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Brexit: implications for holders of intellectual property rights and domain names

Overview

(Updated on 20 June 2020)

Businesses with pan-European rights, i.e. EU trade mark registrations, registered Community design rights, unregistered Community design rights, or database rights should in particular note the following.

The UK formally left the EU, on 31 January 2020 ("Exit Day") and we are now in transition. In this briefing, we highlight the key consequences of Brexit for intellectual property rights and domain names during the transition period and afterwards, and what businesses should do to prepare.

We have written this section on the assumption that the transition period will now come to an end as planned on 31 December 2020, as both the UK and the EU have now ruled out any extension.

In summary, the rights which are most likely to be affected by Brexit, and which will therefore require more focus in terms of preparatory activities, are EU trade marks and registered Community designs. Licence agreements will also need to be checked, and changes in respect of the rules regarding registration of .eu domain names may well have an impact. 

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, after the transition period, they will no longer be available to protect the relevant brand/design in the UK.

Filings

The UK Government has addressed this by confirming that at the end of the transition period, the UK will automatically create a corresponding UK trade mark and/or registered community design for every registered EUTM, at no additional charge.

For any EUTM application which is ongoing at the end of the transition period, companies will 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.

Notwithstanding the grace period, businesses are advised to consider applying for all new filings, in both the EU and the UK, especially as we edge towards the end of the transition period – given that even with the grace period, applicants for EUTMs would need to re-file in the UK anyway.  

With effect from 1 January 2021, businesses which want to protect their brands and designs in both the EU and the UK markets, will need to file 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. Note that opt out requests can only be made after the end of the transition period.

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 is already registered at the EU Intellectual Property Office (EU IPO) before the end of the transition period, the proprietor of the UK mark will have 12 months from the end of the transition period, 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 cover the UK prior to Exit Day, 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 which are already in effect at Exit Day. 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.

  • Pending oppositions/cancellation actions at the EU IPO in respect of a pending EU application, will continue before the EU IPO, however, at the moment, proceedings for oppositions which are based only on earlier UK rights which are not decided by the end of the transition period, will be unsuccessful, and a fresh action against the equivalent UK mark will need to be brought. In future, 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

Overview

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. After the end of the transition period, the right will no longer afford protection in the UK. As with EUTMs, an equivalent right in the UK (a UK registered design right) will automatically be granted. Any registered Community design that was on the register and published before the end of the transition period will therefore be treated on and after as if it had been granted as a UK registered design. This will also apply to any international design registrations which designate the EU.

For pending registrations, again applicants will 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 (ie 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 preparations regarding 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", 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. The new right will sit alongside the existing UK unregistered design, which remains unchanged and continues to protect the shape and configuration of the design of 3D objects.

The draft free trade agreement recently published by the UK Government, proposes that disclosing a design in the EU or the UK will create unregistered design rights in both the EU and the UK. This is a much better position than what was contemplated, which was that designs disclosed outside of the EU (i.e. in the UK post transition period) would strip  the design of its novelty requirement and mean that it would lose EU protection. The concern therefore was that designers would favour the EU market to opt for the EU wide protection rather than the protection limited to the UK only, thereby putting events such as London Fashion Week at risk. The UK Government has not provided any explanation of the draft agreement, but a literal reading suggests both EU and UK rights would arise simultaneously on first disclosure of the design in either the UK or EU. Whether this is what the government intends, and whether the EU will accept the proposal, remains to be seen.

Checklist

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

Overview

Patents

Brexit will have 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 will remain 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.

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.

Copyright

Brexit is unlikely to change much in relation to UK copyright law as it is a national right that each country provides separately. EU law will continue to apply to the UK until the end of the transition period and continued reciprocal protection for copyright works between the UK and EU is further assured by international conventions, such as the Berne Convention and the TRIPS Agreement, which will continue to apply in the UK. There is a real risk that going forward and in time, differences may emerge between UK and EU copyright law, which may pose a challenge for businesses that operate in both territories. Take the Digital Copyright Directive for example, which creates additional liability/responsibility for online content-sharing service providers in relation to infringing material posted on their platform by website users. The directive is an important component of the EU's Digital Market Strategy, however the UK Government has confirmed that it has no plans to implement it, since the implementation deadline does not fall until after the transition period has ended.

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.

The Withdrawal Agreement states 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.

In terms of goods to be put on the market under an IP right for the first time, 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. 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 has said that it will consult with the EU on a "long term" solution for the unbalanced UK/EU regime, 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, EURid (the EU domain name registry) updated its Brexit notice to clarify how .eu domain names will be affected.

During the transition period UK business will continue to be able to hold .eu domain names, but after the expiry of this period, those 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.

EURid has stated that, on 1 October 2020, it will issue an email notification to all UK registrants and registrars that will lose their eligibility by 1 Jan 2021, unless they can update their registration data by 31 December 2020 to indicate a legally established entity in the EU, update their residence to a Member State, or prove citizenship in a Member State.

All .eu domains that do not comply will be withdrawn on 1 January 2021, and then become available for third party registration twelve months after.

If you are a business which uses a .eu domain name in respect of your website, or one of your websites, and you are a UK incorporated company, you should, if you wish to continue using the domain, transfer the registration into the name of an EU subsidiary (to the extent that you have one). If this isn't possible, there are other options - consider appointing a European based agent as the administrative contact, or redirect web traffic to a new top level domain (.com, .co.uk etc.). Remember this will also apply to .eu email addresses.

Checklist

  • Transfer .eu domain names (and other derivations e.g email addresses) to an EU subsidiary
  • Consider appointing an EU representative
  • Re-direct web traffic to an alternative TLD?

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