Legal briefing | IP & Technology, Brexit, Commercial & Technology, Intellectual Property |

Brexit: implications for holders of intellectual property and domain names

Overview

In this briefing, we highlight the key consequences of Brexit for intellectual property rights and domain names and what businesses will need to consider.

For the majority of businesses, the rights which are most affected by Brexit, and which will therefore require more focus are EU trade marks and registered Community designs. Licence agreements will also be affected, and changes in respect of the rules regarding registration of .eu domain names may well have an impact. 

Meanwhile, businesses involved in distribution of branded goods may be affected by changes to the position on exhaustion of rights.  There are also implications for businesses which rely on protected geographical indications or designations of origin.

 

NOTE:  where we use the terms "Post-Brexit" or "after Brexit", this refers to the period after the expiry of the Brexit transition period, which ended on 31 December 2020.

Trade marks

Trade mark registrations are the type of intellectual property right which, arguably, most businesses are likely to hold, since trade marks protect a business' brand and logos. Businesses have benefitted from being able to hold EU trade marks (EUTMs), which are pan European rights protecting their brands/logos in each EU member state. However, post-Brexit, an EUTM will no longer protect the relevant brand/design in the UK.

Filings

Pre-Brexit, the UK Government confirmed that the UK would automatically create a corresponding UK trade mark and/or registered community design for every registered EUTM, at no additional charge at the end of the transition period.

For any EUTM application that was ongoing at the end of the transition period, companies now have a grace period of 9 months from 1 January 2021 to re-apply in the UK to register an equivalent UK trade mark in order to retain the earlier filing (and priority) date of the pending EUTM.

With effect from 1 January 2021, businesses that want to protect their brands and designs in both the EU and the UK markets, will need to file trade mark applications in both the EU and the UK.

Opt Out

If you are an EUTM proprietor and you are certain that you do not intend to operate within the UK market going forward, then there is an ability to opt out if you don't wish to have an equivalent UK trade mark, however you must do this before the mark is put to use in the UK, whether by yourself directly or by someone else, with your consent. Similarly, the ability to opt out does not apply if the equivalent UK trade mark is subject to an assignment, licence, security interest or other agreement or document, or if there are pending proceedings based on the comparable EUTM.

Law applicable to EUTM's

Post-Brexit, the law that regulates the ownership of EUTMs owned by UK companies will no longer be UK law, rather it will either be the law of the Member State in which the UK firm has its main EU establishment, or in the absence of an EU establishment, Spanish law (because the EUTM registry is situated in Spain). Therefore applicable law will need to be considered where a EUTM is owned by a UK company and is sought to be transferred to ensure that such transfer meets the requirements of the relevant jurisdiction.

Other issues:

  • Whilst EUTMs which are the subject of a licence or security interest which authorises actions in the UK, will continue to have effect in the UK (in relation to use of the equivalent UK trade mark), the re-recordal of these rights in respect of the equivalent UK trade mark, on the Trade Marks Register (for the purpose of giving notice of their existence to third parties), will not be automatic. Where a license or security interest was registered at the EU Intellectual Property Office (EU IPO) before 1 January 2021, the proprietor of the UK mark now has 12 months from 1 January 2021 to register these on the UK Trade Marks Register, before the consequences of a failure to register will apply – that is, that the transaction is ineffective against unknowing third parties.

  • Bear in mind licence agreements which refer to the EU – particularly in the context of the territory in respect of which the licence is granted. Although legislation has been enacted to make it clear that licences and consents which covered the UK prior to 31 January 2020, should still be treated as covering the UK after Brexit, and that references to EUTMs will be interpreted as references to the equivalent UK trade mark, it is prudent to consider whether this is in fact what the parties intend going forward. Also, the legislation only applies to licence agreements that were already in effect at 31 January 2020. So, for all agreements going forward, care should be taken to spell out the UK as part of the granted territory, where this is the intention of the parties.

  • Oppositions/cancellation actions before the EU IPO in respect of a EU application that was based only on earlier UK rights that was not decided by the end of the transition period was automatically unsuccessful. In order to continue the challenge against an EUTM in the UK, a fresh action against the equivalent UK mark will now need to be brought. Now post-Brexit, challenges covering both the UK and the EU will require separate proceedings. On the flipside, the UK IPO will ensure that all actions before it which rely on an EUTM which are ongoing after the transition period has come to an end, will continue to be heard and will be decided on the law as it stood prior to the end of the transition period.

Checklist in respect of EUTMs

  • Check your ongoing applications
  • Check strategy for new applications
  • Check ongoing trade mark proceedings
  • Re-record security and licences
  • Check any commercial agreements relating to trade marks

Design rights

Registered design rights

Registered Community designs, are, like EUTMs, pan EU rights, and as such the consequences for proprietors of these rights, are very similar to those for proprietors of EUTMs. Post-Brexit, the right will no longer afford protection in the UK. As with EUTMs, an equivalent right in the UK (a UK registered design right) was automatically granted. Any registered Community design that was on the register and published before the end of the transition period is now treated as if it had been granted as a UK registered design. This also applies to any international design registrations which designate the EU.

For pending registrations, again applicants now have 9 months from the end of the transition period to apply for the same protection in the UK.

Similar issues to those set out in respect of trade marks (i.e. relating to ongoing proceedings, re-recordal of security and licences, and checking commercial agreements relating to the rights), also apply to registered Community designs. As such a similar checklist should be followed in respect of a business' registered Community designs.

Unregistered design rights

The EU's unregistered Community design right, known as the "UCD", will continue to be valid for the remainder of its period of protection (which can be up to three years as from the date on which the design was first made available to the public in the Community). The UK has also created a new unregistered design right, called the "supplementary unregistered design" ("UKSUD"), which provides equivalent protection to a UCD in the UK for designs created after the end of the transition period (thereby bridging the current gap between the scope of protection afforded by unregistered design right protection in the UK, and protection under the UCD). The means that design features including surface decoration and the appearance of a product can be protected under unregistered design law in the UK going forward under the UKSUD. The new right will sit alongside the existing UK unregistered design law, which remains unchanged and continues to protect the shape and configuration of the design of 3D objects.

Where to disclose unregistered designs first? The UK or the EU?

The existence of two concurrent regimes of the UCD and the UKSUD means that there is a risk that if unregistered designs are first disclosed in the UK their novelty will be destroyed preventing their eligibility for protection in the EU and vice versa. As a result, there is concern that designers would favour launching products in the EU market first, as this will give them EU wide protection whereas if they disclose first in the UK, they will not be protected in the much larger EU market (although they will be protected in the UK). This could make some designers more reluctant to participate in UK events such as London Fashion Week. Designers will therefore have to carefully consider the choice of territory before disclosing their designs to the market.

Checklist

  • Monitor changes to the first disclosure rule and consider where your designs will first be placed on the market

Patents

Brexit has no effect on European patents designating the UK that are currently in force. This is because the European Patent Convention and the European Patent Office (the EPO) that manages it are independent of the EU and in any event, have always had a number of non-EU members such as Switzerland, Norway and Turkey. The UK remains part of the European Patent Convention as a similar non EU European member.

The filing and prosecution of European applications, whether directly at the EPO or via the Patent Co-operation Treaty route, is also entirely unaffected by Brexit. New and pending applications can continue to designate the UK where so required. At the grant stage, the applicant can opt for national protection in the UK and other countries, exactly as at present. Applicants who have filed for patents in the UK can still claim priority for that application in other countries.

UK-based European patent attorneys will continue to represent clients at the EPO, as at present.

Licence agreements

As with other types of IP right, care should be taken when drafting licence agreements authorising patent use in Europe going forward, to ensure that territorial scope expressly covers the UK, where that is the intention of the parties. For further information about Brexit proofing contracts, please refer to our briefings: "Brexit proofing your contracts: a checklist"; and "References to EU, EEA etc after Brexit: handle with care".

Unitary Patent System

The Unitary Patent System is intended to provide patentees with an option to apply for a single pan-EU unitary patent alongside benefitting from a Unified Patent Court, which would hear and determine patent disputes on an EU-wide basis. The Unitary Patent System has yet to come into force (and it is currently being challenged in the German courts), and the UK's inclusion in the scheme remains uncertain as it is subject to negotiation with the EU – so the question of whether a unitary patent covering the UK will become available for businesses, is very much up in the air.

Database rights

Databases, are defined under IP law as a collection of independent data or other materials arranged in a systematic or methodical way and which are individually accessible by electronic or other means. This is a broad definition and can included mailing lists and lists of customers as well as document management systems and websites arrangements. They are protected in two ways in the UK – under the rules of copyright as a literary work, but also as a database under a unique IP right known as the "sui generis" database right. To qualify for the sui generis right, substantial investment must have been made to the database in terms of obtaining content and presenting it.

What happens to the sui generis database right after Brexit?

The Withdrawal Agreement stated that at the end of the transition period, database rights currently in existence will continue to exist in the UK and the EEA for the rest of their duration (which could be for up to 15 years from the date of the last substantial investment in the database, so that a database which is updated just before  the end of the transition period, would continue to enjoy protection for a further 15 years). However, for new databases, only UK citizens, residents and businesses will be eligible for new UK database rights. Similarly EEA member states will be under no obligation to grant new EU sui generis database rights to UK businesses in those member states. UK businesses will therefore need to rely on other IP rights, including copyright, and potentially, any duty of confidentiality owed in respect of the database, or contractual rights.

Exhaustion of rights

The concept of exhaustion of rights, relates to the promotion of free movement of goods in the EEA. Currently, an IP proprietor's ability to enforce their intellectual property rights in respect of goods sold in the EEA is "exhausted" once the goods have been placed on the market in the EEA. This means that any further re-sale or distribution of those goods in the EEA cannot be prevented by the IP right holder by virtue of their IP rights e.g. by using their trade mark rights to prevent the sale of goods sold bearing the protected mark in other countries in the EEA.

Following the end of the transition period, where the IP rights relating to goods had already been exhausted in the UK and EEA before the end of the transition period, they will remain exhausted in the UK and the EEA.

What is the position of exhaustion from 1 January 2021?

In terms of goods to be put on the market under an IP right for the first time after the end of the transition period, the scales are tipped. In the UK, the EEA system of exhaustion will be retained as far as possible. This means that, following the end of the transition period, rights in respect of goods put on the market in the EEA will be exhausted in the UK (so distributors do not need to worry about obtaining the right holder's consent to export the goods to the UK).

Absent any agreement with the EU, there will be no such reciprocity for goods put on the market in the UK (the UK-EU Trade and Cooperation agreement does not appear to envisage any agreement on reciprocity; it merely states that each party is free to determine its own independent – and potentially different - positions on exhaustion).This means that putting the goods on the market in the UK will not exhaust the IP rights in the EEA. Proprietors of EU IP rights could therefore use their IP rights to block unauthorised imports from the UK into the EEA.

The UK Government plans to publish a formal consultation (originally stated to be in early 2021) on what the UK should do about exhaustion and parallel trade in the future, but in the meantime parallel importers should review whether they will need the EEA-based IP rights holder's permission to import goods into the EEA.

Therefore, in preparation, businesses that purchase goods first sold in the UK for resale in the EEA will need to check their activities with rights holders to see if permission is needed to import goods into the EEA. If you are a rights holder, consider whether your rights may now allow you to prevent imports into the EEA.

Domain names

On 3 June 2020, EURid (the EU domain name registry) updated its Brexit notice to clarify how .eu domain names will be affected. Post-Brexit, UK businesses wishing to retain .eu domain names can only do so if they can meet certain requirements: that they are an EU citizen or resident, an undertaking established in the EU, or an organisation that is established in the EU (".eu domain criteria").

EU domain names: timetable for suspension and revocation

On 1 January 2021, EURid notified by email UK registrants and their registrars who had not updated their registration data to meet the .eu domain criteria that their domain name was no longer complaint with the .eu regulatory framework and would therefore be moved to the "suspended" status until 30 June 2021. A domain name that has been suspended can no longer support a service, but it can be reinstated if the registration data is updated to meet the criteria.

On 1 July 2021, EURid will again notify all UK registrants and their registrars who do not meet the .eu domain criteria that their .eu domain name now has a withdrawn status. All .eu domains that were previously assigned to UK registrants and have a withdrawn status will be revoked on 1 January 2022 and these domain names will become available for general registration.

Going forwards, in order for a UK incorporated company to use a .eu domain it will need to (i) have the .eu domain registered in the name of an EU subsidiary (if it has one); (ii) consider appointing a European based agent as the administrative contact, or (iii) redirect web traffic to a new top level domain (.com, .co.uk etc.). Remember this will also apply to .eu email addresses.

Checklist

  • Act promptly to reinstate any .eu domain names if you wish to continue to use them.
  • Consider the ways that a UK company can register a .eu domain name going forwards

Protected geographical indications and protected designations of origin

There are three geographical indications, which, if registered, establish protection in the EU for products with qualities that have a specific link to the area of their production under EU Quality Schemes. Protected Designations of Origin (PDO), where every part of the production, processing and preparation process must take place in the region where the product is made. Protected Geographical Indications (PGI), where for most products, at least one of the production or processing stages takes place in the region as opposed to all the stages like PDO's. Geographical Indications (GI), which are specific to spirit drinks and aromatised wines, and protect the name of the product originating in a country or area where the product's quality, reputation or other characteristic is attributable to its geographical origin. Examples include Cornish pasties, or Cumberland sausages.

What is happening to PDOs, PGIs and GIs after Brexit?

It was confirmed that from 1 January 2021:

  • All UK GI's that were registered under the EU GI schemes before the end of the transition period, will continue to receive protection in the EU.
  • All existing UK products that were registered under the EU's GI schemes before the end of the transition period, will remain protected under the UK GI schemes.
  • The UK GI scheme will broadly mirror the current EU regime, and will be open to producers from the UK and other countries.

New labelling will also be introduced, as UK GI logos for food and agricultural products that mark each designation of geographical indication, which will need to be used for products for sale in Great Britain and registered before 1 January 2021, although producers or retailers will have a long transition period (until 1 January 2024) to change the labelling on existing products to display the new logos. If the GI product is registered on or after 1 January 2021 however, the new labelling requirements will apply straight away. The new UK GI logos can be downloaded from the UK Government website here.

Northern Ireland

If you are a producer or retailer of food and agricultural products in Northern Ireland however, different rules apply, and you must continue to use the EU logo if the product is registered under the EU scheme. In other non-EU countries, where the UK has not managed to roll over GI protection in EU free trade agreements or secured a continuity agreement there may be a reduction in protection of UK GIs.

Key points

To sum up, going forward, from 1 January 2021, producers will have to apply to the relevant:

  • UK scheme to protect a new product name in Great Britain
  • EU scheme to protect a new product name in Northern Ireland and the EU.

GB producers will have to secure protection under the UK schemes before applying to the EU schemes. The UK schemes will be overseen and managed by the Department for Environment, Food and Rural Affairs.

What does the UK-EU trade agreement say about intellectual property?

Although the TCA contains a reasonably substantial section on intellectual property (IP) rights, the main effect of these provisions is simply to commit the UK and the EU to maintaining a high level of protection for businesses in this area. Many of the provisions reflect commitments that both parties have already made in international agreements but there are some areas where the TCA goes further; for example, both the EU and UK commit to retaining an artists' resale right and taking measures to facilitate collective management of copyright. Taken as a whole, these provisions make it unlikely that there will be radical change to UK law in this area and may constrain the UK's ability to diverge from the EU, should it wish to do so.

 

For more detail, see this briefing.

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