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IP Information & News

29 February 2016

BREXIT - What would it mean for Trade Marks & Registered Designs

Brexit
  
"Brexit" - the affectionate term for Britain’s potential exit from the European Union, which as of June 2016, could become a reality. The issues at the forefront of the EU membership reforms include the cost of EU membership, legal and economic policies, implications on free trade and of course the hot topic - immigration. But what repercussions will there be for Intellectual Property Rights and more importantly, the thousands of rights owners that have invested in trade marks, designs and patents, if the UK votes to leave the EU?

Current Trade Mark Options

Currently, individuals and businesses have the choice of registering their trade marks or designs at the United Kingdom Intellectual Patent Office (UKIPO) and obtaining national rights or as a Community Trade Mark (CTM), soon to be renamed as an EU Trade Mark (EUTM), or a Registered Community Design (RCD) to obtain EU-wide rights. These unitary rights, afford trade mark or design protection in all current member states of the European Union (including the UK). Furthermore, the application and registration process is centralised, meaning a faster and cost effective system of obtaining extensive protection.

Impact of Brexit

If the UK public votes to leave the EU, UK businesses exporting to and selling goods and services in mainland Europe would have to consider filing national trade mark or design applications in their home market and EUTMs or RCDs to cover the European Union.  Similarly, businesses wanting to obtain trade mark or design protection in the UK would need to add the cost of obtaining national protection as part of their filing strategy.
 
With regards to existing EUTMs, Article 165 of the EU Community Trademark Regulation (207/2009) provides for the expansion of the European Union and allows EUTMs to cover new member states.  The Regulation does not, however, anticipate a member state leaving the EU.  Article 1(2) states that “A CTM shall have unitary character. It shall have equal effect throughout the Community: it shall not be registered, transferred or surrendered or be subject of a decision revoking the rights of the proprietor or declaring invalid, nor shall its use be prohibited, save in respect of the whole Community. This principle shall apply unless otherwise provided in the regulation”. This therefore implies that unless some form of transitional law is implemented, the current EUTM and RCD registrations would no longer have any effect in the UK.

Brexit Consequences?

The consequences of Brexit on IP protection in the UK will depend upon the status of the UK following its departure from the EU.  There are, at least, two realistic scenarios for the UK to consider:

  • “Norwegian Option”

In this scenario, the UK would remain in the European Economic Area (a political arrangement that allows for the free movement of person, goods, services and capital within the EU and Iceland, Liechtenstein and Norway).  The main consequences of this from a trade mark and design perspective would be that:

The government would be required to introduce new successor IP rights or allow conversion of EUTMs or Community Designs into national rights.  This could create issues with existing IP licences, security interests, IP injunctions;
• The exhaustion of rights rules would remain; and
• UK courts would still need to interpret UK IP law in the light of EU rules.

  • “WTO Option”

In this scenario, the UK would be required to negotiate new trade agreements with the EU.  The main consequences of this from a trade mark and design perspective would be that:

• The government would be required to introduce new successor IP rights or allow conversion of EUTMs or Community Designs into national rights.  This could create issues with existing IP licences, security interests, IP injunctions;
• The current rules on the exhaustion of rights would mean that trade marks and design rights could be used to restrict imports from the UK into the EU. This would require rules to be agreed with the EU to avoid price differentials arising between the UK and the EU; and
• UK courts would no longer need to interpret UK IP law in the light of EU rules.

In either scenario, it is clear that a vote to leave the EU will undoubtedly lead to uncertainty, increased costs and administrative difficulties for holders of EUTMs. 

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