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Commercial Question

Brexit: the implications for trademark owners

updated on 03 January 2017

Question

How will Brexit impact trademark owners?

Answer

Towards the end of March 2017, the United Kingdom will likely activate Article 50 of the Treaty of Lisbon, formally notifying the European Union of its intention to withdraw its membership, which opens a two-year window for the terms of the United Kingdom’s exit to be negotiated with the other 27 EU member states. The United Kingdom’s withdrawal from the European Union has been coined “Brexit”.

Brexit has many trademark owners concerned and confused over the current and future position of their trademark rights.

Registered trademarks

Businesses can currently protect their trademarks in the United Kingdom by filing a UK national trademark – that provides protection in the United Kingdom only – or a European Union Trademark (EUTM) – a unitary right that provides protection in all 28 EU member states.

The EUTM regime has been one of the European Union’s many, quiet successes – offering businesses the ability to obtain pan-EU trademark protection for a fraction of the cost that would be involved in filing trademarks in 28 EU member states.

UK trademarks

The United Kingdom’s vote to leave and eventual Brexit will have no direct impact on UK national trade marks: these rights will continue in force as before, and the process of obtaining protection for new UK national trade marks will remain unchanged for now.

European Union Trademarks

The United Kingdom’s vote to leave the European Union has no immediate impact on EUTMs: the United Kingdom remains an EU member state during its withdrawal negotiations and EUTMs will continue to extend to the United Kingdom during this period.

Following Brexit, existing EUTMs will cease to apply in the United Kingdom, regardless of the post-Brexit model adopted. It is likely that the UK government will permit owners of EUTMs to re-file their EUTM rights in the United Kingdom as a national right, while retaining the original filing date of the EUTM. It is not clear what the timing or fee structure would be. It is possible that the UK Intellectual Property Office (UKIPO) would also allow a new opposition period – which would inevitably create uncertainty for many businesses. Likewise, the UKIPO may ask for proof of use before EUTMs that are subject to use requirements can be re-filed in the United Kingdom – unlike with an application for an EUTM, an application for a UK trademark requires the applicant to declare either that the mark is in use or that the applicant has a bona fide intention to use the mark.

Following Brexit, new EUTMs will not cover the United Kingdom. Applicants would have to apply for a separate UK national trademark.

Following Brexit, EUTM registrations will continue to apply in the other 27 EU member states. However, EUTMs which had previously been used only in the United Kingdom would become vulnerable to non-use revocation unless they were put into use in other EU member states, as use in the United Kingdom will no longer be sufficient to support an EUTM registration.

Exhaustion of trademark rights

The principle of exhaustion of rights prevents trademark owners from using their trademark rights to restrict the sale of goods that have been put on the market in the European Economic Area (EEA) with their consent.

Following a Brexit using the so-called “Norway model” in which the United Kingdom remains closely integrated with the European Union by joining the European Free Trade Association (EFTA) and remaining a member of the EEA, exhaustion of rights would be unaffected as the existing exhaustion rules apply within the EEA.

Following a Brexit using the so-called “WTO model” in which the United Kingdom pursues a more definitive break with the European Union and instead relies on WTO rules with no preferential access to the EU single market, exhaustion rules would no longer apply to goods placed on the market in the United Kingdom and EUTM rights could therefore be used to prevent imports into the European Union from the United Kingdom. Likewise, UK national trademark rights would not be exhausted by placing goods on the market in the EEA and could be used to prevent imports into the United Kingdom from the European Union.

Impact on enforcement of trademark rights

Following Brexit the UK courts will no longer be EUTM courts and will therefore be unable to grant pan-EU injunctions against the infringement of EUTM rights.

Where an infringement is occurring in one or more EU Member States and in the UK, a trademark owner will need to bring two sets of enforcement proceedings: one before a EUTM court for a pan-EU injunction and one before a UK court for a UK injunction. This will inevitably increase the cost of IP enforcement for trademark owners.

The effect of Brexit on any existing pan-EU injunctions is unknown. It is likely that such injunctions would cease to apply in the United Kingdom unless they were supplemented by a UK injunction granted by a UK court.

Conclusions

It is difficult to assess the full impact that Brexit will have on the protection and enforcement of trademark rights in the United Kingdom until the terms of the country’s post-Brexit relationship with the European Union have been decided. For now, the United Kingdom remains an EU member state, EUTMs continue to apply in the United Kingdom and UK courts remain EUTM courts capable of granting pan-EU injunctions.

For trademark owners filing new applications, there is a choice: apply for EUTMs and re-file those rights as UK national trademarks under the expected transitional provisions, or file both UK and EUTM applications now, to avoid having to rely on the transitional provisions in the future.

Trademark owners will also need to be mindful of the inevitable increase in the costs associated with intellectual property enforcement.

Martin Henshall is a trademark associate in the intellectual property practice at Cooley.