Kingdom voted via referendum for their country to leave the European Union. This historic event, commonly known as “Brexit,” caused the pound sterling to fall to its lowest level since 1985 and prompted the resignation of Prime Minister David Cameron. For intellectual property lawyers and their clients, the Brexit vote also gave rise to a number of questions about the future of trademark rights in the UK and in the EU at large. This article addresses some of those questions.
No need to panic (yet): First, it is crucial to note that nothing will happen to EU trademarks vis-à-vis Brexit for quite some time. Article 50 of the Lisbon Treaty describes how an EU country may voluntarily leave the Union, specifying that a would-be leaver should notify the European Council of its intention, negotiate a withdrawal deal, and establish legal grounds for future relations with the EU post-exit. For the exit to take effect, the withdrawal arrangements must be approved by a majority of EU member states, with consent of the European Parliament. Importantly, Article 50 gives negotiators two years from the date of notification to conclude the exit arrangements; failure to do so results in the leaver falling out of EU membership with no new provisions in place, unless all remaining EU member states agree to extend negotiations. As of this writing, new British Prime Minister Theresa May has promised to trigger Article 50 by the end of March 2017, which would start the clock ticking for the UK to leave the EU by the end of March 2019.
Until Article 50 is actually triggered, however, it is not possible to advise when the UK’s withdrawal from the EU will take effect, but it would appear that withdrawal prior to 2019 is unlikely.
Also unknown is the nature of future relations between the UK and the EU. For trademark purposes, one particularly relevant question is whether the UK will remain a member of the European Economic Area (“EAA”), which currently includes all 28 member states of the EU, as well as Iceland, Liechtenstein and Norway. The UK’s membership, or lack thereof, in the EEA will play an important role in
representation issues and “exhaustion of rights” principles, as noted further below.
Until the UK officially withdraws from the EU, it is still a member, so existing EU trademark rights will continue to subsist, even during the Article 50 negotiation period.
A Taste of What’s to Come
Once the UK has officially left the EU, it is expected that EUTMs (that is, trademark filings before the EUIPO which currently extend to all 28 EU member states) will no longer cover the UK. However, it is highly likely that the UK will implement provisions for the protection of existing EUTMs (including IRs extended to the EU) in the UK, or for conversion of existing EUTMs (including IRs extended to the EU) into national UK registrations enjoying the same priority. It is not yet known whether these protective measures will be automatic, or whether some proactive steps by trademark owners will be required. Post-Brexit, those wishing for protection in the UK specifically will need to file UK national applications, or IRs designating the UK.
For those EUTMs which claim seniority from UK national registrations, it is expected that any process of recognition or conversion will also allow for the continuing validity of seniority claims. By way of background, a claim of seniority from an earlier UK national registration within an EUTM means that the owner of the EUTM may continue to claim rights dating back to the UK national registration, even if the owner allows the UK national registration to lapse. In other words, the lapsed UK national registration “lives on” through the EUTM filing, regardless of what ultimately happens to the UK national registration. Seniority claims are allowed in cases where the national filing and the EUTM share “triple identity” (same owner, same mark, same or narrower goods/services). The seniority claim lapses only if the earlier national mark is cancelled for non-use, is declared invalid, or is surrendered prior to registration of the EUTM. In terms of Brexit, it is possible that UK seniority claims within EUTMs will be reestablished as UK national registrations. For the time being, national UK registrations coming due for renewal should be maintained and not allowed to lapse, particularly those that serve as the basis for seniority claims in EUTMs.
Trademark owners are also advised to review their EUTM portfolios for marks that are, or within the next few years will be, subject to the use requirement. An EUTM that is used only or predominantly in the UK may become vulnerable to cancellation for non-use once Brexit takes effect, as the “portion” of the EUTM which currently protects the UK will eventually fall away. The current advice in any event is to use an EUTM in at least two EU member states to protect against non-use revocation. If one of two or more countries of use is currently the UK, trademark owners should assess whether their use in the other EU member state(s) is sufficient to maintain registration in the event of non-use attack.
Another important trademark aspect of Brexit is exhaustion of rights. Currently, once trademark-bearing goods have been circulated within the EEA by the trademark owner or with its consent, the trademark owner cannot prevent the further movement of those branded goods within the EEA market. If the UK leaves the EEA, it is possible that the UK will be viewed as a separate market for exhaustion purposes, meaning that trademark owners may be able to restrict imports coming into the UK from the EU, and vice versa.
As to enforcement, an infringement action filed in an EU court, and any relief obtained therefrom (including an injunction), would not be effective in the UK post-Brexit. If infringement occurs in the UK post-Brexit, a court action must be brought specifically in the UK. While UK and EU trademark law is currently harmonized, decisions of EU courts will likely not apply to the UK post-Brexit, so there may be some de facto de-harmonization in the future. Also, while UK court decisions can now be enforced elsewhere in the EU, it is unclear whether and how this will change post-Brexit. Beyond these enforcement issues, however, Brexit is not expected to affect existing national UK trademark rights in any respect.
Finally, post-Brexit, attorneys who formerly practiced before the EUIPO and the EU courts may no longer be permitted to do so, if they do not have a place of business within the EU and if the UK ceases to be part of the EEA. Thus, clients who handle their EU work through counsel based in the UK will need to keep abreast of whether their UK counsel can continue to handle such matters. It is possible that UK practitioners will be able to continue working on EU cases post-Brexit, on a transitional basis.
What to do Now
For now, trademark owners can hold steady, knowing that clarity on post-Brexit trademark implications and procedures will arrive before the UK actually leaves the EU. That said, for very important trademarks, or for marks which are (or will be) used only or predominantly in the UK, national UK filings may be desirable at this time for extra assurance, though most UK practitioners are confident that measures will be adopted to afford EU filings some form of protection in the UK post-Brexit as discussed above.
In addition, it would be prudent to include Brexit language in settlement agreements with effect in the EU, such as, “The geographic scope of this Agreement shall be the European Union including its present and future individual Member States. For purposes of this Agreement, the ‘European Union’ shall be deemed to include the United Kingdom, regardless of whether the United Kingdom remains a member following its June 2016 vote to leave the European Union, commonly known as ‘Brexit.’” Trademark owners should review any existing agreements with effect in the EU; to the extent language contemplating an exit of any particular country from the EU is not included in an agreement, steps should be taken to confirm the parties’ understanding that the UK is (or is not) to be included in the future, even post-Brexit.