Is your business IP Brexit-Ready?

12th November 2020 Intellectual Property

On 31 January 2020, having ratified the Withdrawal Agreement, the UK departed the EU and entered into a transition period, which is due to end on 31 December 2020.

In summary, very little will change during this transition period, as EU law will continue to operate as it does now in the UK. Businesses now need to plan for 1 January 2021 and beyond.

During the transition period, the UK Intellectual Property Office (“UK IPO”) will commence and complete the process of converting over 1.4 million EU trade marks and 700,000 EU designs, to UK national rights, in preparation for 1 January 2021. Businesses will need to carefully consider these and other IP rights, in order to be Brexit-ready.

The purpose of this blog is to summarise those IP rights, the likely changes and invite JMW clients and contacts to arrange a “Brexit-Ready” IP Audit, conducted by JMW’s Intellectual Property experts.

Exhaustion of rights

Exhaustion of rights is an issue which affects all IP rights and IP-rich businesses.

At present, in the spirit of the single market, if your business places goods or services onto the market anywhere in the European Economic Area (“EEA”), you cannot later complain if these are re-sold or distributed in the EEA by a third party.

For instance, this means that if a rights holder sells products to Romania at a lower price than in the UK, that rights holder cannot complain if the products are re-sold, by the buyer in Romania, into the UK market at a higher price. This will remain the case until the end of the transition period, 31 December 2020.

As we do not yet know what relationship the UK will have with the EU from 1 January 2021, it remains uncertain as to whether the status quo will remain the same. However, given the current political climate, it is highly likely that the exhaustion of rights in the EU will not include the UK and vice versa. In short, they will be two different markets regulated by different rules.

So if a rights holder sells products in the UK, a third party will soon need the rights holder’s express consent to sell those products into the EU and vice versa.

In our view, this is going to be a huge issue for, in particular, businesses selling branded products via pan-European online market places. As such, it is vital that you seek advice from the IP experts at JMW in the next few months if your business regularly trades with the EU.

EU Trade Marks

EU trade marks will continue to extend to the UK during the transition period in 2020. However, those EU trade marks will be automatically converted by the UK IPO into UK trade marks.

This means, where your business has EU trade marks, you will automatically have corresponding UK trade marks come 1 January 2021. This will only apply to EU trade marks that are registered as at the 31 December 2020.

While this means you are covered in both the UK and EU, it does mean that, when it comes to renewal (every 10 years), you will need to renew at both the EU Intellectual Property Office (“EU IPO”) and the UK IPO separately. This is certainly an added layer of costs, especially for those businesses with large trade mark portfolios.

The separation of a business’ UK and EU trade mark rights will mean that businesses may, if later challenged by a third party, be required to prove “genuine use” of their trade mark in both the UK and the EU. If they are unable to do so, they could lose their trade mark in that jurisdiction. In short, from 1 January 2021, use of the brand in the UK will not be enough to maintain your EU trade mark and vice versa. Given the UK IPO are converting 1.4 million EU trade marks, many of those marks will likely become invalid in the late 2020s.

Given the promise of Brexit was to increase global trade, if businesses are planning to export into new jurisdictions, they should instruct JMW’s IP experts to clear their brands in those jurisdictions prior to launch. While you may be able to trade under your brands in the UK and/or Europe, this does not mean you have clearance to do so elsewhere.

Copyright

At present, copyright protection between the UK and EU are governed by international treaties, which will not be affected by the UK’s departure from the EU. That being said, there are numerous arrangements between the EU and UK which relate to online content and databases, and these will come to an end on 1 January 2021.

For example, UK travellers can use their UK Netflix account to access content while overseas in other EU Member States. This may all change depending upon the UK’s exit deal with the EU.

In relation to databases, the Withdrawal Agreement ensures any database rights in existence in the UK and EU as at 31 December 2020, will continue to be recognised in both jurisdictions for the remainder of their usual term. What happens to future databases has not yet been agreed.

In the present circumstances, it is vital for those businesses that rely upon copyright protection to prepare now, with the assistance of JMW’s IP experts, for the expiry of the transition period.

Designs

The fields of UK and EU design rights have long been complex, since both the UK and the EU have separate unregistered and registered rights, adding up to four distinct rights for UK designers. Unfortunately Brexit does not make matters any less complicated, but JMW’s IP experts are well placed to steer businesses through the changes.

In relation to UK unregistered and registered designs, there will be no changes for UK designers. Understandably, the key changes as a result of Brexit will be to EU registered community designs (“EU RD”) and EU unregistered community designs (“EU UD”).

EU RD

Similarly to trade marks, when it comes to EU RD, nothing will change until 1 January 2021, when those registered community designs will transpose onto the UK design register and effectively convert into a UK Registered Design (“UK RD”).

In cases where an application for an EU RD is not complete by 1 January 2021, that design will not automatically also become a UK RD. Any business whose design does become a UK RD will need to renew their registered design rights every 5 years, up to a maximum of 25 years. This certainly adds a layer of costs, especially for those businesses with large design portfolios. As such, designers will need to strategically review their portfolio with ever more vigour.

EU UD

Upon expiry of the transition period on 1 January 2021, without intervention, UK designers were going to lose their ability to automatically benefit from EU unregistered design right.

This would have been a great loss for UK designers, as the EU UD affords far greater protection than the equivalent UK unregistered design right. As a result, the UK Government agreed to create a supplementary unregistered design, which will mirror the EU UD rights, although it only covers the UK, not the EU.

The transition period provides UK designers with an opportunity to review their designs and check with JMW’s IP experts that their businesses are properly protected.

Patents

At present, businesses may apply for a “European Patent” to protect their patent in more than 30 countries in Europe, using the European Patent Convention. Since the European Patent Office is not an EU agency, it will be unaffected by the UK’s departure from the EU.

Given the Brexit promise was to increase trade globally, if businesses are planning to export into new jurisdictions, they should instruct JMW’s IP experts to clear their products in those jurisdictions. You may be able to freely sell your products in the UK and/or Europe, however this does not mean you have clearance to do so elsewhere.

Conclusions

During the transition period, JMW will continue to have the right to represent clients before the EU IPO. However, at the end of the transition period, that automatic right will cease and for new cases many other UK-based law firms will need to instruct European agents. At JMW, we have structured our international offering so that we can continue to represent clients at the EU IPO.

In conclusion, the remainder of 2020 should be seen by all businesses as an opportunity to review and secure their IP protection ahead of the choppier waters of 2021.

JMW’s IP team are assisting clients large and small to ensure they are Brexit-ready.

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Philip Partington is a Partner located in Londonin our Intellectual Property department

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