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Posted on 19 February 2020

Brexit: Status quo after 31 January 2020 during transition period

The UK left the EU on 31 January 2020. The EU and UK reached a revised Withdrawal Agreement which includes a transition period ending on 31 December 2020.  This period may be extended, provided that the UK and EU27 agree to this extension by 1 July 2020.  However, the UK Government’s position is that there will be no extension to the transition period and it is legislating to entrench this position in law. 

Transition Period: Status Quo Applies

During the transition period, EU law continues to apply to the UK, and so there is no change in relation to protection and enforcement of IP rights during this period.  EU Trade Marks (EUTMs), Registered Community Designs (RCDs), and Unregistered Community Designs (UCDs) will continue to cover the UK.  There is no need for any action to be taken, other than to continue to monitor developments, and to review IP portfolios and related agreements to be in an optimum position at the end of the transition period. 

The continued application of EU law during the transition period is no longer on the basis that the UK is a Member State, but arises as a result of the Withdrawal Agreement.  In effect, the UK is being treated as if it is still an EU Member State.

Withdrawal Agreement: EUTMs and EU Designs

The Withdrawal Agreement deals with preservation of EUTMs and EU Designs in the UK at the end of the transition period through the automatic creation of equivalent rights in the UK.  This will take place on 31 December 2020 (on the assumption there is no extension to the transition period).

In summary, the Withdrawal Agreement provides as follows: 

  • Existing EUTMs and RCDs will be preserved in the UK at the end of the transition period through the creation of an equivalent UK right, with the same priority and seniority. This will happen automatically, and at no cost to the right owner.  Similarly, where there is an UCD which arose before the end of the transition period, the owner of that UCD will automatically become the holder of an enforceable right in the UK for the remaining period of protection of the corresponding UCD.
  • Where an application for an EUTM or RCD is pending at the EUIPO at the end of the transition period (on 31 December 2020 or any agreed extended date to the transition period), the applicant will have a 9 month priority window in which to file a UK application.
  • Where an EUTM or RCD is being challenged at the EUIPO through a cancellation action which is ongoing at the end of the transition period, and that EU right is later declared invalid at the EUIPO, this outcome will also apply to the new UK right created (unless the grounds for the invalidity or revocation do not apply in the United Kingdom). 
  • Where a UK court has made a referral to the CJEU for interpretation of a point of EU law before the end of the transition period, the CJEU will provide answers to the questions referred, even if the case is heard by the CJEU after the transition period.  Key referrals from the UK Courts pending include the questions recently referred by the IPEC relating to UCD and whether it is necessary for the first disclosure of the design to take place in the EU.  
  • An equivalent UK trade mark arising from an EUTM will not be liable to revocation on the grounds that the corresponding EUTM has not been put into genuine use in the UK before the end of the transition period. 
  • When assessing the reputation of an equivalent UK trade mark arising from an EUTM, it will be possible to take into account reputation acquired in the EUTM in the EU before the end of the transition period.  After the transition period, reputation of the equivalent UK trade mark will only be based on use of the mark in the UK.

What happens after the transition period?

The UK and the EU will be negotiating the terms of their future relationship throughout 2020 and we will monitor developments, and keep you regularly informed.  It remains to be seen how much regulatory alignment will be agreed, including in relation to IP rights. If no agreement is reached by the end of the transition period, this would lead to a ‘No Trade Deal Brexit’. 
In general terms, existing EU IP laws (as at the end of the transition period) will be retained as part of UK law once the transition period has completed, with appropriate modifications.  Over time, however, the UK may diverge on certain aspects in relation to retained EU laws. 

The UKIPO has issued updated guidance on IP in the transition period and also from 1 January 2021 (assuming the transition period ends on 31 December 2020).  This is an update of the guidance that had previously been produced for a No Deal situation, taking into account relevant aspects from the Withdrawal Agreement.  It is possible that aspects of this guidance will be updated over the course of 2020.

Unregistered Designs: Government plans for a ‘supplementary unregistered design right’

One of the more difficult Brexit issues for IP rights is the treatment of unregistered design rights which are, of course, extremely valuable rights in a number of design-led industries. The Government has proposed the creation of a ‘supplementary unregistered design right’ (SUDR) mirroring the UCD, seeking to plug the gap in protection that may otherwise arise (given that the UK’s existing unregistered design right does not provide the same levels of protection). 

However, concerns were raised about the value of the SUDR due to uncertainty in the EU over the existing disclosure requirements relating to UCDs.  Depending on how this issue develops, this may mean that, after the end of the transition period, businesses will need to consider taking steps to ensure simultaneous publication of their designs in the UK and the EU, or incur the expense of obtaining registered design protection in both the EU and the UK.  The concern for UK based designers is therefore that, if they disclose their designs first in the UK, they might be eligible for the SUDR, but they will not be eligible for UCD protection in the EU, and may also destroy the novelty in any subsequent RCD application. But, if they disclose their design first in the EU, will this impact on their ability to rely upon SUDR?

Design-led businesses will be watching the outcome of the referral to the CJEU in the Beverly Hills Teddy Bear case, and any further developments re the SUDR, with interest.

Brexit and Exhaustion of IP Rights: Too difficult to quantify?

The potential impact of Brexit on the treatment of parallel imports into the UK is another difficult issue to resolve. Parallel imports are genuine products imported from another country without the permission of the intellectual property owner. The Withdrawal Agreement provides that IP rights exhausted in the EU and the UK before the end of the transition period shall remain exhausted in both areas. As part of its No Deal planning, the UK Government decided, as a ‘temporary fix’, to align unilaterally to the EU/EEA regime to allow continuity of supply of parallel imports into the UK. However, where a right holder places goods on the UK market after the end of the transition period (or this happens with their consent), the rights may no longer be considered exhausted in the EEA and so consent may need to be obtained. Again, it will be necessary to see how this issue develops over 2020 as to what will now happen after the end of the transition period. 

In relation to the long-term position, however, the Government commissioned EY to conduct a feasibility study, simply to determine whether it would be possible to estimate the scale of parallel trade across the UK economy. The central finding in EY’s Report of its assessment of 30 economic studies was that, other than in the pharmaceutical sector, there is very little data on parallel trade, and limited awareness of the issues surrounding parallel imports, or perhaps a reluctance to speak on it, due to either stigma or normalisation. The study authors concluded that, whilst there were potential avenues for further research, there was not a clear and conclusive research methodology available to estimate reliably the scale and impact of potential changes to the parallel trade regime.

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