.

It may be open for the UK to be a European Economic Area (EEA) and European Free Trade Association member state (like Norway), with access to the single market and facing no tariffs. At the other end of the spectrum there might be no new negotiated agreements with the EU and instead the UK could comply with World Trade Organization rules, representing the hardest of the ‘hard’ Brexit outcomes.

May also stated that article 50 will be triggered in the first quarter of 2017. She cannot be sure that this will be the case. At the time of writing my law firm is in court acting for one of the parties challenging the government’s belief that it has the power under royal prerogative or otherwise to give notification under article 50 without a prior decision of parliament. Brexit might not mean Brexit if parliament has the right to vote.

All rights affected

A vast amount of intellectual property legislation in the UK is derived from EU law and the ultimate impact of Brexit will not be known until we understand where the UK ends up in its relationship with EU countries once the negotiations are complete. All UK IP rights will be affected in some way, including trademarks.

Brexit will have no impact on national UK trademarks. European Union trademark (EUTM) rights will continue to exist and UK entities will continue to be entitled to own EUTMs.

Unless there is an agreement to extend EUTMs to the UK (“EU plus”), the difference will be that EUTMs will cover 27 countries instead of 28. It could be that EUTMs would in effect shrink in scope, leaving owners with no legal protection within the UK unless they also own UK trademark rights—either via UK trademark registrations or based on use in Britain.

However, there should be a mechanism by which EUTMs can be separated or extended to ensure coverage in the UK continues. The owners of EUTMs which are predominantly used in the UK do need to be aware that those rights could become vulnerable to challenge for non-use in the EU after five years because any use of the trademark in the UK, at least after Brexit, might no longer be relevant.

For the moment, owners of EUTMs can continue to enforce those rights in the UK and use the local rights to prevent the registration of an EUTM (because of its unitary character). However, post-Brexit, this may no longer be possible.

"European Union trademark rights will continue to exist and UK entities will continue to be entitled to own EUTMs."

Those currently planning their filing strategy will need to give careful consideration to any conversion process for the UK and the filing of separate UK trademarks.

Currently, a brand owner cannot object to further dealing with trademarked goods it has placed on the market within the EEA (unless there are legitimate reasons to do so), as the trademark rights in those goods will have been exhausted. A brand owner can object to imports into the EEA from outside this area. So if in the future the UK is treated as being outside the EEA, EUTM rights could be used to prevent exports from the UK into the EU because exhaustion rules would no longer apply to goods placed on the market in the UK.

However, if the UK government applied the principle of international exhaustion of trademark rights, UK traders might find that not only is it more difficult to sell goods in the EU, but they might not be able to prevent goods they have sold outside the UK being sold back into the territory by a reseller if there is a margin to be made on the sales in the UK.

Simon Miles is head of the IP team at Edwin Coe. He is a solicitor and UK and European trademark attorney. He advises on all aspects of IP. On the contentious side he has acted on a number of well-known IP cases. He can be contacted at: simon.miles@edwincoe.com