Brexit update on Intellectual Property Rights - Draft trade mark legislation has now been introduced

United Kingdom

On 28 November 2018, The Trade Marks (Amendments etc.) (EU Exit) Regulations 2018 and The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2018 were laid before both Houses of the UK Parliament.

The Trade Marks (Amendments etc.) (EU Exit) Regulations 2018

The draft Regulations amend the Trade Marks Act 1994 and the Trade Mark Rules 2008 in preparation for the exit of the UK from the European Union and are planned to come into force on exit day.

The draft legislation confirms the UK government guidance on trade marks if there is a no-deal Brexit. EU trade marks which have been registered immediately prior to exit day are to be treated on and after exit day as if they had been filed and registered as a UK trade mark under the Trade Marks Act 1994 (referred to as “comparable trade mark (EU)”). This includes EUTMs within their six-month late renewal period.

The Trade Marks Act 1994 will apply to such “comparable trade marks (EU)” as it applies to UK registered trade marks, unless provided to the contrary. These comparable trade marks (EU) will be considered fully independent UK trade marks which can be challenged, assigned, licenced, have a security interest registered against it, or renewed. They will be independent from the original EUTM. These new registered trade mark rights will be created automatically and free of charge.

Renewal will be in line with renewal of existing UK trade mark registrations. However, the UKIPO will send renewal notices for comparable trade marks (EU) which come up for renewal shortly after exit day once the UK right is created. From the date of this notice, the trade mark proprietor will then have six months to renew its right. Late renewal fees paid with the EUIPO will be taken into account such that there will be no additional late renewal fees to be paid to the UKIPO.

The entry of goods and services in the UKIPO register will be taken from the English language version of the EUIPO Register. However, in the event that the first or second language of the EUTM are not English, the trade mark proprietor may apply for a rectification of the UKIPO register if it considers the English language version inaccurate.

Proprietors of EU collective or certification marks will be requested by the UKIPO registrar to file regulations in line with the existing EUTM regulations in force immediately before exit day.

The draft Regulations include an opt-out provision in the event that an EU trade mark proprietor does not wish to own a comparable trade mark registration (EU). However, it is interesting to note that an opt out notice may not be filed if the comparable trade mark (EU) has already been put to use in the UK on or after exit day. The draft regulations expressly note that this includes affixing the mark to goods/packaging in the UK solely for export purposes. Equally, an opt out notice may not be served if the comparable trade mark (EU) is subject to an assignment, licence, security interest or any other agreement or document, or if proceedings are pending which are based on the comparable trade mark (EU). These limitations to serve an opt out notice will protect the interests of licensees, security rights holders, etc., .during a period of time when there is no obligation on the proprietor of a comparable trade mark (EU) to make an application for registration of a registrable transaction. We do not expect many proprietors to exercise the opt-out provision – rather, they will just allow unwanted comparable trade marks (EU) to expire in due course.

Opting out has effect as of exit day (i.e. it has retrospective effect).

Additional Information: The draft Regulations deal with a number of issues not dealt with in the Government notice, including the following:

  • In the event that the proprietor of a comparable trade mark (EU) wishes to rely on this mark in opposition proceedings and the right has been registered for more than five years, genuine use of the mark in the EU prior to exit day will be taken into consideration. 
  • Equally, where reputation of a comparable trade mark (EU) is to be determined in respect of any time prior to exit day, reputation of the mark in the EU prior to exit day will be relevant.
  • A registrable transaction registered for a comparable trade mark (EU) in the EUIPO Register is effective even if it has not been registered or an application for registration been made with the UKIPO in line with the usual time periods for UK trade marks. The draft Regulations provide for longer time periods to make such an application for registration. 
  • The draft Regulations also provide that references in documents (such as coexistence agreements) to an existing EUTM made before exit day shall have effect in the UK unless there is evidence that the document was not intended to have effect in the UK. Consent given with regard to an EUTM prior to exit day is deemed to also consent to the comparable trade mark (EU) after exit day.    
  • Court proceedings pending on exit day (i.e. instituted but not finally determined) before a UK court sitting as EU trade mark court will continue with the comparable trade mark (EU). The draft Regulations do not appear to deal with proceedings relating to registered EUTMs which are pending outside of the UK (e.g. revocation or invalidity proceedings pending before the EUIPO). It seems as if a comparable trade mark (EU) would come into existence irrespective of such pending proceedings. If so, the comparative trade mark (EU) would have to be attacked independently on or after exit day.
  • Injunctions in force in the UK immediately prior to exit day will remain in force.

Applications for an EU trade mark which are pending on exit day may be filed as a new UK trade mark application, claiming the original priority date or seniority date (if any) provided that the application in the UK is made within 9 months of exit day. The new trade mark application must be identical to that filed previously with the EUIPO, and must cover identical goods/services or at least goods/services contained within the original application.

The draft Regulations do not contain any provision relating to pending international trade mark applications or registrations.    

The draft Regulations also do not appear to contain any provisions relating to payment of Application fees. It is to be expected that EU rights holders will have to pay the usual filing fees to file a new priority application in the UK. 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.    

International Property (Exhaustion of Rights) (EU Exit) Regulations 2018

The exhaustion of Intellectual Property (IP) rights means the loss of the owner’s right to control distribution and resale of a product that has been placed on the market within a specific territory by the rights holder/trade mark owner or with the rights holder’s/trade mark owner’s consent.    

The draft Regulation confirms the previously stated UK Government position, namely that the UK will continue to recognise regional exhaustion of rights within the EEA (European Economic Area) from exit day. This is to ensure continuity in the immediate future and continued protection for businesses and consumers.

Parallel imports of goods such (e.g. pharmaceuticals), can continue from the EEA.  

However, while this means that there will not be any change for goods imported into the UK, there may be restrictions to the import of parallel goods from the UK into the EEA.

We understand that the UK Government considers this solution to be temporary. It has announced that it will be working with businesses, trade associations and other stakeholders to look at other long-term solutions relating to the exhaustion of rights.

Overall, the draft Regulations confirms the UK government guidance published in September 2018 and government has largely succeeded in its promise to provide maximum certainty for users, applicants and rights holders. The draft Regulations finally provide much needed clarity on the continuity of trade mark protection of EU trade marks in the UK.

The UKIPO is expected to provide additional guidance once the draft Regulations have been approved by Parliament.