6 months prior to the enforcement deadline of March 30th, 2019 of the BREXIT, it is high time to consider the issue at a broader scale.
Below are a few dates to recall the main stages that punctuated the Brexit story:
- June 2016, 51,9% of British people voted in favor of pulling out of the EU
- 29 March 2017, the United Kingdom notified the European Council of its intention to leave the European Union, in accordance with Article 50 of the Treaty on the European Union
- March 19th, 2018 saw the publication of a Draft Agreement on the Withdrawal of UK and Northern Ireland from the EU
Though Task Force 50 of the EU and the British government have reached some significant agreements regarding the framework of the future relationship with the Draft Withdrawal Agreement, some key political, social and economic gaps in expectations between the two protagonists are pointed out, leading to uncertainty on how it will be solved, if solved! Therefore, the closer we approach the deadline, the more the “two options” scenario (soft Brexit vs Cliff edge scenario) is relevant, one not having prevailed over the other. And finally, whatever is the ending, we come to the same position that it is our duty to recommend that you take proactive measures as soon as possible and prepare yourselves.
1. As both scenarios lead to some unwished risky uncertainties:
If a Cliff-edge scenario seems to be slightly moderated by the recent UK government’s position on IP rights, we shall warn you on the unsolved questions of both the soft Brexit and no deal scenario. Articles 50 to 57 of the Draft Withdrawal Agreement (i.e. chart on the side) appear to “be more or less organized” on IP but the following points must be considered:
As for the Cliff edge, a direct consequence is that UK would no longer be a member of the European Union, leaving its Single Market and Customs Union. But what would happen if any of the EU provisions applying to your business cease to have effect in the UK on March 19th, 2019?
From an IP rights perspective, on September 24th the UK government issued some guidelines on what it would implement in case no deal is reached. The government ensures that a conversion will arise for all existing rights with minimal administrative burden. However, questions remain as to what minimal administrative burden means, and on the validity of the UK converted part in relation to the use requirement. Will the use of a sign, slightly different from the EU trademark, be considered by the UKIPO as a proper use that validates the trademark in the UK? Will a use in a substantial part of EU, excluding UK, before Brexit, be taken into account to maintain the converted UK part? The devil is in the details!
As for applications, the UK government will allow a 9-month period from the date of the exit to obtain a UK equivalent right, retaining the EU application date for priority purposes but applicants will have to be proactive. No notification will be issued, and it will be subject to a UK fee.
Further questions about use, exhaustion of rights and enforcement would arise, in such a way that our global legal way of thinking would need to integrate the differences between existing (possibly evolving) UK and European laws. We already know that UKIPO practices differ from EUIPO practices, but we will have to face it on each UK-wide project.
An example concerns the methods of examination carried out by the two offices. The UKIPO considers absolute and relative grounds of refusal of a trademark application, allowing for a party to oppose an application by contesting its capacity to function as a trademark, and that it is confusingly similar to an earlier right. However, the issue of similarity to an existing earlier right can only by brought before the EUIPO in the form of an official opposition. Should a trademark be considered invalid on absolute grounds, the third party must launch invalidation proceedings after the trademark has been registered by the EU Office.
2. Acting, instead of reacting, to save time and avoid potential business disruption and rights loss.
One must question whether their company can still safely operate in this case, and how detrimental this could be for one’s assets and goodwill.
The first immediate step is to conduct a deep business review. We encourage companies to consider whether the UK represents a strategic country for their business. Do they have significant sales in the UK? Any growth perspectives? Any major competitors and existing disputes?
Once they have been through this exercise, we can support clients to conduct a deep IP rights portfolio review, especially by identifying their key brands, checking all their existing EUTM and pending EU applications, and conducting an analysis on actual use versus registrations.
The purpose of such an analysis is to consider whether it is worth it to refile if use is not in alignment with the EUTM.
Furthermore, to satisfy the ‘use requirement’ in the EU, it is enough that a trademark is used in a substantial part of the EU. However, to maintain the validity of a right post-Brexit, it is necessary for rights owners to sufficiently use their signs within the territory of the UK.
If not yet used or significantly used or identically used in the UK, the business review will allow to recommend to trademark owners to consider the extent of the use of their signs, or refiling. As such, it would at least provide you with an uncontested 5-year delay.
As for any new projects, it is high time to use the double-filing, at EU and UK levels. For broader projects with an International Trademark filings strategy, it is painless to automatically designate the EU and UK, as a UK designation is only 227 CHF compared to the possible damages of a Cliff Edge scenario.
Filing/refiling, in front of so many uncertainties, will also help you to gain time and to “postpone” the use requirement. As we have little idea of most of the mechanisms’ details, but being sure of the UKIPO upcoming backlog, anticipation is key to achieving a competitive advantage.
Figures from UKIPO already show the level of activity generated by the upcoming Brexit.
Lastly, in certain cases, an additional element to argue in favor of filing is that the conditions of passing off are more difficult to meet, and the costs are significantly higher than to pursue IPRs infringement!
Clotilde PIEDNOEL
European Trademark Attorney INLEX IP EXPERTISE