EU trademarks and Community designs in the light of Brexit
European Union trademark (“EU trademark”) is a system that enables the applicants to encompass all EU Member States with a single trademark registration and thus this trademark does not have to be registered separately in each EU Member State, which can significantly reduce the costs related to such registration. This applies as long as there are no third persons that object to such trademark based on their priority rights, when life can suddenly become quite complicated, in particular if the applicant has already launched its EU trademark on the market, without waiting for the application to be transformed into registration. A similar system to the EU trademark is also the system of Community design, which enables the applicants to register the design (i.e. design corpus) in all EU Member States.
Both systems are very popular with applicants from the EU and from elsewhere around the world, in particular in the US and in China. The data on the number of EU trademark applications in the period 2010–2017 show that 956,000 new EU trademark applications were filed within this period, while a comparison between the years 2010 and 2017 shows a 49% growth. On 1 January 2018 there were more than 1.2 million EU trademarks in force. The numbers regarding Community designs are similar, in this period more than 203,000 applications for 770,000 individual designs were filed, and a comparison between the years 2010 and 2017 shows a 33.8% growth. More than 730,000 Community designs were registered on 1 January 2018 (source: https://euipo.europa.eu, EUIPO Trade Mark Focus 2010 to 2017 Evolution in EUIPO Design Focus 2010 to 2017 Evolution).
One of the Member States where EU trademark and Community design apply is (for now still) also the United Kingdom. Soon after announcing the results of the referendum in the UK, speculations started to arise what will happen with those rights when the UK will exit the EU, more precisely, whether the holders of EU trademarks and Community designs will lose their rights and whether it will be ensured in any way that protection will continue also after UK’s withdrawal from the EU.
As it is known, the EU and the UK are currently negotiating a withdrawal agreement. The draft agreement, which was published on 19 March 2018, provides for a regulation in the field of intellectual property which brings some clarity with regard to how EU trademarks and Community designs should be handled after Brexit and what will happen in the interim period, which is supposed to expire on 31 December 2020.
The draft agreement foresees that those holders of EU trademarks or Community designs who will have rights granted by the end of the interim period will not have to re-register these rights in any way in the UK, which is crucial for the holders of these rights. These rights will automatically become either UK trademarks or UK designs, the rights will be virtually “cloned”, whereby the date of application of EU trademark or Community design will be deemed as the application date, or the date of priority right where the latter has been exercised. The continuity of internationally registered trademarks and designs should be ensured as well, whereby the EU is marked as the area of protection, although this mechanism still has to be finalised. Thus, it seems that if the agreement is concluded, the holders of these rights do not have to worry what will happen to them after Brexit and even less to rush now with e.g. filing trademark applications in the UK, such that are registered as EU trademarks now, in order to protect themselves from the consequences of Brexit and a possible loss of these rights.
Furthermore, it is foreseen in the draft agreement that the holders of EU trademarks and Community designs will not have to pay any fees for the validity of these rights in the UK neither will they have to file any applications – the competent authority will search for the rights in the registers of the European Intellectual Property Office (EUIPO) on its own, neither will it be required for the holders of rights to have their correspondence address in the UK (in simplified terms, this means that for the needs of rights “cloning” they will not have to search for a representative for trademarks or designs before the Intellectual Property Office of the UK). The text of the draft agreement has not been harmonised in this part yet, however the Government of the UK has already announced that it does not intend to charge any fees to the holders of rights for the transition process.
However, a different regulation is foreseen for those EU trademarks or Community designs which will not be registered yet upon the expiration of the interim period. After the expiration of the interim period the applicants will have 9 months to file a request for registration at the Intellectual Property Office of the UK, whereby the date of application of priority right will remain the same as was assigned to these applications by EUIPO. Thus, an additional activity of the applicants is foreseen in this case and if the agreement is to be concluded with the current content, the deadline is not to be missed, as the date of application or priority right is crucial.
The draft agreement deals also with the so-called unregistered Community design, for which it is foreseen that its holder will ipso iure become the holder of enforceable right in the UK and will be guaranteed the same level of protection as it has under Council Regulation (EC) No. 6/2002 on Community designs, and also the same (remaining) period of protection as provided for in the Regulation in Article 11(1), i.e. the remaining period, counting from the date on which the design was first made available to the public within the EU (the period is otherwise three years from this date).
The draft agreement resolves also the issue of use of an EU trademark. In simplified terms, the latter is required within five years under Regulation (EU) 2017/1001 of the European Parliament and of the Council on the European Union trademark, otherwise the trademark may be cancelled. The draft agreement foresees that a trademark will not be cancelled due to non-use if it was not put into use in the territory of the UK within the period until the expiration of the interim period. The holders of trademarks with a reputation may be relieved as well, as the reputation gained at EU level until the expiration of the interim period will be taken into account also with the “cloned” trademark and onwards following the expiration of the interim period in the UK.
The arrangement, which resolves issues in principle, will thus, as long as it is concluded in such content, ensure the continuity of rights that enjoy uniform protection in the EU. However, the details are not known yet, e.g. what, if any, will be the costs related thereto and how the administrative procedures will be set based on which the rights will be “cloned”. Similarly it is also not clear what will happen to EU trademarks regarding which proceedings will be still pending before EUIPO due to an opposition raised, where the opponent has to demonstrate the use of its trademark on which the opposition is based.
And what if there will be no agreement? It follows from the directions of the Government of the UK that for granted EU trademarks and Community designs equivalent rights will be granted in the UK, which will enter into force with the withdrawal of the UK from the EU. Equivalent rights will be granted with minimum administrative burden, whereby their holders will be also able to select not to obtain these rights. For applications to obtain these rights, it is foreseen that the applicants will have to file again their applications in the UK within nine months after withdrawal from the EU, under the rules of procedure for the registration of these rights and upon the payment of fees, however with the recognition of application date in the EU. Continuity for non-registered Community designs will be granted by creating an entirely new right in the legislation of the UK with the same characteristics as those of unregistered Community design.
It seems that the destiny of EU trademarks and Community designs upon the withdrawal of the UK from the EU is not completely uncertain and their continuity in the UK will be guaranteed in one way or another. We advise the companies for which the UK represents a crucial or significant market to follow the development and maybe consider filing an application for the registration of EU trademark or the registration of Community design now, as it is quite likely that they will already be granted upon the expiration of the interim period, all of course bearing in mind the company’s business strategy, financial capacities and adequate degree of caution.