3 December 2018Trademarks

Brexit IP divergence would set bad precedent: INTA taskforce

A failure to agree a system of reciprocal enforcement of court judgments post-Brexit would negatively affect the EU and UK IP systems and set a bad precedent around the globe.

These are the thoughts of the co-leader of the International Trademark Association’s (INTA) Brexit taskforce, Michael Hawkins, who spoke to WIPR as the UK and the EU edge closer towards a Brexit agreement.

With less than a fortnight to go before the UK House of Commons is expected to vote on the draft deal, which was announced earlier in November, Hawkins, who also serves as a partner at Spain-based Noerr Alicante IP, outlined the taskforce’s concerns.

On November 14, UK Prime Minister Theresa May announced that a draft Brexit deal had been agreed between the European Commission and UK negotiators.

The 585-page draft Withdrawal Agreement contains information on the future of existing IP rights in the UK and confirmed that a transition period will be implemented after the UK leaves the EU on March 29, 2019, until the end of December 2020, during which the UK will be treated as if it were a member state.

Under the draft agreement, UK courts must consistently interpret case law handed down by the Court of Justice of the European Union (CJEU) until the end of the transition period. The courts must also “pay due regard” to CJEU case law following that end date.

“We have some questions about ongoing cases and the recognition of judgments after the transition period. It kicks the can down the road a little—we have certainty about the next three years or so, but what comes after?” Hawkins asked.

Hurdles remain ahead of the UK’s vote and members of parliament will debate the Brexit deal for five days up to the main vote on December 11, with speaker John Bercow permitted to select up to six proposed amendments to the government motion.

However, a ‘no-deal’ Brexit—under which the UK leaves the EU and the single market entirely with no transition period—remains on the cards.

INTA is concerned that if the Prime Minister’s deal is not ratified, the result will be a very difficult situation in which there is no agreement on both sides on the recognition of pending judgments.

“While the UK has indicated that it will apply the same rules, we don’t have the same guarantee from the EU side,” cautioned Hawkins.

A complete break in the relationship between the UK and the EU could have severe implications for both IP systems, particularly from an enforcement perspective.

Hawkins added: “The UK and EU are very strong enforcement jurisdictions. If a rupture were to occur, it would set a very bad precedent around the world. INTA is keen to encourage as much harmonisation as possible.”

Turning to the draft agreement, INTA is pleased an agreement has been reached, but has expressed some concerns, particularly on issues which may arise after the transition period.

“The agreement reduces the risk of a disorderly Brexit and, assuming it is ratified, the agreement will ensure rights are protected without a significant administrative burden,” Hawkins said.

From a practical point of view, INTA is concerned about the potential lack of resources post-Brexit to deal with the important issue of counterfeits.

Currently, there is ongoing cooperation and collaboration between customs agents, but this may change. Customs and UK border force resources for dealing with counterfeits may be diverted to other areas such as immigration, according to Hawkins.

The association is also concerned that the UK may weaken its position on counterfeit goods in transit.

“Any changes will give rise to costs for brand owners and we want costs to be kept to a minimum.

“The agreement seems to be a very good basis for the duration of the transition period, but what happens afterwards is anyone’s guess,” he said.

Additionally, the UK government has made it clear that, post-transition, it will follow a hybrid UK/European Economic Area exhaustion of rights system.

“While we would have no issue if it were to end up this way, we question whether it is legally possible. INTA is keen for the UK to avoid adopting an international exhaustion of rights regime [under which, if a good is sold anywhere in the world and resold in the UK, the trademark owner would have no way to stop that happening],” added Hawkins.

For INTA, which has been “very much in full speed lobbying since the referendum result”, Brexit is “a volatile situation”, which he encourages brand owners to monitor very closely.

Hawkins said brand owners need to consider the possibility that the UK will leave the EU next March without a transition period.

“They need to be prepared for the consequences,” said Hawkins. “In the event of ‘no deal’, the consequences from the UK side are relatively clear, but from the EU side they are not quite as clear. Prepare, audit, and make sure you are following developments,” he concluded.

Brand owners can access INTA’s resource page here.

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