Brands and IP in a no deal Brexit scenario

The UK government has issued a series of "technical notes" on IP matters to address a possible no deal Brexit outcome. The key ones relating to brands are below:

• Trade marks and designs - if there's no brexit deal
• Exhaustion of IP rights - if there's no brexit deal

On the whole, they include little that has not already been publicly stated. There are still some helpful confirmations but also scope for uncertainty. Considering the two notices in turn:

Trade marks and designs if there’s no Brexit deal

This now confirms that EU trade marks and Registered Community Designs will definitely be protected in the UK as a split-out "comparable" UK right immediately on Brexit.

• A UKIPO spokesperson had previously been quoted, in July, as saying this protection was contingent on a deal being reached. On the same day, a statement on the UKIPO website had merely expressed this continuity of protection as something the government "aims to ensure".
• Now the position is more emphatic. It is irrespective of the EU27's position on post-Brexit arrangements and it is good to see IP rights are not being used as a negotiating pawn in this respect. There will be an opt out for those not wishing to have the UK protection.
• However, there is some confusion over how this will happen. The same UKIPO spokesperson had said the new right would be "granted automatically and free of charge". The fact that it would be free was also first indicated in a government parliamentary statement on 19 July.
• This technical paper is less clear on this. It says it "will be provided with minimal administrative burden". It is not clear if this means it will be entirely automatic and free. If it is not, there is a concern that small businesses and rights holders without professional representation in particular may lose their UK protection simply as a result of inadvertently not paying the charge or not taking the administrative step required. This is not least because the introduction of any "administrative burden" at all is likely to invite fraudsters to send out more scam invoices confusing the situation. They would be received by EU rights around the world (not all of whom will understand English) simultaneously with any official communication. The risk of both being ignored or just the fraudulent invoice being paid is high.

It is confirmed that, even in a no deal scenario, EU applications pending at Brexit would need to be re-filed as UK applications in order to secure UK protection but, if this is done within 9 months of Brexit, the original priority date can be preserved.

• This is exactly as had been provisionally agreed between the UK and EU27 back in March and reflected in the last version of the draft Withdrawal Agreement.
• However, many rights owners (including the MARQUES organisation – see here) believe it would be preferable for pending EU applications to be split out automatically into a comparable UK right only once any EU objections or oppositions had been concluded at the EUIPO. That avoids absolute ground objections and opposition issues pending before the EUIPO being re-argued or re-litigated before the UKIPO. Instead, applicants and opponents alike now face the additional cost of having to deal with such issues all over again, perhaps after having spent considerable time and money dealing with the issues still pending before the EUIPO at the time of Brexit. It also avoids the cost of having to refile the application anew in the UK.
• The position proposed by the UK and provisionally agreed with the Commission, also risks opportunists filing new UK applications for some or all of the EUTMs pending at Brexit which do not get re-filed in the UK within the 9 month priority window. It creates a regrettable opportunity for trade mark squatting of brands owned by those least able and resourced to defend themselves, i.e. SMEs and those without professional representation.
• Assuming the need to re-file in the UK, it means applicants may now want to accelerate any pending EUIPO prosecution matters to get their EU applications through before Brexit. Likewise parties to oppositions will want to consider employing delaying or acceleration tactics, including the lodging of appeals, so that applications either are or are not pending on Brexit. However, it needs to be remembered that such tactics will be ineffective if the Withdrawal Agreement is agreed and the proposed 21-month transition period applies until the end of 2020.

The position remains unclear as regards international registrations designating the EU under the Madrid (for trade marks) and Hague (for designs) Conventions.

• This is something the UK government needs to resolve with WIPO but there is no sign of that having progressed yet.
• It is hoped that they can be dealt with in the same way as EU rights registered directly with the EUIPO but this remains to be seen.

The notice states that "provision will be made" regarding litigation pending before the UK courts where the claim is based on an EUTM or RCD.

• Whilst the notice does not say so, it seems clear the UK comparable right could still be the subject of a UK court's order but only for a UK-wide injunction. However, injunctions and compensation covering the EU27 presumably could not be granted by a UK court post-Brexit even if the litigation has started pre-Brexit.
• The notice is silent on, and it remains to be resolved, whether a UK appeal court can uphold post-Brexit a pan-EU injunction granted pre-Brexit by a UK first instance court.
• Likewise, we do not know if such an injunction would be enforceable in the EU27 and, in reciprocation, whether the UK courts will enforce in the UK a pre-Brexit granted pan-EU injunction issued by an EU27 national court but which was subject to appeal at the time of Brexit.
• These and many others are points remain to be negotiated. It is hoped the respective UK and EU27 positions will be fully clarified as soon as possible since there will be many litigations, and actions being contemplated, where the outcome of those negotiations, or their anticipated outcome, will determine the immediate litigation strategy.
• In particular, for those contemplating a claim against a UK-based defendant but wanting pan-EU relief, a decision needs to be taken now whether to wait until 29 March 2019 before starting the action in the appropriate EU27 court (depending on whether and where in the EU the claimant is present) rather than in the UK. Of course, to obtain injunctive relief and compensation in relation to use in the UK, a separate claim would also need to be started in the UK. Anyone hoping to secure pan-EU relief for the UK and EU27 countries in a current UK action, or one about to start, is gambling on the Withdrawal Agreement being agreed.

There will be a new UK system to protect a "supplementary unregistered design right" which will be comparable to the unregistered Community design right (UCD).

• This addresses future designs and is in addition to the promise already made that that UCDs valid at Brexit will have a comparable UK right created for the remaining duration of the UCD. This was provisionally agreed in the draft Withdrawal Agreement. Such protection has proved especially helpful for brand owners protecting against lookalike fashion goods and packaging in particular.
• The notice refers to UCDs for EU27 countries in future being valid only if the first publication of the design is in the EU27. However, whilst this has been the interpretation of the EU design regulation by the German Supreme Court, there have been conflicting decisions around the EU and it remains a point for the CJEU to decide.
• The notice adopts the same approach in respect of the new supplementary UDR. It is stated that this new protection will only arise for designs first published in the UK. If the UK does explicitly adopt such a requirement, it has the potential to create an unfair dilemma for designers. They either first publish in an EU27 country to benefit from the free pan-EU27-wide UCD (assuming that is the law) or they first publish in the UK but then only secure the new supplementary UDR in the UK. If that were to apply, it could be impossible for a designer to secure UDR protection in both the UK and the EU27. Ideally CJEU case law will clarify whether first publication in the EU is a requirement or otherwise a negotiated outcome will clarify that first publication in either region will secure both types of rights. The alternative is that the CJEU and/or a negotiated outcome clarify that a first publication simultaneously within and outside the EU (in particular in the UK) is sufficient to secure the relevant rights.

The section on correspondence address indicates there will be no immediate requirement to have a UK address added to the UKIPO's database for each of the UK comparable rights that will be created out of EUTMs and RCDs.

• This is helpful since it ties in the with the need to minimise the administrative at the time of Brexit. The EU27 position as regards EUTM and RCD representation is presently that UK professional representatives will no longer qualify to represent IP owners before the EUIPO.
• For UK firms with a number of international offices within EU27 countries and/or professionals qualified in those countries, there ought to be no issue. Taylor Wessing, for example, is confident there will be no disruption to its services.
• Whilst there is no immediate need to change address before the UKIPO, it seems likely that a UK address will be needed if a step has to be taken before the UKIPO, e.g. effecting a renewal, recording a change of name, address or an assignment, and/or defending the new comparable UK right against an invalidity or revocation attack.
• The notice makes reference to legal professional privilege attaching to communications with UK IP professionals as something derived from UK IP laws. It confirms that such privilege currently extends to professionals in EU27 countries who are qualified to act before the EUIPO and who are advising clients on UKIPO matters. However, nothing is said about whether that privilege will continue post-Brexit and it seems likely the UK government will be seeking to negotiate some reciprocity.

Exhaustion of intellectual property rights if there’s no Brexit deal

• In a previous notice issued on 14 September 2018 and entitled "How medicines, medical devices and clinical trials would be regulated if there’s no Brexit deal" (see here), it had already been stated that the UK "will unilaterally align to the EU/EEA exhaustion regime from Exit day to provide continuity in the immediate term for businesses and consumers and ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EU/EEA".
• That has now been repeated in respect of all branded goods, although this is only stated to be only for the "immediate term". It is unclear what may happen in the medium to long term.
• The notice makes express reference to TRIPS with the implication that this proposal complies with the UK's obligations under Article 4 (Most-favoured Nation Treatment). Whether it is indeed compliant remains to be seen.
• It is recognised that this is a unilateral declaration and it is uncertain if IP rights relating to goods first put on the market in the UK will be exhausted within the EEA. Assuming not, then parallel imports from the UK to the EEA could be blocked by holders of EUTMs and national rights in EU27 countries going forward. In contrast, parallel imports from EU27 (and other EEA countries) could freely flow into the UK without brand owners being able to stop them.