The Authors' Take - Post-Brexit IP rights: what is agreed and yet to be agreed under the European Commission's draft Withdrawal Agreement

We reproduce below the full text of a Current Intelligence note that will be published in JIPLP and tackles the thorny issues facing Brexit and IP rights:

Post-Brexit IP rights: what is agreed and yet to be agreed under the European Commission's draft Withdrawal Agreement

by Nick Allan, Michael Browne & Anna Carboni

Abstract

European Commission Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community

A summary of the European Commission's draft proposals on IP under the draft Withdrawal Agreement and a review of the areas of agreement and disagreement following negotiations with UK Government.

Legal context

On 28 February 2018, the European Commission published its draft text for the Withdrawal Agreement that will, if agreed, govern the UK’s withdrawal from the European Union (EU) and the European Atomic Energy Community. As the future of EU intellectual property (IP) rights in the territory of the UK are included in the draft text, it will be of great interest to proprietors of EU IP rights, especially those who operate in the UK and are planning for ‘Brexit’. The draft text proposes a ‘transition period’ from 30 March 2019 until 31 December 2020, which would mean that ‘true Brexit’ would start from 1 January 2021.

Following further negotiations with the UK and identifying those areas on which agreement has now been reached, the European Commission presented a colour-coded version of the draft text on 19 March 2018. According to the colour coding, the majority of the IP provisions are now agreed. Where the provisions are not agreed, there is no mark-up or reasoning for the disagreement provided, but negotiations are continuing.

Facts

Set out below are the European Commission’s proposals for IP and an indication of whether or not UK Government has agreed to these proposals. (The relevant Article numbers of the draft Withdrawal Agreement are given in parentheses.)

Registered EU rights: including trade marks, designs and plant variety rights

·        Entitlement to a new equivalent UK right after the end of the transition period for proprietors of EU trade marks (EUTMs), Community registered designs (CRDs) and Community plant variety rights (CPVRs), ie an equivalent UK trade mark, UK registered design or UK plant variety right (Article 50(1)). International trade mark registrations designating the EU would also be ‘grandfathered’ across to the UK register in the same way as for EUTMs (Article 52). No re-examination of new UK equivalent rights would be permitted by the UK Intellectual Property Office (UKIPO) or UK Plant Variety Rights Office (Article 50(1)). Agreed

·        No application by proprietors of a EUTM, CRD or CPVR required. The UKIPO and UK Plant Variety Rights Office would carry out the conversion work automatically based on the data held at the EUIPO and the Community Plant Variety Office at the end of the transition period (Article 51). Not agreed

·        No fees would be payable by rightholders to the UKIPO or UK Plant Variety Rights Office before the renewal date; and no correspondence address in the UK would be required or renewal fees payable until the first renewal date (Article 51). Not agreed

·        Priority dates, seniority dates and renewal dates unaffected for ‘new’ UK IP rights deriving from existing EUTMs, CRDs and CPVRs (Articles 50(4), 50(5)(a) and 50(6)(b)). Agreed

·        Duration of ‘new’ UK IP rights deriving from existing CRDs and CPVRs would be unaffected (Article 50(6)(a)). Agreed

·        EUTM and CPVR applications pending at the end of the transition period would not result in the creation of an equivalent UK application; but a further 6-month priority period would be granted from the end of the transition period to allow for corresponding UK applications (Article 55). Any such equivalent UK IP rights granted would have the same priority date as the EU IP right from which it is derived. No such priority period is awarded for CRDs: probably because the registration process usually only lasts a matter of days, with no substantive examination. Opponents of pending EUTM or CPVR applications would need to file a separate opposition against any new UK applications claiming priority from pending EUTM or CPVR applications. Agreed

·        Cancellation proceedings against an EUTM or CRD that are commenced before, and are successfully concluded after, the end of the transition period would also cancel the new equivalent UK right created. This has tactical implications for brand clearance, as those considering taking action to remove EU registered rights from the register would probably benefit from initiating those proceedings before the end of the transition period to cancel two IP rights with one cancellation action. Agreed

·        Revocation of ‘grandfathered’ EUTMs not permitted based on a lack of genuine use in the UK, provided there has been genuine use elsewhere in the EU in the relevant period (Article 50(5)(b)). Agreed

·        Reputation of ‘grandfathered’ EUTMs can similarly be based on (non-UK) EU reputation and need not rely on a UK reputation alone (Article 50(5)(c). Agreed

·        Geographical indications, designations of origin and designations of traditional specialities will be grandfathered to become equivalent UK rights (Article 51(2)). As the EU will continue to recognize non-EU geographical indications, businesses relying on UK geographical indications (eg Scotch whisky or Yorkshire Wensleydale cheese) would continue to benefit from protection in the EU system. Not agreed

·        Exhausted IP rights in both the EU and the UK at the end of the transition period will remain exhausted (Article 57). Agreed

Unregistered Community design rights

·        Automatic protection for existing unregistered Community design right at the end of the transition period, as if a UK version of such a right existed, and for the same duration (Article 53). But no provision is made for UK equivalents of new unregistered Community design rights to arise in designs created after the transition period. Agreed

Databases

·        Automatic protection for existing databases protected by sui generisdatabase right arising out of Directive 96/9/EC at the end of the transition period, which would last for the same duration (Article 54(1)). Agreed

·        Databases created by UK nationals and UK companies to be protected by deeming UK nationals and companies to constitute European Economic Area (EEA) nationals under Regulation 18 of the Databases Regulations (Article 54(2)). Otherwise, without amendment to the Database Regulations, technically EEA nationals and companies could benefit from database right in the UK, but not UK nationals and companies. Agreed

Supplementary protection certificates

·        Applications for supplementary protection certificates for patented plant protection products and medicinal products pending at the end of the transition period shall continue to be governed by Regulation (EC) No 1610/96 and Regulation (EC) 469/2009, respectively (Article 56(1)). Not agreed

·        Pending applications subsequently granted in the UK should continue to provide the same level of protection provided under Regulation (EC) No 1610/96 and Regulation (EC) 469/2009 (Article 56(2)). Not agreed

Analysis

Of the various models that have previously been discussed in the IP community, the European Commission appears to prefer the so-called ‘Montenegro’ (automatic protection) model over alternatives such as the ‘Tuvalu’ (‘opt-in’) and ‘Jersey’ (‘as if’) models. The exception is for pending EUTM and CPVR applications, which require a form of opt-in. This is a favourable position for proprietors of EU IP rights.

It appears from the UK’s response that it agrees with the principle of granting new equivalent UK rights to proprietors of EU IP rights. But, as Article 51 is not agreed, it seems that the UK may favour the ‘Tuvalu’ (opt-in) model. In respect of trade marks alone, with over 1 million EUTMs on the EUIPO's register, the ‘Montenegro’ (automatic protection) model could place a serious administrative and financial burden on the UKIPO and a post-Brexit UK economy.

Even if the initial databases could be copied from the EUIPO and Community Plant Variety Office without too much difficulty, which may or may not be the case, there would be a future cost of administering so many new rights. Some would say that many such rights would never be used in the UK, creating ‘clutter’ that would unreasonably stifle competition and place an unnecessary burden on businesses operating in the UK after Brexit; but others would say that Brexit was the UK's decision and EU rightholders should not be prejudiced by it in any way.

There is also a lack of agreement on geographical indications and supplementary protection certificates. It may be that the UK is concerned about lack of reciprocity for geographical indications and what could constitute continued direct effect of the Regulations (and thus jurisdiction of the Court of Justice of the European Union) for supplementary protection certificates.

Practical significance

Despite the areas of administrative and procedural difference, proprietors of EU IP rights should draw comfort from the fundamental agreement between the UK and the EU (albeit subject to achieving an overall Brexit deal) that they should be entitled to enjoy equivalent UK IP rights to replace existing EU IP rights after the transition period ends.

Yet there remains no provision for equivalent protection of newly createddesigns after the transition period, unless the UK introduces new legislation. As the UK already has a standalone unregistered design right under the Copyright, Designs & Patents Act 1988, it may choose not to legislate; but the scope of protection of Community unregistered design right and UK unregistered design right are materially different and many businesses would be negatively affected if unregistered Community design right is lost completely after Brexit.

Overall, the current agreement between the UK and EU is positive for proprietors of EU IP rights seeking certainty after Brexit. But ‘nothing is agreed until everything is agreed’ and there remains the possibility that the fisheries policy, Irish border or any other issue will lead the UK to not sign the Withdrawal Agreement and leave without a deal. Proprietors and prospective proprietors of EU IP rights may therefore choose to file separate UK rights and act cautiously until a deal is done.