From midnight on 31 December 2020, the United Kingdom will no longer be governed by EU law and will leave the EU trademark system. HGF’s Lee Curtis and Suzan Ure point out the important implications that this will have for ongoing contentious proceedings, evidence of use, clearance searches, injunctions, agreements and exhaustion of rights.
At midnight Central European Time on 31 December 2020, as much of Europe toasts the New Year, the United Kingdom will find itself no longer governed by EU law – and leave the EU trademark system.
The landscape of registered rights is clear, but the impact of Brexit and indeed 31 December 2020 has been wide reaching, particularly with regard to contentious proceedings before the EUIPO.
Ongoing contentious proceedings
Before the EUIPO
Any EUIPO opposition and invalidity actions based solely on UK rights that are still pending as of 31 December 2020 will be concluded automatically, with the opposed EU trademark application proceeding to grant or the granted EU trademark registration remaining in force and being cloned into a corresponding UK registration automatically. Therefore, opponents should look out for cloned UK trademark applications filed by the relevant applicants and oppose these accordingly before the UK Intellectual Property Office (UKIPO).
Another important provision of the Withdrawal Agreement is that any EUIPO invalidity or non-use decision that is decided upon at a later date and affects a cloned UK registration can be implemented against the cloned UK right. The applicant for invalidity will be able to request that the UKIPO apply the EUIPO decision to the cloned right, and the registrant will have one month to file a so-called ‘derogation notice’ arguing why that decision should not apply. The UKIPO will then make a decision. As such, there may be no need to file a separate action at the UKIPO, although nothing precludes an applicant from filing its own invalidity action before the UKIPO. Interestingly, the UKIPO itself or any third party can ask for an EUIPO decision to apply to a cloned UK right. Therefore, it would be wise for parties to search the EUIPO database for applicable decisions if, for example, a UK cloned right is likely to pose a bar to registration.
Ongoing non-use revocation actions before the EUIPO have been largely unaffected by Brexit, as the EUIPO stated in its Brexit practice guidelines that use of an EU trademark registration in the United Kingdom before the end of the transitional period can be used in the defence of a corresponding EU non-use revocation action, even if the decision is made after 31 December 2020. The same provisions will also logically apply to proof of use requests in opposition and invalidity proceedings. However, the EUIPO has made clear that this use will slowly “decline in relevance”. Thus, in the medium to long term, the value of use in the United Kingdom before 31 December 2020 in the defence of EU revocation actions against EU trademark registrations pre-dating 31 December 2020 will decline and ultimately disappear. Use in the United Kingdom after 31 December 2020 is of no relevance whatsoever.
Before the UKIPO
With regards opposition and invalidity proceedings filed before the end of the transitional period or against UK trademark applications filed before the end of the transitional period, EU trademarks and EU designations under international registrations will continue to constitute earlier trademarks for the purpose of these proceedings. This applies to both registered and pending marks, although, in the case of the latter, this is subject to the earlier mark subsequently being registered or protected. Although it will not be possible to substitute or add cloned UK trademark applications and registrations into these proceedings, the UKIPO notice suggests that these proceedings will simply continue on the same grounds and earlier rights basis.
Ongoing non-use actions remain unaffected by Brexit due to the undertakings provided for by the UK government in the Withdrawal Agreement, whereby the UKIPO has agreed to recognise use of a UK cloned registration in the European Union before 31 December 2020 in defence of a non-use revocation action.
Evidence of use
As has become clear, the UKIPO and the EUIPO have taken different approaches to the relevant evidence of use overtime in the Brexit Guidance Notes. Indeed, use before 31 December 2020 will not decline in relevance for UK proceedings. Therefore, it will continue to be vital to include such evidence in UK actions (albeit translated into English if derived from a non-English-speaking EU jurisdiction). On the other hand, the further we move from 31 December 2020, the less important any UK use will be before the EUIPO. Most importantly, parties should remember that any use deriving outside the respective jurisdictions after this date will no longer be relevant and EU use can only be used in the United Kingdom in support of cloned rights.
In the European Union, use in one member state may become a more important issue. Although the EUIPO has generally found that use in a single member state is sufficient to defend an EU trademark registration against non-use proceedings, it should be remembered that a UK court found the opposite to be so in Sofaworks and there is no guarantee that EU case law will not change. If a client has its principle markets in the United Kingdom and only limited operations in the European Union, it may be wise to consider filing national EU registrations as well as UK registrations. The limited geographical scope of use in the European Union may be more easily defendable in this national sphere, rather than under an EU-wide unitary registration. It will be worth conducting audits of the geographical extent of the client’s use of its trademarks in the United Kingdom and the European Union and amending any filing strategies accordingly.
If the client’s use is principally in the United Kingdom and is limited in the European Union, consider refiling EU trademark applications or national EU applications afresh, bearing in mind the case law on ‘ever-greening’ applications.
Practitioners should also take note when conducting clearance searches. When searching for a brand in the United Kingdom, it will be important to remember the nine-month cloning period and the ability for lapsed EU trademark registrations to be brought back from the dead in the form of cloned UK registrations (if still within the renewal grace period). Thus, in terms of searching, UK practitioners cannot simply ignore the EU register after 31 December 2020. Instead, they should monitor the cloning of any EU applications into UK applications that they wish to challenge.
The small number of pending proceedings before UK courts concerning EU trademark registrations will be allowed to continue, but the remedies afforded to such actions will only apply to the cloned UK registration. Therefore, UK courts will no longer be able to issue EU-wide injunctions with regard to cloned UK trademark registrations. Any EU-wide injunctions granted before 1 January 2021 in relation to EU registrations will continue to apply and will be enforced against the cloned UK registration.
Turning to agreements, where these cover the whole of the European Union, they should legally apply to the United Kingdom and may have been made ‘Brexit-proof’ for a while. The UKIPO previously accepted that it could not record such agreements (eg, licence agreements) before 31 December 2020 against cloned UK trademark registrations. Thus, the period for recording such transactions has been extended from six months to 12 months – making it vital to record these now.
Exhaustion of rights
A final consideration relates to exhaustion of rights. The United Kingdom will apply a UK and European Economic Area (EEA) exhaustion of rights regime immediately after the end of the transitional period, effectively maintaining the status quo pre-Brexit. However, the UK government has indicated that this regime will be subject to future consultation, so how long this lasts remains to be seen. In time, the United Kingdom could apply a UK-only exhaustion of rights regime or an international exhaustion of rights regime instead.
Things are also lopsided in terms of the exhaustion relationship between the European Union and the United Kingdom, as the former has indicated no change in its exhaustion of rights regime, which applies to the EEA only, noting that the United Kingdom will no longer be a part of the EEA at the end of the transitional period – yet another point for practitioners to take note of.
This is an extract taken from a longer article on the impact of Brexit on trademark practice, due to be published in WTR 86, which will be available to subscribers in early January.