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Brexit vote creates uncertainty

June 24, 2016
By: Trevor Little

“Don’t panic”: call for calm as Brexit vote creates uncertainty over future scope of trademark protection

The UK electorate has voted to leave the European Union, meaning that after months of campaigning and speculation, trademark professionals now face the very real prospect of a changed IP landscape. The exit won’t become a reality until 2018 at the earliest, meaning that European Union trademarks and registered Community designs currently remain valid in the UK. However, in the interim there is a lot to be negotiated, with the UK’s Institute of Trademark Attorneys (ITMA) urging rights holders “not to panic”.

In the end, the vote was largely as opinion polls predicted – 51.9% (17,410,742 individuals) voted to leave the European Union, versus 48.1% (16,141,241) in the ‘remain’ camp. In the immediate aftermath, David Cameron has resigned as the country’s Prime Minister, with a successor expected to be in place by October. His resignation has a direct impact on the timeframe for exit negotiations, with Cameron signalling that his successor will lead the process. Therefore, Article 50 of the Lisbon Treaty may not be invoked until October, kicking off the estimated two year exit negotiations.

On World Trademark Review we have previously reported in some detail on the trademark implications of a vote to leave the EU – both on the blog and in the magazine. As it stands, uncertainty is the norm. Briefly, in current terms, a UK exit would mean that the protection offered by EU trademark and Community registered designs would no longer extend to the UK – requiring those without a UK registration and wishing to continue their coverage in the UK to seek a national registration. An exit would also mean that UK-based practitioners would no longer be able to represent clients before the EU Intellectual Property Office, while UK courts would no longer be able to hear trademark infringement disputes based on EU trademarks. The legal environment could also become more complicated, with UK and EU trademark and design law potentially diverging.

One possible positive for UK law firm practitioners with respect to the representation of clients before EUIPO would stem from the UK doing a deal to remain in the European Economic Area (EEA). Under the recently-enacted European trademark reforms, the right to act as professional representatives before the office was extended to those qualified in one of the member states of the EEA. However, it is by no means certain that the UK would do such a deal in the current political climate.

The reality is that IP arrangements will be the subject of negotiations in the run up to the divorce and there could be agreements that lessen the blow. For instance, Georgie Collins, partner at Irwin Mitchell, suggests, that transitional provisions could be agreed that enable existing registrations to remain effective under ‘grandfather rights’. ITMA has pledged to work with key stakeholders to ensure “the best possible outcomes for owners of intellectual property rights and practitioners in the UK”.

While ITMA has counselled against panic, the mood of trademark professionals on social media is not positive, with uncertainty and concern clearly evident. That won’t change in the immediate term. A number of industry professionals have issued statements reacting to the vote and the possible impact on trademark owners. A selection are reproduced below:

Kate O’Rourke, president of ITMA: We would encourage trademark and registered design owners not to panic – European Union Trademarks and Registered Community Designs remain valid in the UK and there is no immediate loss of IP protection. There is likely to be no change for at least two years giving intellectual property rights owners plenty of time to plan. ITMA will be working hard with key stakeholders including the UK’s Intellectual Property Office and Minister for Intellectual Property to influence the negotiations and ensure the best possible outcomes for owners of intellectual property rights and practitioners in the UK. ITMA will advocate for the transition of all EU-based trademark and design rights to UK-based protection to be simple and cost effective. We will also be calling on the UK Government to ensure that UK practitioners remain entitled to represent clients before the European Union Intellectual Property Office. At this time we recommend that all trademark or design rights owners seek advice from their registered trademark attorney to ensure they are fully prepared and can put in place plans to confirm the continuance of their IP protection.

Tom Scourfield, UK head of IP at CMS: IP rights are often considered on a national basis but are really an international currency, the value of that currency was diminished today. Brexit undermines the status of the UK in the international IP community. Some form of transitional period will be required for EU Trademarks, which will ultimately cease to be applicable in the UK. All businesses intending to trade here will need to look to national trademark registrations.

Georgie Collins, partner at Irwin Mitchell: A UK exit from the EU will have a significant effect on EU Trademarks. New EU trademarks would not cover the UK, so separate applications would have to be filed in the UK. There is also the question of the scope of existing EU trademark registrations and existing EU design right registrations and whether these will remain valid in the UK. We would expect that during the withdrawal negotiations, transitional provisions will be agreed and implemented for existing registrations, such that they remain effective under ‘grandfather rights’ or transfer into national rights based on prior rights. [However] Rights owners will be subject to additional costs of transferring rights and maintaining separate registrations going forward. UK trade mark attorneys and lawyers will [also] not be able to act as representatives before the EUIPO which is likely to result in increased fees.

Arty Rajendra, partner at Rouse Legal: Many companies will own EU Trademarks which cover all 28 states of the EU. This trademark will no longer be valid in the UK. This may pave the way for trademark owners needing two registrations: a new national mark for the UK which can be dated back to the original EU trademark filing, and their current EU trademark for the remaining member states. This would mean continued trademark protection coverage and, importantly, it would not extinguish a right previously held in the UK. Whatever happens, it will involve cost and management time of businesses to ensure they have the right protection covering the newly fragmented jurisdictions. Owners of Community Registered Designs, which currently cover all 28 states of the EU, will find their rights will no longer be valid in the UK, meaning that CRD owners would probably need to convert this right into a UK registration and maintain the CRD in the rest of the EU as well. From an IP enforcement perspective, a vote to leave should mean that parallel imports are a thing of the past so no cheaper branded goods from Eastern Europe can come into the UK. There is also a risk that less cooperation between border force authorities in EU member states could lead to a rise in counterfeiting in the UK.

Sally Shorthose, partner at Bird and Bird: Brexit is not going to be a simple divorce. Now any UK legislation, which has hitherto been dependent on EU legislation, will have to be unpicked. Beyond this, the key development in the IP field is the likely exclusion of the UK from pan-European rights systems… It is likely that Community rights, such as registered and unregistered Community designs and EU trademarks (previously Community trademarks), will now no longer have effect in the UK. Ultimately the scope of any rights applied for from now on will not include the UK, and there will be questions about what will happen to the ‘UK portion’ of such rights obtained before Brexit. If the right in question was automatically reduced in geographical scope, its value will diminish, especially given the economic significance of the UK, which could result in the right-holder losing out commercially. Any organisations which rely on Community rights will now need swiftly to respond to changes in this area.