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EU referendum: What does a Brexit vote mean for trademark rights?

24-06-2016

Following our update on the possible impact on a business’s patent rights after the UK voted to leave the EU in yesterday's referendum, we look at the implications of 'Brexit' for trademark and design portfolios.

The EU referendum vote was predicted to be close, but 52% of British public ultimately decided to 'Brexit' the EU on 23 June. It's a vote that is likely to have major implications for businesses across the region, but what will it mean for their trademark and design rights?

Will EU TMs continue to cover the UK?
At present, there is no documentation or comment from the UK’s Intellectual Property Office (IPO) on the potential impact on trademarks and designs following the exit vote in the referendum. However, it is reasonable to expect that if the UK does leave the EU, it will no longer be part of the European trademark (EU TM) or registered design (EU Design) systems.

That said, the withdrawal from the EU TM and Design systems will not occur immediately: Article 50 of the Lisbon Treaty stipulates a two-year withdrawal and negotiation period (which can be extended). It is yet to be seen whether the UK would need to legislate for successor rights as part of that withdrawal (i.e. some form of conversion of EU rights into UK law) or if UK proprietors would be required to re-register EU rights at the UK IPO. 

Nonetheless, companies would be advised to review their current filings and management/renewals strategy to ensure their rights continue to be protected at both EU and UK level post-Brexit. We would advise taking the following steps:

  1. Prioritise registrations: Review your current EU TM (and Design) portfolio and prioritise rights for action/protection (e.g. between primary, secondary and tertiary registrations)
  2. Pull out duplicate rights: Identify those EU rights that overlap with existing UK registrations (as separate protection should already exist)
  3. Weed out waste: Use the opportunity to identify those rights or classes that are no longer relevant, so as to save cost and streamline the portfolio
  4. Ringfence core rights: Also use the time to review primary/key rights to ensure that they are up-to-date and adequately protected
  5. Consider associated effects: For example, implications for existing licensing agreements, injunctions/disputes or anti-counterfeiting strategies (as the UK may no longer be subject to the EU principles on the free movement of goods)

(Click here for more tips and advice on auditing IP portfolios)

Should you convert your EU TMs to UK applications?
If an EU TM has been filed and the trademark is used only in the UK, then the right could be  vulnerable to cancellation actions (for non-use) if the five-year grace period has passed. It is already possible to convert such EU TMs to UK rights, however, it’s important to note that such conversions will leave companies without EU TM protection and could, therefore, require you to file additional applications to ensure protection in Europe if you plan to use your mark/s there moving forward.

Conversely, when the UK portion of a EU TM, which is used only outside the UK, is converted into a national registration, the UK registration would similarly be vulnerable to cancellation actions (for non-use). 

Seniority claims would also need to be reviewed. When the EU TM system was implemented, there was a system by which national rights could ‘live’ within the EU right and the national right allowed to lapse. Where this has occurred in respect of UK rights, it would need to be discussed whether these rights could be re-activated in some way.

Will it impact enforcement strategies?
There will be some impact on the enforcement of rights once the UK exits the EU, as the UK would no longer have a EU TM court. While the impact is likely to be quite minimal, any pan-EU injunctions/ or decisions could be vulnerable to change or amendment.

What about imports?
An exit from Europe could also have an impact when it comes to the transportation of goods between the UK and the EU. The considerations preventing the partitioning of the internal market would no longer apply if the UK leaves the European Economic Area (EEA). Consequently, EU TMs and Designs could be used to prevent imports into the EU from the UK, as exhaustion rules would no longer apply (currently, a trademark owner cannot object to the further dealing of goods it has placed on the market within the EEA). Likewise, UK rights would not be exhausted by sales elsewhere in Europe and could be used to prevent parallel imports into the UK from the EU.

Most brand owners already know the importance of recording their trademarks with customs to enable them to identify and act against infringing products; however, the Brexit vote may be a good opportunity to review those strategies and to ensure that those trademarks are recorded with customs authorities in both the UK and EU (Click here for advice on recording your trademarks with customs departments).

A right for Scotland?
Nicola Sturgeon has indicated that there would be strong demand for a new referendum on independence if the UK were to exit the EU. This could pose greater uncertainty surrounding the national UK systems for trademarks, designs and patents.

What happens next?
A vote for Brexit has started the process of change in the way in which UK and European businesses protect their IP rights nationally and in the EU; however, the process itself is yet to officially begin. Article 50 of the Treaty on the European Union requires a member state that wishes to withdraw from the EU to notify the European Council of its intention to secede. The referendum result in itself does not constitute such a notice. Once the notice has been served, a withdrawal agreement between the UK and EU will then need to be negotiated – the process of withdrawal itself could take up to two years (longer if the remaining member states agree to extend this period).

There is no clarity yet on what exit will mean for future trading arrangements in the EU or the UK's involvement in the European single market. These issues (and others) will only become clear once negotiations progress.

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