Brexit update on Intellectual Property Rights -Draft Withdrawal Agreement

On 20 March 2018 the UK and EU Commission published the draft Withdrawal Agreement (here), which reflects the current status of Brexit negotiations between the UK and the EU. The text of the Agreement has been colour-coded to show: (1) agreed terms that are subject to technical legal revisions (highlighted in green), (2) terms where policy objectives have been agreed but drafting changes or clarifications are required (highlighted in yellow), and (3) terms proposed by the EU but where negotiations are still ongoing (left white). The draft Agreement confirms that once the UK exits the EU there will be a transition and implementation period from the date of the Agreement (29 March 2019) until 31 December 2020 (Article 121).

EU and UK rights holders will be pleased to know that the majority of the provisions on intellectual Property rights, contained in Articles 50-57 of the Agreement, fall into the category of agreed terms (green), the salient points of which are summarised below:

• holders of EU trade marks, Community designs and Community plant variety rights that have been registered or granted before the end of the Transition Period will automatically obtain equivalent registered and enforceable rights in the UK (Article 50(1)). Whether the UK is entitled to charge a fee or require the rights holder to have a correspondence address in the UK as a condition of this registration process remains subject to negotiations;
• if an EU trade mark or an Community design is declared invalid or revoked or a Community plant variety right is declared null and void or cancelled in the EU as a result of an administrative or judicial procedure that was ongoing on the last day of the Transition Period, the equivalent registered right in the UK will also be declared invalid or revoked for marks and designs or declared null and void for plant variety rights. However, the UK does have the right not to declare the corresponding UK trade mark or design right invalid or revoked, if the relevant grounds do not apply to the UK (Article 50(3)). The Withdrawal Agreement does not contain any detail about how the equivalent right will be invalidated or revoked and we anticipate that that the UKIPO will be considering these issues with the relevant provisions being included in the appropriate secondary legislation;
• The corresponding UK trade mark registration will also benefit from the same filing date or priority date as the EU registration (as well as benefit from the seniority of a UK trade mark, if claimed in the EU registration). Furthermore, this corresponding UK trade mark registration cannot be revoked on the grounds that the mark has not been used in the UK before the end of the Transition Period (Article 50(5)). How long the non-use period will be or when the non-use period will effectively begin remains to be clarified: it is unclear whether the period will start on 1 January 2021 or on the date when the UK corresponding right has officially been registered at the UKIPO or on such other date to be determined. The other grounds for revocation (e.g. the trade mark has become the common name in the trade for a product or service for which it is registered) are presumably not affected and may be invoked at any time post-withdrawal;
• Similar provisions are in place for the resulting UK design and UK plant variety registration to claim the same date of filing and priority date as the corresponding Community design and Community plant variety registration (Article 50(6));
• Owners of EU trade mark registrations are entitled to rely on the reputation of their mark acquired in the EU (e.g. in opposition or infringement proceedings in the UK) up to the end of the Transition Period. After this period has ended, the continuing reputation will be contingent upon use of the mark in the UK (Article 50(5)). It is noticeable that the Withdrawal Agreement does not contain reciprocal provisions enabling UK proprietors to rely on the reputation they may have acquired in the UK in the context of opposition or infringement proceedings on the Continent during the Transition Period;
• International Registrations of trade marks and designs designating the EU existing before the end of the transition period will continue to have protection in the UK but is will be down to the UK to decide how this is implemented (Article 52). So far as trade marks are concerned, it is not clear whether this applies to International Registrations where the EUIPO has not yet granted protection (e.g. because opposition proceedings are pending or the re-publication opposition period will end after the Transition Period);
• Unregistered Community design rights existing prior to the end of the Transition Period will become an enforceable intellectual property right under UK law for at least an equal remaining period of time (Article 53). As the UK does not currently have a system in place for unregistered design rights corresponding to the unregistered Community design rights, the UK will have to implement new legislation to meet this requirement. This will be welcomed news for UK brand owners who rely heavily on unregistered Community design rights. However, for UK brand owners who wish to obtain unregistered Community design rights, it remains to be seen whether, post-Brexit, designs first made available in the UK will still qualify for unregistered Community design rights. Currently, there is some debate about whether designs first made available to the public outside the EU but which are brought to the attention of the relevant public within the EU can claim unregistered Community design rights, following a German Supreme Court decision called Pastry Press.
• Holders of database rights existing under EU law at the end of the Transition Period will similarly be afforded equivalent enforceable rights in the UK and rights owners will be deemed to satisfy the requirements for holding such rights in the UK (Article 54);
• Applications for a EU trade mark or Community design pending at the end of the Transition Period (i.e. where a filing date has been accorded) will not automatically be transformed into a UK enforceable right as in the case of registrations. The Applicant with have a right to file an application in the UK for an identical mark and identical goods or services in 9 months period from the end of the Transition Period in order to have the same filing date and priority date as the EU trade mark or Community Design application (Article 55(1)). A similar right of priority has been agreed for Community plant variety rights applications, the period for which is 6 months from end of the Transition Period (Article 55(2)). EU rights holders will presumably have to pay a fee to file a new priority application in the UK and with this in mind brand owners should consider filing a UK application simultaneously when filing their EU application. However holders of EU applications which have been opposed and where the opposition proceedings are unlikely to conclude before the end of the Transition Period, may be better off waiting until the special priority period starts before filing a new UK application in order to obtain the same filing date and priority date as their EU application;
• IP rights that were exhausted in the EU and the UK at the end of the Transition Period under EU provisions will continue to be exhausted in these two territories (Article 57).

The following are issues where no agreement has yet been reached (i.e. the EU has proposed provisions but discussions are ongoing):

• Geographic indications (Article 50(2)
• Registration procedure for EU registered rights transferring to the UK, and in particular the conditions for registration and the cost implications (Article 51)
• Pending applications for Supplementary Protection Certificates in the UK (Article 56)

Overall, the UK Government has largely succeeded in its promise to provide maximum certainty for users, applicants and rights holders by agreeing arrangements appropriate to each of the different types of intellectual property rights in its approach to the Brexit negotiations (as set out in the Technical Note published by the UK Government on 6 March 2018 (here)). This draft Withdrawal Agreement provides much needed clarity on Intellectual Property rights post-Brexit, although a number of key questions still remain.

Significant progress has certainly been made in so far as outlining the general principles for maintaining EU Intellectual Property rights that exist prior to withdrawal. However, much further detail is required on how these measures will be implemented and also crucially the cost implications for brand owners and other intellectual property rights holders.