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Brexit and trade marks - latest developments: filling in the gaps

Heidi Hurdle
09/07/2020

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United Kingdom

While talks continue between the European Commission and the UK over the terms of the trade deal next year, naturally rather overshadowed by the continuing Covid-19 pandemic, there has been some recent progress in filling in some of the outstanding gaps in relation to the protection of trade marks from January 2021.

Transition period and Covid-19

Following the UK's exit from the EU on the 31 January 2020, under the terms of the UK-EU Withdrawal Agreement 2020 (WA), it has largely been "business as usual" for trade marks and other intellectual property (IP) rights in the UK, as the UK IP Office had assured us back in January would be the case (see our previous blog: Brexit: what does the transition period mean for intellectual property rights?). During the transition period the UK has remained part of the EU insofar as the protection of EU IP  rights is concerned and has been required to continue applying and implementing relevant EU law.

Not to be forgotten at this unprecedented time are the short term changes swiftly introduced by the UKIPO and many other IPOs around the world to help businesses during the pandemic, such as extending the time periods to provide flexibility until there was a more settled business environment (see our blog,  COVID-19: latest updates from intellectual property offices across the globe). The UKIPO recently announced that this period of what it referred to as "interrupted days" would come to an end on 29 July 2020, but at the same time announced a welcome reduction in a number of its fees from 30 July 2020 to 31 March 2021.

The transition period will end on 31 December 2020 and we now know for certain that this will not be extended following the formal announcement by the UK government last month.

The UK government has put in place a range of Regulations (Statutory Instruments) providing for the protection of EU and UK rights when the transition period comes to an end. These Regulations (such as the Trade Marks (Amendment etc.) (EU Exit) Regulations 2019/269) essentially drill down the high-level provisions for the protection of IP as set out in Articles 54 to 61 of the WA deal. The IPO in turn has produced a large number of guidance notes fleshing out many of the arrangements set out in the Regulations. The European Commission has also produced a range of "readiness" notices.

Conversion of EUTMs

As was agreed at an early stage of the Brexit process (and explained in our earlier blogs), the UKIPO will convert almost 1.4 million EU trade marks (EUTMs) and 700,000 EU designs to comparable UK rights at the end of the transition period. These will come into effect on 1 January 2021. (It is possible to opt out of this automatic conversion). There will be no cost to trade mark owners for this conversion. The registration number of each comparable trade mark will be the last eight digits of the relevant EUTM mark, with the added prefix UK009.

  • Pending EUTM applications: applicants for EUTMs that have not reached registration by the end of the transition period will have a period of nine months to apply for the comparable UK trade mark taking advantage of the same filing, priority and seniority dates.

  • Use and reputation: any use of the mark in the EU before 1 January 2021, whether inside or outside the UK, will count as use of the comparable UK mark. Similarly, the reputation of the EUTM in the EU, but not necessarily the UK, before 1 January 2021 will be considered for the purposes of the comparable UK mark.

  • Existing licences:  any licence, assignment or security interest relating to an EUTM will apply to the comparable UK right. 

Conversion of international (EU) trade marks

It was unclear until very recently what would happen in relation to international trade mark registrations designating the EU, for like EUTMs they will no longer be valid in the UK from 1 January 2021. On 26 June 2020, the UKIPO confirmed in an update that they would be dealt with on the same basis as the EUTMs, which was hoped would be the case. Key points to note are:

  • A comparable trade mark (IR) will be created in relation to each international (EU) trade mark designation which has protected status immediately before 1 January 2021.

  • Each new UK right will be treated as if applied for and registered under UK law, and may be challenged, assigned, licensed or renewed separately from the original international registration.

  • The registration number of each comparable trade mark (IR) will be the last eight digits of the international (EU) trade mark, with the added prefix UK008.

  • Applicants for international (EU) marks that have not reached registration by the end of the transition period will have a period of nine months to apply for the comparable UK trade mark.

Use of EUTMs in the UK

Another unanswered question until very recently was whether after January 2021, use of a EUTM in the UK could count towards use "in the EU" for the purpose of maintaining the rights conferred by the EUTM. In a joint notice from the Commission and EUIPO on the effect of Brexit on EUTMs and Community designs, it was confirmed that this was not the case. Similarly, all existing seniority claims in EUTMs based on national trade mark rights in the UK will cease to have an effect in the EU.

Owners of EUTMs who have primarily used their EUTM in the UK until now are advised to review their commercial strategy to minimise the risks of their EUTM being vulnerable to attack in the future for non-use. The options available to them include expanding their market into the EU and registering new trade marks.

It remains unclear if earlier UK rights used as the basis for opposition or cancellation proceedings at the EUIPO which are not decided by 1 January 2021 will continue to be a valid ground of objection.

Exhaustion of IP rights

Currently, exhaustion of trade marks and other IP rights occurs in the UK when an IP-protected good is placed on the market anywhere in the EEA, by or with the right owner’s permission. This means that rights owners cannot prevent the movement of those goods within the EEA.

From January 2021, EU law providing for the exhaustion of IP rights will no longer apply to the UK - an IP right will not be exhausted in the EU if a good protected by it has been lawfully put on the UK market. This means that the right owner can oppose parallel imports from the UK into the EEA. Consequently, businesses that export IP-protected goods from the UK to the EEA will need to ensure they have permission from the right owner.

The EU and UK agreed (as set out in the WA) that IP rights exhausted in the EU and the UK before the end of the transition period shall remain exhausted in both areas indefinitely.

The UK government has been debating the options for what exhaustion regime should apply from next year, but while the trade negotiations continue the position remains uncertain and businesses should be prepared for the situation to be as outlined above - this was recommended by the Commission in its recent notice in June 2020. There is however no change for parallel imports from the EEA to the UK which remain freely importable.

Final word

Although the recent developments outlined above were largely anticipated, it is helpful for brand owners and businesses in general to have some certainty so that they can continue to prepare for 2021 and beyond. We will continue to monitor and assess the situation as further developments emerge in the coming months. 

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