Brexit: A Complicated Picture

The United Kingdom’s withdrawal from the European Union has implications for trademark holders worldwide. Peter Scott reports on the latest developments.

Brexit has dominated the political landscapes in the United Kingdom and the European Union since June 2016, when the UK voted to leave the European Union. If and when the UK does leave the EU, there will be a shakeup of the political status quo and an impact on the legal regime in the UK and the EU, with trademarks being one area subject to change.

The UK intends for the European Union (Withdrawal) Act 2018 to come into force on the date of exit, which will repeal the European Communities Act 1972. UK Parliament have also had the power to create secondary pieces of legislation, called statutory instruments (SIs), to translate the current EU legislation into UK law and address deficiencies.

The current position as at the date of publication is that the European Council (27 EU Heads of states and governments) has agreed to extend the Article 50 withdrawal period until October 31, 2019 at the latest, but the UK may leave earlier if the UK Parliament approves the current version of the Withdrawal Agreement before then.

There are three potential outcomes of the process still available:

• A so-called “deal” Brexit, with the Withdrawal Agreement having been approved by the UK Parliament before  October 31 (if no request for extension is made or if one is made but not granted), leading to a transitional (implementation) period until the end of 2020.
• A so-called “no-deal Brexit” in which there would be no deal agreed between the two parties and no transition period, and in which EU primary and secondary legislation would cease to apply in the UK from the date of exit (currently October 31 by automatic operation of law).
• A revocation of Article 50 leading to the UK remaining a member of the EU on its current terms. The Court of Justice of the European Union (CJEU) confirmed in December 2018 that the UK can unilaterally revoke Article 50 at any time before it leaves the EU.

As David Stone, Partner at Allen & Overy (United Kingdom), notes, the UK  government’s approach has always been to try to provide for “business as usual” the day after Brexit.

“SIs will amend the main pieces of UK legislation (e.g., the UK Trade Marks Act 1994) to ensure that the legislation works correctly outside of the EU system on the day after Brexit,” he adds.

“We understand that businesses want certainty at this time." Simon Haikney

If and when the UK leaves the EU without a deal or after the agreed transitional period, all previous rulings by the CJEU  will carry the same precedential weight as UK Supreme Court rulings. Parties will therefore need to take cases all the way to the Supreme Court in order to overturn their reasoning, “which currently doesn’t happen very often in trademark and design cases,” says Mr. Stone.

But British courts will not need to follow CJEU decisions handed down after exit, although they can choose to if they wish. Mr. Stone notes that UK courts already take note of decisions of other foreign courts (e.g., those in the United States and Australia) without their having any binding effect; CJEU rulings will presumably be treated in a similar way.

“I’m sure the UK courts will continue to be aware of how EU law is developing but they will be able to choose whether UK law should follow,” he adds.

“There are many areas of IP law where the UK approach aligns with that of the CJEU, but some other areas, such as functions of a trademark and unfair advantage, where the courts have previously expressed some reluctance to follow the CJEU position.”

The UK Intellectual Property Office (UKIPO) has been preparing for all potential Brexit outcomes. “We understand that businesses want certainty at this time,” says Simon Haikney, Acting Divisional Director, Tribunal, Trade Marks and Designs at the UKIPO. “When the UK voted to leave the European Union in June 2016, the UKIPO undertook to ensure that rights holders would not lose the protection afforded to them in the UK by any EU registered right, even if we were to leave the EU without a deal.”

To that end, he explains that the Withdrawal Agreement contains “important transitional provisions for intellectual property.” In addition, the UK government set out a framework for the UK’s future relationship with the EU through a White Paper published in July 2018 and the EU-UK joint Political Declaration on the future relationship, which forms part of the agreement that has been negotiated.

“With respect to intellectual property, the Political Declaration sets out the UK and EU’s intention to establish a mechanism for cooperation and exchange of information on intellectual property issues of mutual interest, such as respective approaches and processes regarding trademarks,” he explains.

To prepare for a potential “no-deal” scenario, Mr. Haikney says that “the government has been implementing a significant program of work to ensure that the UK is prepared to leave the EU.”

Specifically regarding trademarks, this has resulted in the introduction of The Trade Marks (Amendment etc.) (EU Exit) Regulations 2019.

“These regulations will ensure that the property rights in all existing registered EU trademarks will continue to be protected and enforceable in the UK by providing a comparable trademark registered in the UK,” Mr. Haikney explains. 

These new UK equivalent rights will come into force at the point of the UK’s exit from the EU. “The new UK right will be provided with minimal administrative burden and at no cost to the original holder [and] the trademark will then be treated as if it had been applied for and registered under UK law, he says.

Chris McLeod, Partner at Elkington & Fife LLP (United Kingdom), says the UKIPO has “done its best to allay concerns,” and that the main challenges for rights owners post-Brexit would be “increased costs due to the need for separate registration and enforcement” as well as the “loss of single market benefits.”

Many companies have been mitigating the potential risks of Brexit by filing trademark and design applications both at the EU Intellectual Property Office and in the UK already, according to Mr. McLeod. “I would say that this is not strictly necessary,” he suggests, “although the relatively low additional costs are easy to justify in the context of removing uncertainty.”