Brexit - EU Draft Withdrawal Agreement - What about EU IP Rights?

The EU Draft Withdrawal Agreement running to 585 pages was published yesterday (14 November 2018). Politicians in the UK and EU will now be pouring over the detail of the draft with particular reference to the "divorce bill", the Northern Irish "backstop" and the rights of EU and UK citizens, to decide if it's a good or bad deal. This piece will focus on what the draft agreement proposes for intellectual property rights and the possible impact for IP owners.

We have previously blogged about the impact of leaving the EU on IP rights here. After the Brexit vote, for IP owners it has and still remains a case of business as usual. However, leaving the EU could potentially have wide reaching impact on IP rights in the UK. In particular the status of valuable pan-European IP rights such as community trade marks, community registered designs and community wide geographical indicators of origin has been uncertain.

What does the agreement say?

Article 54 is devoted to intellectual property rights. In summary, the draft agreement would provide that:

1. Any community wide trade marks, designs or plant variety rights registered before the end of the transition period (31 December 2020) will be converted to an equivalent right in the UK without any re-examination process. The renewal date for the new UK right will be the same as the existing EU right. This effectively means that any existing EU wide rights will continue to be protected in the rest of the EU as pan EU rights and in the UK as separate UK national rights.

2. Geographical indicators of origin (such as Scotch whisky, Orkney lamb and Stornoway black pudding) and similar rights protected in the EU before the end of the transition period will continue to be protected in the rest of the EU and in the UK by a new equivalent right in the UK, again without re-examination. Protection at UK level is to be withdrawn if the corresponding EU right ceases to be protected. The creation of a comparable UK right will be welcomed by many European and international food and drink producers keen to ensure that the UK does not allow the sale of copycat products seeking to trade off the cachet and reputation of well know protected terms such as Port, Cognac and Roquefort.

3. If an existing EU IP right is declared invalid or is revoked as a result of proceedings before the EU Intellectual Property Office or an EU Court then the new corresponding UK right will also be declared invalid or revoked provided that the proceedings had started before the last day of the transition period. The important date is the date of the commencement of the proceedings rather than the date of the decision. So decisions after the end of the transition period will still have effect in the UK provided that proceedings started before the end of the transition period. It also means that any proceedings for invalidity started after the transition period will need to take place separately in the EU and UK.

4. Specifically in relation to community trade marks, the priority date of the EU mark (when legal protection starts from) will apply to the new UK mark meaning that protection in the UK is deemed to begin on the same date as protection in the EU. This ensures that the start date of the new UK right is the same as the EU right rather than the UK right starting at the end of the transition period. Also, the new UK trade mark cannot be declared invalid on the basis of non-use in the UK prior to the end of the transition period.

5. The owner of a trade mark can prevent use of a sign which is identical or similar to its mark where the sign takes unfair advantage of its reputation. However, the rights holder needs to show that the mark has a reputation to be successful. The agreement states that should opposition or infringement proceedings be brought in the UK on the basis of the reputation of a former EU mark which was converted to a UK mark, the rights holder can point to the reputation the mark enjoyed in the EU before the end of the transition period to support the case of infringement of the UK right in the UK. After the transition date, the continuing reputation of the mark is to be based on use of the mark in the UK. This is an interesting, albeit difficult to follow, provision that means that even post transition, UK Courts will need to look at the reputation a mark enjoyed in the EU prior to the end of transition, but trade mark and brand owners would be wise to start using their marks in the UK now if the UK is a country in which they want to protect their mark

6. In relation to designs, the term of protection of the corresponding UK right is to be at least equal to the term of protection in the EU and, like trade marks, the protection in the UK is to start from the same date as the equivalent EU design.

7. Article 61 of the agreement deals with exhaustion of rights. EU law on exhaustion of rights prevents IP owners threatening infringement to prevent the free movement of goods bearing their mark where the particular goods have already been placed on the market in the EU by or with the consent of the IP owner. The agreement provides that IP rights which were exhausted in the EU prior to the end of the transition period shall remain exhausted in both the EU and the UK. This prevents UK rights holders claiming infringement of their rights where they placed the goods on the market in the EU prior to the end of the transition period. The post transition position will be the subject of a consultation in due course.

What would this mean?

The effective continuation of existing EU IP rights in the UK after the expiry of the transition period will clearly be welcomed by IP owners. There has been a noticeable increase in EU IP registrations by UK individuals/entities since the Brexit referendum and importantly those rights will continue to be protected in both the EU and UK after the UK has left the EU. It is likely that we will see a continuing surge of EU registrations until the end of the transition period to avoid the need for double registration, and cost of registration, in both the UK and EU. Post transition, as expected, those wishing to register IP rights will need to register rights in both the UK and EU to get the equivalent protection to a current community IP right.

The agreement is still a draft and has only been agreed between negotiators. It is possible that it will be rejected by Parliament, the EU Member States or the European Parliament, any of which may mean that the UK would leave the EU without a deal. If that happens then the status of community IP rights remains uncertain and we will continue to keep a close eye on that.

Further reading

See our earlier papers on Brexit and IP, and Food & Drink for more on the issues to which Brexit gives rise. In addition for the latest legal updates please visit our Brexit Hub.