EU trade marks – a Brexit strategy

It has been four months since the people of the UK voted (much to the dismay of the majority of voters in London, Scotland and Northern Ireland) for Brexit; for the UK to leave the European Union.

So, what has happened since then, how will this affect your EU trade marks and what do you need to do?

When will Brexit happen?

In order to officially commence the process of leaving the EU, the UK must notify the European Council of its intention to withdraw under Article 50 of the Treaty on European Union.

On 2 October 2016, UK Prime Minister Theresa May announced that she would trigger the Article 50 procedure by the end of March 2017. After Article 50 has been triggered, there is a two-year period for the UK's withdrawal to be negotiated. This can be extended by unanimous agreement between the UK and the European Council.

The process to trigger Article 50 in the UK is not without its controversy. Theresa May has just accepted that 'full and transparent' parliamentary scrutiny (not parliamentary approval) will need to take place before Brexit can be triggered. The High Court in London is currently considering a challenge to the government's right to begin the official process without parliamentary approval, so how it will happen still remains to be seen.

How will Brexit affect your trade marks?

Until the UK ceases to be a member of the EU, it is business as usual with respect to any IP which is subject to EU law. Nationally registered trade marks in the UK will be unaffected by Brexit.

EU trade marks (EUTMs) cover all 28 member states of the EU under EU-wide trade marks regulation. This is directly applicable in all states of the EU, so if and when the UK ceases to be a member of the EU, this regulation would cease to have effect in the UK, meaning that EUTMs should no longer cover the UK.

It is widely considered that transition arrangements of some description will be introduced allowing existing EUTMs to continue to be protected in the UK. How this will occur has been the source of some debate. For instance, could holders of EUTMs have to show that they are using their trade marks in the UK for their trade marks to continue to be protected in the UK? This will be a matter of negotiation between the UK and the EU.

On 2 August 2016, the UK Intellectual Property Office (UK IPO) released a statement regarding IP and Brexit, available here, confirming that the UK government is exploring various options and will be consulting with users of the EUTM system about the best way forward.

Brexit does not affect the UK's participation in the international trade mark system under the Madrid Protocol. Trade mark applicants can continue to designate the UK for trade mark protection under international trade marks.

Managing Intellectual Property magazine recently reported that there was a 33% increase in trade mark applications with the UK IPO in August 2016 compared with August 2015. This is particularly interesting given that August is peak holiday season in the UK, similar to January in Australia. This increase is likely to be a result of the impending Brexit and companies seeking to maximise their trade mark protection in light of the current uncertainty around their future trade mark rights in the UK, based on their EUTMs.

What should you do?

Firstly – don't panic! It will be some time before your current EU trade mark rights in the UK could be affected.

For businesses with EUTMs or interested in obtaining EUTMs, now is the time to review your trade mark portfolios and your IP-related contracts which have effect in the EU.

If the UK is of particular interest to your business, it may be beneficial to obtain separate UK trade mark protection, corresponding to EUTMs that are currently used predominantly in the UK, for two reasons:

  • once registered, it would provide protection in the UK for the trade mark, without the uncertainty of what may happen at a member state level regarding EUTM protection in the UK post Brexit; and
  • if EUTMs are only used in the UK after Brexit, then in the long term, such trade marks could be at risk of removal for non-use as use in the UK would not be deemed to be use in the EU. This is not an issue for trade mark owners in the short term and may be somehow addressed in transitional provisions. However, a separate UK trade mark would provide additional UK protection in this regard.

    Contracts should also be reviewed to ensure that they will sufficiently address a post-Brexit scenario. Where the EU is the relevant territory, consider whether the UK needs to also be specifically added as a stand-alone territory going forward so that there is no confusion and the risk of disputes at a later stage is reduced. This should also be considered when entering into new contractual arrangements which affect the EU, particularly where the business or IP rights predominantly relate to the UK.

    At the moment, there are more questions than answers regarding Brexit and its consequences. We will continue to provide updates as the situation progresses.