The effect of Brexit on your EU Trade marks and Community Designs

THE EFFECT OF BREXIT ON YOUR EU TRADE MARKS AND COMMUNITY DESIGNS

On 31 December
2020 at the stroke of midnight all remaining ties between the UK and EU were
definitively cut. The UK exited the EU on 31 January 2020 already but had obtained
a “transition period” till 31 December 2020. As from 1 January 2021 EU Treaties
no longer apply in relation to the UK. Under these treaties, the EU created uniform
IP titles covering the whole EU: in 1996 for trade marks (the “EU Trade mark”) and
in 2003 designs (the “Community Design”), each governed by its own Regulation
and managed by the EUIPO (European Intellectual Property Office in Alicante). The
territorial scope of these rights will now shrink for all rights filed as from
1 January 2021, excluding the UK. But what happens to the territorial scope of
the European rights filed or registered before that date?

Conversion

EU Trade marks and (registered) Community Designs that were registered with
the EUIPO before 1 January 2021 have been converted in the UK to a UK trade mark and a UK design identical to the European right. This conversion happened automatically without
an examination or a fee payable. However, should a right holder not wish such
conversion, there is the possibility to “opt out”: the European right will then
be considered having never encompassed the UK.

EU Trade marks
and (registered) Community Designs that were filed but not yet registered with
the EUIPO on 1 January 2021 will not be converted automatically to comparable
rights in the UK. Right holders will have 9 months, ending 30 September 2021,
to apply for a UK trade mark or UK design. As the conversion is not automatic,
such applications will be subject to an examination and a fee. The advantage for
right holders is that they can keep the European filing date in the UK,
assuming that the application in the UK is identical to the original European
filing.

As from the
moment of conversion, the European right and the UK right in principle each
start an independent life: the European right will continue according to the
existing European law, the UK right will be governed by UK law. Renewal and
litigation of these rights will be treated independently.

Some
interdependence remains, however, in particular in case of successful cancellation
and invalidation actions of EU Trade marks and Community Designs that were initiated
before 1 January 2021 but decided after 1 January 2021. In such case, the (converted)
UK right will automatically be cancelled or invalidated as well, unless the right
holder sends a derogation notice within one month after the cancellation or invalidation
decision to the UK IPO Tribunal that will then decide whether the UK right should
be cancelled or invalidated as well or not. The same applies mutatis
mutandis to pending national proceedings in which invalidation or
cancellation actions have been initiated.

Unregistered designs

When it
comes to unregistered designs, the situation is slightly different.
Unregistered Community designs (UCD) enjoy a three year protection from the
date on which the design was first disclosed. In general, it is assumed that
this first disclosure must happen within the territory of the EU.[1]

Designs
first disclosed within the EU territory (including the UK) before 1 January
2021 will stay protected in the UK after the transition period for the
remainder of the three year term.

However,
designs first disclosed as from 1 January 2021, will not automatically be
protected in the EU as well as in the UK. The UK has created a new unregistered
design right, namely the supplementary unregistered design (SUD) which offers
protection similar to the UCD but in the UK.  

Because the
UK is not part of the EU territory anymore, a first disclosure of the design
within the EU territory will create a UCD (within the EU) but not a SUD (within
the UK). At the same time, a first disclosure of the design within the UK
territory will create a SUD but not a UCD. A possible practical solution to
this dichotomy could be a simultaneous disclosure in both the UK and the EU
e.g. via a website which is available in both the UK and the EU. However, it
remains to be seen whether this practical solution is legally accepted by the
courts and the EUIPO.

Exhaustion of IP rights[2]

The
European Court of Justice originally developed the so-called principle of
Community-wide exhaustion that was later incorporated in EU legislation[3]. According to this principle, IP rights are exhausted throughout the EEA once
a product has been put on the market in any Member State by the right holder or
with his consent.

According
to article 61 of the EU-UK Withdrawal Agreement, IP rights which were exhausted
both in the EU and in the UK before 1 January 2021, shall remain exhausted both
in the EU and in the UK. This only applies to the actual
goods that were effectively put on the market. Similar goods that still need to
be put on the market are not covered.

When it
comes to goods put on the EU or UK market on or after 1 January 2021, the
situation is different. The Intellectual Property (Exhaustion of Rights)(EU
Exit) Regulations 2019 of the UK government set up – for now – an asymmetric
regional exhaustion: goods placed on the EEA market with the consent of the
right holder on or after 1 January 2021 will also be exhausted in the UK.
Therefore, parallel importers who import goods from the EEA into the UK, will
not need the permission of the right holder to continue the parallel import. Since
the UK is no longer part of the EEA, goods placed on the UK market with consent
of the right holder on or after 1 January 2021 will no longer be exhausted in
the EEA. This means parallel importers who import goods from the UK into the
EEA need the permission of the right holder to continue the parallel import.

The UK is now
to decide what its exhaustion regime will be. According to the UK government
this new regime will be announced early 2021. Exhaustion has always been a charged
subject and it remains to be seen which principle the UK will choose to apply
post Brexit.

Conclusion

Since 1
January 2021 IP right holders are now forced to reflect on their IP strategy in
the UK separately. Post Brexit trade mark and design protection in the UK will
need to be balanced and assessed the same way as for every other non-EU
country.

14 January 2021

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[1] Article 11 and 110a Community Design Regulation; see
also: C-728/19, Beverly Hills Teddy Bear
Company v PMS International Group: two prejudicial questions were referred
to the CJEU which would force the Court to provide more clarity regarding the
question whether it was necessary for the first disclosure to take place within
the territory of the EU or not. Unfortunately, the parties settled the case so
that the case was removed from the register and the CJEU did not have the chance to rule on this matter.

[2] Exhaustion of IP rights means that IP rights cannot be
used to stop the further distribution or resale of those goods once they have
been put on the market by the right holder or with his consent.

[3] Article 15 of Regulation 2017/1001 on the European
Union trade mark; Article 15 of Directive 2015/2436 relating to trade marks;
Article 21 of Regulation 6/2002 on Community designs; Article 15 of Directive
98/71/EC; Article 16 of Regulation No 2100/94 on Community plant variety
rights; Article 4 of Directive 2001/29/EC on certain aspects of copyright and
related rights in the information society; Article 4 of Directive 2009/24 on
the legal protection of computer programs; Article 5(5) of Directive 87/54/EEC
on the legal protection of topographies of semiconductor products.