What should I be doing now? Part 2 – Future-Proof those Agreements

What should I be doing now? Part 2 – Future-Proof those Agreements

Co-existence agreements are a popular way of settling EU trade mark disputes, and many EU trade mark owners are signatories to at least one such agreement.  However, can such co-existence agreements and other legal contracts, like consents and licences (and including those for designs as well as trade marks), be relied upon in the future? To create legal certainty, we think every EU agreement needs to be rewritten, or at least be amended by the execution of an addendum. 

Here’s why:
 
Firstly, Brexit will produce new national UK rights that are not mentioned or anticipated in existing documents.  Although the mechanism is not yet known, it seems clear that, after Brexit, what was previously an EU registration will become an EU registration plus a new UK registration.  Even if the new UK rights have an EU lineage and retain the same numbers, they will no longer be EU registrations.  Few, if any, agreements will cover this eventuality automatically.
 
Then there is the question of territory.  It is possible that agreements that currently cover the UK because it is a member state of the European Union will not cover the UK in future.  Since the introduction of the EU trade mark and design systems, whenever countries have joined the EU, existing EU trade marks and designs have been automatically extended in scope so as to cover the new member states.  But, the focus always has been on enlargement.  Until now, the EU has only ever grown, and the so-called Unitary Principle means that EU trade marks and designs must cover the whole of the EU, and cannot only cover part of it.   No one has ever envisaged a member state leaving.  Consequently, the territory is usually defined as “the European Union” or “the European Union, namely the member states in which EU trade marks (and designs) are protected, including those that may join the EU in future,”.  It is arguable that any agreement that defines the territory in terms like these will cease to be effective in the UK after Brexit.  The question is whether the territory definitions used encompasses the European Union “at the time” or “from time to time”.  Many agreements will be ambiguous.
 
We are also advising that all agreements be scrutinised for other issues that might be thrown up by Brexit.  For example:
 
If there is a force majeure clause, it may be that parties to an agreement are able to claim exemption from liability or obligation under the agreement because Brexit creates a “material adverse change” in the trading conditions for which the agreement was written and envisaged to operate.  This is unlikely to be a valid argument in most cases, but there may be instances where the specific circumstances of the agreement or the industry or market sector concerned mean that it is.
 
In other instances, there may be consequences of differences between EU law and the law in the UK, which were not anticipated when an agreement was written with EU regulations in mind. For example, under EU law, a licensee can bring infringement proceedings in its own name as long as it has the licensor’s consent, but the position is different under the UK Trade Marks Act, where only a registered licensee is entitled to bring infringement proceedings.    
 
We sometimes hear people say that they will wait until something actually happens with Brexit before doing anything.  Our advice is to start now.  There’s lots to do and it isn’t necessary to wait for Brexit to agree and execute revised agreements, or addenda.  Changes can be made now, even before new UK rights, potentially with new registration or application numbers, are known. 
 
And, just in case, it might be sensible to anticipate future departures from the EU……….. 
 
As ever, we are at the disposal of all our clients and friends around the world for advice in specific cases.

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