©2018. Published in Landslide, Vol. 11, No. 1, September/October 2018, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.
The referendum that started the United Kingdom on a road toward its divorce from the European Union (EU) has impacted business and the economy a great deal. The effects of the vote and the subsequent “divorce proceedings” have been felt far beyond Europe, too. Brexit, it seems, is affecting everyone. While many of these implications are strictly long-term and have not yet been properly defined, there have been some immediate effects. They have begun to filter through the United Kingdom and European countries, touching on areas from trade to travel. And the intellectual property (IP) market is no exception.
While some industries, such as retail, were quick to feel the effects of the vote (with prices seemingly increasing overnight), other sectors have been slower to come to terms with the changes that may occur once every i has been dotted and every t has been crossed. In the IP market, questions abound regarding the registration of trademarks. Currently, any business wanting to operate and protect its interests in the United Kingdom, EU, or both simply needs to file a mark with the European Union Intellectual Property Office (EUIPO). However, that will change in the future.
Already a Change in Tactics
It is important to note that while draft guidelines have been put forward,1 nothing is set in stone just yet, which means there is still uncertainty over what to expect going forward when the United Kingdom does split from the EU. However, what is clear is that the impending Brexit is already affecting filing behavior; that is, the approach to the trademark filing process. As mentioned, in the past this has been relatively simple: for both EU and U.K. trademarks, all organizations needed to do was file with the EUIPO to ensure a brand was covered across the 28 EU member states. Organizations have been encouraged to “wait and see,” but many brands are already changing their approach. Instead of just filing one application with the EUIPO, they are filing an application for the same mark in the United Kingdom, too. While this approach looks likely to be needed post-Brexit, again things remain somewhat unclear for now, and many feel that taking this approach early will avoid confusion going forward.
This sentiment is backed up by CompuMark research, which shows there has been a 20 percent increase in U.K. trademark filings since the Brexit referendum in 2016. There has also been a significant rise in the average monthly filing figures, from 4,538 to 5,567—an increase of more than 30 a day. Taking this a step further and looking at U.S.-based applicants of U.K. trademarks, the increase is even more noteworthy, with the average number of monthly applications rising from 104 to 261—an increase of 150 percent. Conversely, the Brexit vote has had a marked decrease on the amount of applications by U.K.-based applicants per month for EU trademarks, with the monthly average falling from 933 to 766, an 18 percent decline.
What the trademark environment will look like post-Brexit is open to conjecture, but the likelihood—and the reason for those readying themselves now—is that from March 2019, brands will have to treat U.K. filings in much the same way as they would for countries like Switzerland or Norway, regions that are part of continental Europe but not actually a part of the EU club. It is a case of “if your name is not on the list, you’re not coming in” and will mean significant additional work and expense for trademark professionals that have to file two marks instead of just one.
While the approach will not necessarily change the way that trademarks are searched, cleared, or watched, it will mean that there will be an increased reliance on tools, solutions, and processes to automate some of the procedures to protect margins for trademark professionals.
In addition, there is also likely to be a change in the way cancellations are viewed. In the past, use of an EU trademark in a single EU country was enough to prevent it from being vulnerable to cancellations due to nonuse. However, post-Brexit, if the United Kingdom is the only market of interest for existing EU trademark holders, their mark might now be vulnerable for cancellation.
While the draft agreement provides some clarity on how the EU and the United Kingdom will manage existing trademark registrations, it also introduces some new areas of uncertainty. EU-28 trademarks that are registered at the time of Brexit will simply be converted into separate EU-27 and U.K. trademark registrations, with the new U.K. record keeping the filing date of the EU trademark. Any priority and seniority dates also appear to be protected, and the renewal dates will be synchronized.
However, there is a new question over any applications and cancellation proceedings that are still pending at the end of the transition period on December 31, 2020. The draft agreement suggests that pending EU applications will not automatically be converted into corresponding U.K. trademark applications. Instead, the suggestion is that there will be a nine-month period in which the applicant may file an application in the United Kingdom, retaining earlier filing and other dates. It is not yet clear how expensive this “re-registration” will be, and applicants will need to assess the likelihood that any EU trademark applications filed before Brexit will still be pending on December 31, 2020.
Post-Brexit there will be a need to put in place a strategy that treats the EU and the United Kingdom separately, to ensure the correct brand protection and enforcement policy is in place. There is also considerable uncertainty over the way the trademark profession in the United Kingdom works with the EUIPO. The possible outcomes range from the United Kingdom joining the European Economic Area (EEA), which would allow members to represent clients before the EUIPO, to U.K. trademark attorneys obtaining licenses to practice in the EU country or perhaps even relocate some of their staff to within the EU zone so that they can handle IP work locally. Some U.K. IP practices have already announced new offices based in the Republic of Ireland for this purpose.
With final agreement still the subject of negotiations between the EU and the United Kingdom, both trademark professionals and government are working to find a potential solution. At this point in time, the U.K. government website states:
The existing UK system for protecting trade mark rights will remain largely unaffected by the UK’s decision to leave the EU. While the UK remains a full member of the EU then EU Trade Marks (EUTM) continue to be valid in the UK. When the UK leaves the EU, in any scenario, an EUTM will continue to be valid in the remaining EU Member States and UK businesses will still be able to register an EU trade mark, which will cover all remaining EU Member States.
We recognise that owners of existing EU trade marks want clarity over the coverage of those rights when the UK leaves the EU. In any scenario, including one which does not involve a deal between the UK and the EU, the government will seek to minimise disruption for business and to provide for a smooth transition. For existing EU trade marks, this means that for all scenarios, the government aims to ensure continuity of protection and avoid the loss of those rights. In doing so, our overall objective is to provide maximum clarity and legal certainty for right holders and third parties. The government is looking at various options and is discussing the best way forward with users of the system.2
Change is coming—an attitude underscored by a notice issued in December 2017 by the European Commission reminding trademark owners to prepare for the effects of Brexit, though no solid plans have been established.3
Trademark Fundamentals Are More Important Than Ever
With uncertainty over the precise future of pending EU trademark applications (and cancellation proceedings), brand owners should consider the value of proper screening and searching to maximize the chance that an EU trademark application will be successfully accepted and registered before the end of the transition period on December 31, 2020. Because registered EU trademarks and pending applications will be treated differently, understanding the landscape will be more important than ever.
Obtaining proper legal advice from trademark attorneys is also vital in a rapidly shifting landscape. This is especially important because trademark complexity likely will only increase as we move closer to the United Kingdom’s departure date. Brands need to rely on the advice of professionals within the industry who are adept at understanding the changes and the impact on current, pending, and new trademark applications.
Notably, trademark lawyers and professionals need to understand the scope of their portfolios; that is, knowing which marks are registered in the United Kingdom, which are registered in the EU, and where actual use is taking place. Again, this is crucial to ensure that a brand is protected in all regions it is operating in (or wishes to operate in).
A Shift Is Coming
Whatever your view on Brexit, positive or negative, there is no doubt that it is not just U.K. or EU businesses and economies being affected. For organizations operating in a global market, there are wider consequences to consider. In the United States, for example, companies are already exploring their options, as evidenced above with the 150 percent increase in filings for U.K. marks from U.S.-based brands. While day-to-day trademark operations are continuing, there is an acceptance that a shift is coming, and already organizations are proactively seeking to understand these changes and keep themselves protected across regions.
1. Draft Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community of 19 Mar. 2018, TF50 (2018) 35, https://ec.europa.eu/commission/sites/beta-political/files/draft_agreement_coloured.pdf.
2. IP and Brexit: The Facts, GOV.UK, https://www.gov.uk/government/news/ip-and-brexit-the-facts (last updated July 23, 2018).
3. Notice to Holders of and Applicants for European Union Trade Marks Pursuant to Regulation (EU) 2017/1001 on the European Union Trade Mark and to Holders of an Applicants for Community Designs Pursuant to Regulation (EC) No 6/2002 on Community Designs (Dec. 1, 2017), https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/contentPdfs/news/Brexit_preparedness_notice_on_IP.pdf.