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Following the “Brexit” vote by the United Kingdom signaling an intent to depart from the European Union, there was a rush of speculation and guesswork about how EU trademark and design rights would be treated with respect to the UK. Brand owners faced uncertainty about whether they needed to make parallel trademark filings in the UK, and what they needed to do protect their rights and their businesses. Most practitioners assumed that some provision would be made to ensure continuity during the transition, but it was largely guesswork at that time.

What progress has been made and what obstacles remain to a smooth transition? How will these changes impact brand owners with EU or UK trademark properties? The good news is that a roadmap has been drawn and largely agreed upon by both the UK and EU. However, other non-trademark issues still threaten to derail the ratification of these plans, and brand owners need to be mindful of both the withdrawal progress and the status of their brands in order to ensure continuity of protection.

On March 19, 2018, the EU published a draft agreement on the withdrawal. The draft agreement (which is available online and is color-coded to indicate negotiation progress on various topics) proposed specifics for the “Continued protection in the United Kingdom of registered or granted rights.” On July 12, 2018, the British government published its own “white paper,” setting out its blueprint for the future relationship between the UK and the EU. Prime Minister Theresa May made the point in this white paper that the United Kingdom will “leave the EU, without leaving Europe.” Shortly thereafter, on July 23, 2018, the United Kingdom Intellectual Property Office (“UKIPO”) updated its website with a guide called “IP and BREXIT: The facts.” The guide set out the UK’s position on the transition and its impact on trademarks, designs, patents, copyrights and enforcement.

The positive message to be gathered from the negotiations and various official documents so far is that the UK and the EU appear to agree on most of the major trademark/design issues involved in the transition. The UK in particular has been clear that its goal is to have a smooth transition, and to minimize disruption for businesses. In the context of existing EU trademark holders, the UKIPO has stated that “the government aims to ensure continuity of protection and avoid the loss of those rights,” in any scenario. Assuming the withdrawal agreement is properly ratified, the parties generally agree that the transition will include the following:

  • There will be a transition period extending from March 30, 2019, until Dec. 31, 2020.
  • Prior to the end of this period, EU trademark registrations will continue to be valid in the UK.
  • For EU trademarks and designs that are registered before the Dec. 31, 2020, deadline (and presumably for extensions of protection in the EU registered under the Madrid Protocol) the UK will create a corresponding new UK trademark/design registration in the UK at no cost to the registrant. This will involve the creation of over 1.7 million comparable UK rights, which will be granted automatically and free of charge.
  • For EU trademark applications filed but not yet registered before the Dec. 31, 2020, deadline, the UK will not create a separate registration. However, the applicant will have until September 2021 to file an equivalent UK application and keep the same filing and priority dates as the EU application.
  • Once the transition period has ended on Jan. 1, 2021, UK trademarks will proceed separately from EU trademarks, and will need to be maintained and renewed separately.
  • UK-based businesses will still be able to file applications for EU trademarks in the EU, which will cover the remaining EU member states. They also will be able to file Madrid Protocol applications from the UK.
  • UK professionals representing clients before the EUIPO or the Court of Justice of the European Union will likely be able to continue that representation through the transition period, but will probably need to make plans to transition representation to EU professionals before the close of that period.

Unfortunately, each of these terms will be included in the withdrawal agreement, and all of this progress may be lost if that agreement is not ratified by the deadline of March 30, 2019. At a recent press conference in Helsinki, British Foreign Secretary Jeremy Hunt warned that while no one wants to see a no-deal situation, “I think the risk of a no Brexit deal has been increasing recently.” Sabine Weyand, deputy to the EU’s chief negotiator, warned that business should “prepare for a disorderly Brexit.” If the withdrawal agreement is not ratified by March 30, 2019, there will be no transition period, and EU trademark law will cease to apply in the UK as of that date. Businesses will need to hope that the UK will implement its own legislation to recognize or convert the EUTM rights. The possibility of a no-deal Brexit is very real, and has been growing recently due to unresolved disputes over non-intellectual property issues.

How should brand owners prepare for the two very different scenarios of a deal-or-no-deal Brexit? Some analysts have recommended that brand owners file parallel applications in the UK for all of their EU marks. Others have argued against filing unnecessary applications unless there is a particular reason to do so. While there is surely a reasonable middle-ground, the most pressing issue for practitioners to watch is the March 30, 2019, ratification deadline. Whether the ratification occurs, and whether other legislation is put into place in the alternative, will dictate what steps brand owners must take. In the meantime, practitioners should plan for the worst, and prepare clients for the possible need to file separate UK applications, at least on their most important marks, if it looks like the withdrawal agreement will not be ratified by March 30, 2019.

Even if Brexit occurs smoothly, practitioners will need to pay attention to the next transition deadline of Dec. 31, 2020. Since pending EU applications will not be automatically registered in the UK by that deadline, practitioners will need to prepare clients for the possibility of filing separate applications in the following nine months. For practitioners with oppositions or litigation pending before the EUIPO or the Court of Justice of the European Union, care should be taken (before and during the transition) to make sure that substitute EU counsel is available and prepared to step in if necessary. Brand owners may want to identify brands that are critical to their businesses in the UK so that they can budget for the potential extra costs associated with “insurance” filings and additional counsel. Practitioners should continue to review the territorial scope of existing and pending trademark agreements, to ensure that references to the EU and UK have the same intended effect as when they were drafted. Petitioners should also prepare to record any relevant EU trademark agreements at the UKIPO to ensure that they carry the same effect as when recorded in the EU.

Brand owners should take comfort in knowing that both the EU and UK are continuing to work toward a smooth transition, and are committed to making the process as painless as possible for those brand owners. But brand owners and practitioners should also prepare for and budget for the very real possibility that the withdrawal agreement will not be ratified within the next six months. Brand owners should have a plan in place for their trademarks and designs in both deal and no-deal situations, and should monitor the withdrawal progress regularly. With a little care, brand owners should be able to negotiate either situation smoothly.

 

William Stroever is co-chair of the Intellectual Property Department at Cole Schotz in Hackensack.