By referendum on 23 June 2016, the majority of British people voted to leave the European Union. Even if the exit is not to become reality before several months, the first effects relating to IP could occur very soon (1).
As far as IP titles are concerned, transformation mechanisms will be defined after the United Kingdom formally notifies its decision to exit to the European Council, which would certainly trigger long and complicated negotiation phases.
First of all, let us make clear that Brexit will have no effect at all on the European patent system which is entirely independent of the EU. The European Patent Office is not an institution of the EU.
Concerning EU trademarks (EUTM) and registered community designs (RCD), nothing has been set in case of withdrawal of one or more Member States, neither in the current law, nor in the very recent Regulation on European Union trade mark (2).
A conversion mechanism needs to be established between the EU Intellectual Property Office (EUIPO) and the British IP Office (IPO), allowing either automatically or most probably at the request of IP rights owners, maybe even against payment of a fee, to convert EU trademarks and Community designs into UK National trademarks and designs, while benefiting still from the date of the initial EU protection.
This way, IP rights would be preserved, but their effects could be modified to a significant extent.
- In terms of requirements of use for the maintenance of registered trademarks, National trademarks owners have to prove the genuine use of their trademarks in the relevant country while, given its unitary nature, the territorial borders of the Member States should be disregarded in the assessment of whether a EUTM has been put to “genuine use in the Community” (3);
- In terms of defence of IP rights, UK trademarks owners will no longer oppose EU trademark applications, which should substantially reduce the number of opposition proceedings. Moreover, IP rights owners will have to act directly before National courts to assert their rights in the UK, and before any Member States court to obtain EU-wide injunctions prohibiting defendants from continuing to infringe EUTMs and/or RCDs, as well as to obtain provisional and protective measures.
In fact, the consequences of Brexit could be felt more quickly before the courts and in the practice of the IPO than in any other areas. Some British courts already showed discontent with, and indeed even frustration about, the answers to the preliminary questions submitted to the EU Court of Justice concerning the interpretation of Community law (3). With Brexit, British judges may be tempted no longer to ask preliminary questions to the EUCJ about the interpretation of laws and regulations that eventually would no longer apply to the UK and it is not impossible that some judges may even be tempted not to apply the EUCJ case law anymore. Discrepancies could quickly arise.
In any case, EU IP rights holders will have to review and update contracts, agreements and transactions related to the exploitation, the coexistence or the protection of EUTMs and/or RCDs and adapt them to the UK territory.
We will keep you informed of any further developments and remain at your disposal to advise you on the strategy for the protection, management and protection of your IP rights.
(1) See our previous article here.
(2) See our article about the revision of the European Trade Mark system.
(3) ECJ, 19 December 2012, case C‑149/11, ONEL, Leno Merken BV v/ Hagelkruis Beheer BV. The Court ruled that: “A Community trade mark is put to ‘genuine use’ within the meaning of Article 15(1) of Regulation No 207/2009 when it is used in accordance with its essential function and for the purpose of maintaining or creating market share within the European Community for the goods or services covered by it. It is for the referring court to assess whether the conditions are met in the main proceedings, taking account of all the relevant facts and circumstances, including the characteristics of the market concerned, the nature of the goods or services protected by the trade mark and the territorial extent and the scale of the use as well as its frequency and regularity.”
(3) In a recent case related to the KIT KAT chocolate bar (see our previous article here), the Court doubted about the understanding of the question asked to the ECJ, maybe to break away from the ECJ’s decision: “This difficulty is compounded by the language issues I have identified, which lead me to doubt whether the Court fully understood the second alternative. In those circumstances, it is tempting to refer the question again. But I see no realistic prospect of a further reference yielding a materially different result. Accordingly, it is necessary to try to understand and apply the answer which the Court has given as best I can” (England and Wales High Court of Justice (Chancery Division), 20 January 2016, CH/2014/392 and CH/2013/394, Société des Produits Nestlé / Cadbury UK).