Brexit paper's questions unfold like origami

On 7 September, the EU Commission issued a position paper setting out its views on the division of “Intellectual property rights (including geographical indications)” when the UK leaves the EU. 

It’s a short document that takes a broad-brush approach. The fundamental principle is that existing EU rights should be automatically recognised as enforceable IP rights in the UK.

‘Automatically’ means there would be no fee and features like renewal dates, priorities, seniorities, genuine use and reputation would be preserved.

The EC wants this principle applied to registered EU trademarks, registered Community designs, unregistered Community designs, Community plant variety rights, protected geographical indications, protected designations of origin, and other geographical indications, traditional speciality guaranteed and traditional terms for wine registered under a number of EU regulations, as well as (potentially) pending applications for registration/protection. 

Patents are not considered in the position paper because European patents are not under the auspices of the EU. However, the position paper proposes that the principle should apply to Supplementary Protection Certificates.

The position paper also proposes two further things:

• that database rights of UK and EU nationals and companies be mutually recognised; and
• that goods for which IP rights were exhausted in the EU prior to Brexit should remain exhausted in the EU and the UK. Exhaustion should be as defined by EU law such that, for example, when a product branded with a registered trademark is imported into a European Economic Area country with the trademark owner's consent, the trademark owner cannot oppose the re‐importation of this product into another European Economic Area country.

On the face of it, these proposals would be good for rightsholders, and it would be beneficial if the UK government could reassure businesses, especially UK ones that want protection in their home markets, but are currently reliant on EU rights, that those rights will continue in force in the UK after Brexit. This would be especially important for owners of registered Community designs, which cannot be validly re-filed in the UK for lack of novelty. 

However, invariably with Brexit, the devil is in the detail that is missing. 

Trade marks 
With trademarks, the number of national UK rights would triple under the proposals. Even if the importation of data could be done relatively cost effectively, there still would be a potentially huge burden on the UK Intellectual Property Office (IPO) in dealing with pending oppositions and cancellations that remain viable when the UK is considered in isolation. 

Such cases would be especially burdensome given the discrepancies in practice between the EU and UK regimes when it comes to things like pleadings and evidence. How this would be done in practice, and whether the UK is willing to foot the bill for doing it, remains to be seen. (Then, too, there are those cases currently on appeal. UK appeals cannot be filed merely on the basis that a party does not like the first instance decision – there must be some arguable error of principle or fact. Hence, many EU appeals simply could not be run in the UK).

There are also issues to be clarified in respect of genuine use. Under the proposals, valid trademarks right with an EU lineage presumably would exist in the UK upon Brexit even if those marks have never been used in the UK (providing they have been used sufficiently to establish genuine use in the rest of the EU). After Brexit, it would be strange if use in the EU-of-27 continues to count towards genuine use in the UK. Presumably, EU trademarks recognised in the UK after Brexit will be treated in the same way as UK marks with a domestic lineage. The question then would be when the clock starts ticking – would it be the date of Brexit?

Registered designs 
With registered designs, it is more a question of administrative burden – a near 20-fold increase in national rights is anticipated… 
Then there is the question of how the proposals would be implemented. Would EU registered trademarks and Community designs go onto the UK registers, or simply be recognised as potentially valid and enforceable in the UK? The latter might be easier from an administrative point of view, but then there would need to be some tidying up later. For example, presumably rightsholders would have the option of creating new UK rights upon renewal.

With unregistered designs, there is a more fundamental issue. There are significant differences between UK unregistered design rights and EU ones. Thus, there is a serious question over whether EU unregistered design rights can be honoured in the UK after Brexit. This is a commercially significant problem, since EU unregistered design rights are often an important weapon in the fight against infringers and counterfeiters.

GIs and PDOs
The same goes for protected geographical indications and protected designations of origin, for which there is currently no UK legislation. There is also a political dimension to this – should the UK introduce new legislation, or incorporate EU law into English law, to meet the EC’s desire for geographical indications to continue to be protected in the UK?

When it comes to exhaustion of rights, there would be a fundamental practical problem in distinguishing between goods exhausted within the EU prior to Brexit (which would be treated as exhausted in the UK) and those exhausted in the EU of 27 after Brexit (which presumably would not). 

It is not all about the UK, however. There also would be issues for the EUIPO. For example, how would it deal with pending trademark oppositions and cancellations based on UK trademarks? Also, what would it do about proceedings in English if English ceases to be an official language of the EUIPO.

Many commentators are suggesting that the best way forward is if EU law is incorporated into English law upon Brexit, as proposed in the Repeal Bill. Undoubtedly, given the time constraints and the potential chaos of the alternatives, this seems sensible. However, for the reasons given above (and no doubt many others as well) there still will be a pressing need to tie up loose ends.

And then, there is the UPC…

Author

Victor Caddy is a partner at Wynne-Jones. He has over 25 years’ experience as a trade mark and design attorney.

Featured in Intellectual Property Magazine September 2017