As the countdown towards Brexit draws nearer, we appear to be edging closer than ever to a “no deal” situation, particularly given the recent turn of political events. From an IP perspective, this will no doubt represent a period of substantial uncertainty, and it is rather difficult to predict how well businesses will be able to navigate around these unchartered territories.
Those in the IP fields can, however, be somewhat reassured that the government, amongst all the crisis, have taken steps to put IP issues on their agenda when preparing for the eventuality of a post-Brexit world. In their notice, published 24th September 2018, the government offered some guidance on the approach to be taken in a “no deal” scenario, specifically with Trade Marks (and Designs) in mind. The technical notice is aimed at preparing the road in such a way as to minimise disruption, ensuring a ‘smooth and orderly exit’.
Since then, a draft instrument has been written up to address, at least in part, the implementation of Trade Marks following the UK’s departure from the EU – see The Trade Marks Exit Regulations 2018 (the “TM Exit Regulations”).
The TM Exit Regulations
If a deal is done with the EU, the TM Exit Regulations will come into force on “exit day”, which, for all Trade Mark intents and purposes, will be at the end of the transition period (currently 31 December 2020).
If there is no deal on exit day (currently 29 March 23.00 GMT), the effect of the Regulations is still likely to be applicable – so the only real conceivable practical difference between a deal and no deal departure, will be in timing.
The draft TM Exit Regulations includes a new Schedule 2A, which will be inserted into the UK Trade Marks Act 1994.
In short, the TM Exit Regulations provides for a cloning-based Trade Mark regime. Existing EUTMs will be cloned into UKTMs, provided that they have been registered prior to exit day (29 March 2019). These UKTMs will be given a new title, “comparable Trade Mark (EU)” (hereinafter “clones”). Clones will share the filing (including priority and seniority) and registration dates of their parent EUTM, and there is to be no fee or opt-in procedure for this process to happen.
Clones should, according to the Regulation, appear automatically on the UK Trade Marks Register ‘as soon as reasonably practicable after exit day’. The government’s notice has confirmed that a notification will be made to EUTM owners that a UK clone has been created. Given the multiplicity of EUTMs currently existing on the UKIPO database, and the likely administrative challenge of implementing this wholly novel clone-based database, it is foreseeable that there may be a significant lapse of time before clones start showing up on the IPO Register, and before owners are actually notified of their new clones.
EUTM owners may choose to opt-out of cloning at any time on or after exit day by serving notice on the UKIPO. However, opting out is not possible in the following circumstances:
- If the clone has been used in the UK;
- If the clone has been licensed or involved in certain transactions;
- If proceedings relying upon the clone have commenced.
With this in mind, it is questionable whether European Trade Mark owners with business in the UK can choose to opt-out at all, given that, in most cases, EUTMs will be used extensively in the UK during the course of business on the day before exit day, and will likely continue post-Brexit, upon which a clone will have automatically been made. Therefore, unless a business completely ceases to operate its business activities following exit day, it is difficult to envisage how a situation might arise, whereby an owner would not be “using” a clone in the UK, allowing them to utilise the “opt-out” provision.
Renewals will still follow existing UKTM renewal procedures following Brexit, but with important added protection anticipating the potential problem of owners forgetting about their clones. The Regulation provides that any owner with a clone renewable in the first 6 months post-Brexit will receive written notification from the UKIPO, notifying them of the upcoming expiration. From the date of receipt of this notice, Trade Mark owners will have 6 months to renew their clones.
Crucially, renewal fees will have to be paid to both the EUIPO and UKIPO for all Marks with a renewal deadline post 29 March 2019.
Proof of Use
There are some important technicalities to bear in mind when it comes to proving use of a Trade Mark post-Brexit. When proving the use of a clone within a proof of use period occurring wholly before exit day, the use of a parent EUTM in the EU, which will include use in the UK, will count towards establishing proof of use. However, where the proof of use period of a clone is split partially before and after exit day, the use of a parent EUTM can only count for the part of the period before exit day. Any evidence of use during the part of the period after exit day must be use occurring specifically within the UK.
Similar provisions are mirrored with respect to proof of reputation. Where there is requirement to prove reputation at a point before exit day, the reputation of a parent EUTM in the EU prior to exit day will count, including any relevant reputation in the UK existing before exit day.
Co-existence Agreements, Licenses etc.
Post-Brexit, any co-existence agreements, licences and any other relevant transactions which involve EUTMs are deemed to cover their corresponding clones unless there is explicit evidence that such documents were not intended to have effect in the UK.
Pending Proceedings and Injunctions in the UK
Any actions pending before the UK courts concerning EUTMs will continue after exit day, but with the EUTM being swapped out for their corresponding clone. Similarly, any existing injunctions prohibiting acts in the UK on the basis of an EUTM will continue, with a clone being swapped in. From a practical perspective, this process of swapping in clones may potentially significantly diminish the scope of proceedings and injunctions between the parties, so it seems that pan-European level injunctions will no longer be available from the UK courts following Brexit, at least insofar as far a ‘no deal’ departure is concerned.
One of the most important things to note in the new Regulations is that any EUTM Application pending as of exit day will not be cloned.
Instead, the Applicant will have 9 months from exit day to file a new UKTM Application, during which they will be entitled to claim the same filing date (or priority date) of the previously pending EUTM Application.
Given that most EUTMs generally taking at least 4 months from the date of filing to progress to Registration, 3 months of that being the mandatory Opposition period, the usual lag before the EUIPO marks an Application as “Registered” may well mean that EUTMs filed in 2019, and potentially some filed in December 2018, will not be automatically cloned, and will need to be re-filed within 9 months.
Importantly, Trade Mark Applicant’s with pending Applications should therefore note that they will not be notified of the need to refile, and will be required to pay all official fees to make a new filing.
Outstanding Issues Unaddressed by The TM Exit Regulations
Generally speaking, the TM Exit Regulations go some way in addressing the problems which may arise following the UK’s departure from the European Union. Nonetheless, despite a level of detail, some outstanding issues remain largely unaddressed. A few of these issues are summarised below:
- The UK government has confirmed the continued protection of International Trade Marks in the UK following a ‘no deal’ departure scenario. International Trade Marks designating the EU will be protected as new UK Registrations, rather than International Registrations designating the UK. It remains unclear whether this is to happen automatically, as with cloning, or, in the alternative, whether Trade Mark owners will have to take proactive steps in order to safeguard continued protection.
- Based on current rules on correspondence addresses, anyone applying for a UK trade Mark must supply an address for service in the European Economic Area (EEA). The Regulations does not adopt any form of “transitional” approach to representation, which would have ensured a level of certainty if the UK were to leave the EEA too. Considering that this may well become the reality following a ‘no deal’ departure, the lack of transitional measures addressing the loss of rights of representation on part of UK Trade Mark Practitioners might have some significant ramifications.
Overall, the TM Exit Regulations, address a large area of the upcoming issues which may arise in a post-Brexit, ‘no deal’ world. As we get nearer to Brexit day, things could, no doubt change significantly overnight. Judging by what the UK government has prepared thus far, the current ‘business as usual’ theme is entirely focused on a visible attempt to make everything as easy as possible for Trade Mark owners. Whilst most of what is being suggested appears sensible, some larger issues do remain unresolved at the expense Trade Mark practitioners.
With many of the important details still to be confirmed, and with Brexit still being “up in the air” in terms of securing a deal or “no deal”, we may find ourselves in a situation where solutions and/or any significant changes are only announced at the very last moment. With this in mind, Trade Mark owners and practitioners should be minded to closely follow and monitor the unfolding political and legal developments, as these will, no doubt, have a huge impact on the implementation of Trade Mark law and practice in the post-Brexit world.