Brexit implications for UK trademarks

If the UK is to officially leave the EU it has to notify the EU Council of its intention to do so and trigger Article 50.2 of the EU Treaty, which provides for a maximum of two years for the withdrawal negotiations.

At the Conservative Party Conference in October 2016 the Prime Minister assuredly stated that “Brexit means Brexit”. This is a statement of pure party politics. Nobody who voted in the EU referendum knew what they were ultimately voting for – it was guesswork. So, it may be open for the UK to remain an European Econmic Area (EEA) and European Free Trade Association (EFTA) Member State (like Norway) with access to the single market and no tariffs, or at the other end of the spectrum there might be no new negotiated agreements with the EU and instead the UK could comply with the WTO’s (World Trade Organization) rules – the hardest of the hard Brexit outcomes.

Theresa May also stated that Article 50 will be triggered in the first quarter of 2017. She cannot be sure that this will be the case. Edwin Coe acted for one of the parties who challenged the Government’s belief that it has the power under royal prerogative or otherwise to give notification under Article 50 without a prior decision of Parliament. Brexit might not necessarily mean Brexit if Parliament has the right to vote.

A vast amount of intellectual property legislation in the UK is derived from EU law and the ultimate impact of Brexit will not be known until we understand where the UK ends up in its relationship with EU countries once the negotiations are complete. All UK IP rights will be affected in some way but the law of trade marks highlights typical issues.

Brexit will have no impact on national UK trade marks. EU Trade Mark (EUTM) rights will continue to exist and UK entities will continue to be entitled to own EUTM’s. Unless there is an agreement to extend EUTM’s to the UK (“EU Plus”) the difference will be that EUTM’s will cover 27 countries instead of 28. It could be that EUTM’s would effectively shrink in scope leaving owners with no legal protection within the United Kingdom unless they also owned UK trademark rights – either via UK trademark registrations or based on use in the United Kingdom.

However, there should be a mechanism by which EUTM’s can be separated or extended to ensure that coverage in the UK is continued. The owners of EUTM’s which are predominantly used in the UK do need to be aware that those rights could become vulnerable to challenge for nonuse after five years because any use of the trade mark in the UK, at least after Brexit, might no longer be relevant.

For the moment, owners of EUTM’s can continue to enforce those rights in the UK and they can continue to use the local rights to prevent the registration of a EUTM (because of its unitary character). However post Brexit, this may no longer be possible.

Those planning their filing strategy at present will need to give careful consideration to any conversion process for the UK and the filing of separate UK trade marks.

Currently, a brand owner cannot object to the further dealing with trade-marked goods it has placed on the market within the EEA (unless there are legitimate reasons to do so), as the trade mark rights in those goods will have been exhausted. A brand owner can object to imports into the EEA from outside of the EEA. So if the UK was treated as being outside the EEA, EUTM rights could be used to prevent exports from the UK into the EU because exhaustion rules would no longer apply to goods placed on the market in the UK. However if the UK Government applied the principle of international exhaustion of trademark rights, UK traders might find that not only is it more difficult to sell goods in the EU but they might not be able to prevent goods they have sold outside the UK being sold back into the territory by a reseller if there is a margin to be made on the sales in the UK.

If you wish to discuss this topic further, please contact Simon Miles– Partner, or any member of the Edwin Coe Intellectual Property team.

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