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BREXIT - A Game of Chanceā€¦

2016-07-21

On the 23rd June 2016 the UK voted to leave the European Union (which comprises 28 Member States) by a small majority – 51.9% voted to Leave and 49.1% voted to Remain. It’s fair to say the result was a surprise and with such a small margin of victory, it’s perhaps not surprising that there are now demands for a second referendum and Scotland making assertions that they may be able to veto Brexit. However, it’s unlikely the result will be reversed and so we need to consider the implications of the UK leaving the EU, insofar as it relates to Clients and their pan-European Rights.   Let’s start with what we do know (which shouldn’t take too long!).
 

What do we know?

We do know that the UK will eventually be leaving the EU and that registered and unregistered Community Designs and EU Trade Marks will no longer have affect in the UK. It will therefore be necessary to seek separate UK national protection.

We also know that European Patents will be less affected and will continue to extend to the UK. Likewise, national filings and PCT applications will also see no change. It seems very unlikely, however, that the proposed introduction of the Unitary Patent will now apply to the UK.

So, what don’t we know?

We don’t know when the UK will formally leave the EU; it will likely be within 2 years, but based on similar trade deal negotiations other countries such as Switzerland and Norway have experienced, it could be longer. It’s also unclear whether the UK will be going it alone, or whether we will be part of the European Economic Area (EEA).

Intellectual Property

It’s not known at this stage what procedures will be put in place to ensure extension of EUTMs and Community Design registrations and Community Unregistered Designs into the UK.

The speculation is that, in relation to EU Trade Marks, there will be some form of conversion. In other words, it will be possible to carve-out the UK rights from a EUTM and it will then be assigned a new application number and be treated as a separate UK application/registration.

However, it’s unclear whether the current rules of conversion will apply, whereby any converted EUTM into the UK retains the original filing date but undergoes examination at a national level, or whether a new system is brought in where the converted mark simply proceeds straight to registration, without examination.  

If the former, this means that a different set of criteria will be used to examine the converted mark – there are many similarities between the UK and EUTM system but one difference is that, in the UK, applications are examined  based on the citation of third party marks. Whilst an examiner cannot refuse a UK application based on similar/identical third party marks already on the register, the owners of any UK cited marks will be notified of the new filing giving them an opportunity to oppose. This would create further delays and uncertainty and may lead to increased oppositions.  

It’s also possible that we will be able to carve-out a UK mark from the EUTM, but it receives the filing date it was carved-out (not the original filing date of the EUTM) and there will be some transitional provisions in place to deal with any intervening rights.  However, we suspect this will be a less likely scenario.

There is also a big question mark over Crown dependency countries like Gibraltar, Jersey and Guernsey. A EUTM currently extends to Gibraltar but this is unlikely to be the case once the UK has left the EU. Similarly, the EUIPO and UKIPO agree that a EUTM does not extend to Guernsey, however, there has always been some contradiction in relation to Jersey.

Turning to Community Designs/Unregistered Community Designs, it is also anticipated that there will be some form of conversion of these rights into the UK.

However, unlike trade mark rights, there is no formal conversion process already in existence to compare it with – we suspect there will therefore be a straightforward conversion to registration without any re-examination process. The main reason for this being that, unlike trade marks, there is a one year grace period from disclosure of the design to obtain protection in the UK and EU. It would be impractical to examine a newly converted Community Design at a national UK level as it would unlikely meet any novelty requirements.

The same also applies to International design registrations secured under the Hague Design system; it is likely provisions will need to be put in place allowing for extension into the UK.

European Patents will be less affected and will continue to extend to the UK.  Likewise, national filings and PCT applications will also see no change. It seems unlikely, however, that the proposed introduction of the Unitary Patent will now apply to the UK.

Exhaustion of Rights

The Exhaustion of Rights doctrine is captured under Article 7(1) of the Trade Mark Directive 2008/95, which states that 'a trade mark shall not entitle the proprietor to prohibit its use in relation to goods, which have been put on the market in the Community under that trade mark by the proprietor or with his consent.'  - this principle will take on a new lease of life when the UK leaves. At present, there is nothing stopping you purchasing genuine branded product in one EU Member State and then selling in another EU Member State – the owner of the rights in the product bearing the trade mark are said to have been “exhausted” once it was put on the market with their consent, albeit there are some exceptions.

When the UK leaves the EU, and assuming they do not join the EEA, then UK Business will no longer be able to undertake parallel importing – products purchased in the EU then sold or exported into the UK may amount to design and/or trade mark infringement.

Dispute Resolution

This issue of cross border litigation, co-existence Agreements and Licenses (to name just a few) will all be subject to scrutiny over the coming years.

In theory, the UK Courts will not be able to grant EU-wide injunctions nor would EU Court injunctions extend to the UK. Co-existence Agreements and/or Licenses that extended to the “European Union” or “the European Union now and in the future consecrated” will need revisiting to see whether letters of addendum are required to clarify the intention of the parties.

Also, will the UK Courts uphold jurisdictional clauses? Will Agreements that relate to EUTMs that stipulate the Court of England and Wales have sole jurisdiction still be enforceable?

Our Recommendations

It will be quite some time before we really know the true position following the UK’s vote to leave the European Union and so this does create significant uncertainty. We have heard a number of commentators say “no need to panic, business as usual” and that we should wait to see what happens over the coming year. The problem with this is that some marks can take a year to register, and longer if oppositions are encountered. It’s not something we can ignore, we need to make preparations now, although we still recommend a balanced approach.

EUTMs and Community Designs still remain the best way to protect your rights across Europe. However, the approach to the UK needs to change as taking a “wait and see” approach carries significant risks.

Our Team will be following-up directly to discuss the specific ramifications in relation to your own Portfolio. In the meantime, if you have any additional questions, please don’t hesitate to get in touch with your usual contact at Lane IP.

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