Newsletter Brexit July 2016
How the impending Brexit impacts the legal framework of doing business with the UK – the German perspective: Intellectual property rights
Effects on harmonized European protected privileges
- EU trademarks
EU trademarks are harmonized protected privileges that are directly applicable in all EU member states on the basis of the EU Trademark Regulation. It is currently not clear what will happen to the "UK part" of these trademarks. In the event of the withdrawal negotiations not producing an agreement under which the EU trademark system continues with regard to the UK, the question will arise of whether, when and to what extent the limitation of the territorial scope of protection of the EU trademark could be compensated for through the simultaneous creation of a corresponding national protected privilege in the UK. Even if experience following the break-up of the USSR and Yugoslavia currently does much to suggest that there will be priority-safeguarding conversion into a UK trademark with retention of the EU trademark then covering 27 EU member states, the possibility of loss of the trademark rights in the UK cannot be fully excluded as "worst case" scenario.
Parties registering EU trademarks, for whom the UK represents an important market, should therefore consider registering UK trademarks in addition now, if applicable by way of international protective cover under the Madrid System - possibly intended anyway. The resulting additional expense is unlikely to differ significantly from any possible conversion fee.
- Community designs
In principle, the above considerations concerning EU trademarks apply accordingly to community designs.
In contrast to trademarks that can be extended time and time again, the period of protection for community designs is however limited from the outset to 25 years (registered community design) or three years (non-registered community design). This situation could encourage a solution in the interests of the continuity of existing designs, in particular since, in view of the pre-conditions for protection of newness and uniqueness, the new registration of national designs outside of the so-called period of grace could not be considered.
Other than under the Madrid System for international registrations applicable to trademarks, an international design registration is not possible, because the UK is as yet not a member of the Hague Convention. The flanking registration of national designs in the UK may appear advisable here.
Consequences for IP portfolio Management
With regard to the management of EU trademark portfolios, it should be noted that persons with neither a place of residence nor a commercial or trading establishment in the EEA, are subject to compulsory representation before the European Union Intellectual Property Office (EUIPO), with the exception of when registering an EU trademark. If the UK does not remain in the EEA under the "Norwegian" model, trademark owners based in the UK would therefore have to appoint a lawyer, admitted and based in an EEA country, or other admitted representative, to be able to act before the EUIPO.
Irrespective of whether the UK remains in the EEA, the appointment of a representative, admitted and based in the EU, or of another admitted representative, would certainly be necessary in the area of the Community Design Regulation given the current legal situation, since, other than the recently reformed Art. 92 Subsection 2 of the European Trademark Regulation, Art. 77 Subsection 2 of the Community Design Regulation is not based on the EEA but rather on the "community".
With international trademark registrations, it must be noted that the registrant or owner of the base trademark must either be a national of the country of registration or be domiciled there, or must have an actual commercial or trading establishment there that does not exist just for sham purposes. For registrants from the UK with no such establishment in the EU, the choice of an EU trademark as base trademark is therefore not possible in the event of effective withdrawal, seen from the current perspective. With regard to the five-year binding of the international trademark to the continued existence of the base trademark, it is currently not clear whether and under what pre-conditions existing international registrations, submitted by registrants from the UK on the basis of European base trademarks, will last in future. Here too, transition rulings can be expected.
Enforcement of IP rights
A consequence of limiting the territorial scope of protection of EU trademarks and community designs would be that an injunction, granted by a court for the entire EU, would no longer suffice for forbidding infringements of rights in the UK following a Brexit. Instead, the holder of the rights would have to file separate legal action in the UK, in order to also prohibit the infringements of the rights there. Any such legal action could then only be successful on the basis of a national UK law.
Whether titles, previously issued by UK courts with EU-wide effect, would continue to be recognized by courts in the EU member states following withdrawal of the UK, is as difficult to forecast as it is to answer the question of how the UK will handle court titles with only a national effect, but obtained on the basis of EU rights. In each of these cases, the parties are therefore faced with the risk of disputes, already decided by a court, being "rekindled".
Also uncertain is whether and to what extent reasons for cancellation, relevant to a specific territory and with no effect thus far based on the principle of uniformity of the EU trademark, could "infect" the EU trademark (and vice versa), even given simultaneous creation of a national UK trademark. Thus for example, the use of an EU trademark in the UK will no longer be able to constitute rights-maintaining use five years after the date of withdrawal; the trademark would become due for cancellation. Owners of EU trademarks who have thus far operated mainly in the UK with their trademark, should consider starting use measures in (other) EU member states or registering new EU trademarks at an early stage.
If the UK does not remain in the EEA, the consequence would be that imports of goods from the UK to the EEA would no longer be covered by the principle of exhaustion, i.e. holders of rights could oppose the import of such products into the EU and their sale there if these were first marketed in the UK.
For holders of rights taking measures against product piracy with the help of the customs, it is likely to be worthwhile also submitting a national application for border seizure to the UK customs authority Border Force in future.
License agreements and delimitation agreements
The EU should not be chosen unguardedly as territory when concluding future license agreements and delimitation agreements. Clarification is recommended concerning the UK. Rulings should also be considered that oblige the registration of new national protected privileges in the UK.
In terms of existing, long-term oriented contracts, a check should be made on whether the desired effects can still be achieved following the UK's withdrawal, or whether there is a need for renegotiation.
Effects on patent law
It is highly likely that the planned European Unified Patent will fail as a result of Brexit, as it appears inconceivable for the central division of the Unified Patent Court to be based in London and thus outside the EU. This means that new negotiations would be required in order to save the EU Patent. Matters to be clarified include where the central division should be located instead of London as previously planned. A decision would also be required on whether the annual fees would have to be lowered, given the reduced territorial scope of application. Whether these negotiations will be successful, whether the idea of a European Uniform Patent will be called completely into question or whether a genuine community patent will be introduced in its place, is something that remains to be seen. The negotiations would certainly need time, and the EU Patent could not become reality in 2017.
By contrast, European Patents (EP Patents) can still be registered with the European Patent Office and validated in the United Kingdom. The European Patent Office and the EP Patent issued by it have nothing to do with the EU, and are therefore not affected by Brexit.
