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EU vision for intellectual property rights post-Brexit

In its position paper for discussion with the EU27 at the Council working party of 7 September 2017, the European Commission sets out its initial expectations for intellectual property rights after withdrawal of the UK from the EU, in particular in relation to geographical indications and exhaustion of rights. While short, at just five pages long, it indicates the Commission’s high level priorities and marks a start of the negotiations around intellectual property and Brexit.

Automatic recognition of EU intellectual property rights in the UK

Unsurprisingly, as a general principle, the Commission seeks to preserve the full scope of all intellectual property rights (IPRs) having unitary character within the EU, by requiring that the holder of any such right granted before the withdrawal date be recognised, after that date, as having an enforceable right in the UK, comparable to that provided by EU law, if need be on the basis of specific domestic legislation to be introduced by the UK. To do otherwise would deny holders of their legal property rights, potentially triggering judicial review of the government’s actions, and so this recommendation is likely to be willingly accepted by the UK.

Administrative burden on Intellectual Property Offices

Depending on the route by which EU rights will be recognised in the UK, whether by automatic entry into the UK registers, or by an “opt-in” or “veto” mechanism, it is clear that the administrative burden that the process will put on the Intellectual Property Offices, particularly in the months immediately prior to and post-Brexit, will be great.

Prior to Brexit, the European Union Intellectual Property Office (EUIPO) will face an influx of applications for registrable IPRs, as prospective rights holders seek to secure wider protection than will otherwise be afforded to them post-withdrawal, in the absence of additional UK filings.

Post-Brexit, the UK IPO will be required to give effect to a near insurmountable number of new registrations. The EUIPO database currently holds in excess of one million registered trade marks, at least double the number held by the UK IPO.

Similarly the EUIPO holds in the region of 700,000 registered designs, whilst the UK IPO only holds around 40,000.

Businesses should beat the rush

Both offices are considering mechanisms to manage the process and will need to be well prepared. Back logs at either office could cause severe delays to the filings and renewals processes, and any lag time between rights being registered and the relevant databases updated could make it impossible to ascertain what rights are in existence at any one time, which could have serious implications for rights holders and their opponents alike.

With this in mind, any business considering taking action in relation to its trade mark or design right portfolio this side of 2019, whether by filing new applications, amending or consolidating existing rights, or recording the grant of security, licences or assignments, should make a head start as soon as possible.

Adaptation of “genuine use” requirement for trade marks

Other aspects flow from this general principle. The Commission recommends what it describes as an “adaptation” of the “genuine use” requirement to ensure trade marks are not refused recognition in the UK on the ground that the equivalent European registration has not been put into genuine use in the territory of the UK before the withdrawal date. This adaptation will be necessary for the general principle to take effect automatically, but the Commission gives no indication as to how long it anticipates it applying for.

Given that the concept of genuine use was designed to reduce the number of exclusively protected trade marks, as well as preventing possible conflicts between them, the UK will be keen to ensure that European trade marks obtaining automatic protection in the UK post-Brexit are not outside the scope of this requirement for too long. The most likely assumption is that the usual five year usage clock will start ticking after the date on which the UK registration is deemed to come into effect, giving rights holders a generous period within which to put their marks to “genuine use” in the UK before risking revocation on the grounds of non-use. Alternatively, the UK might seek a shorter period, to avoid the registry becoming clogged up with trade marks that were never intended for use in the territory.

UK legislation required for protected food, drink and agricultural product names

More specifically, the Commission requires that the UK implements domestic legislation to provide for the continued recognition of protected statuses given by the EU to some 3,300 food, drink and agricultural products, avoiding the risk to producers of copycat products such as “English champagne” and “English parma ham”.

Taking its cue from the Agreement on Trade-related Aspects of Intellectual Property Rights 1994 (TRIPS Agreement), the EU has developed one of the most robust regimes in this area, granting collective rights to certain producers to have the name of their product protected indefinitely under EU law, where the name is used to identify the geographical origin and quality, reputation or other characteristic of their product.

Unlike trade mark registrations, which are owned exclusively by the registrant in each case, protected statuses enable an indeterminately sized group of producers to hold the same right.

Taking the form of protected geographical indication (PGI), protected designation of origin (PDO) and traditional speciality guaranteed (TSG), they prevent other producers from marketing products under the same name unless produced in the same area and using the same methods as the right holder has agreed with the EU.

Geographical indications nothing new and UK benefits

Protected statuses are of enormous economic value, particularly to France, Spain and Italy, and have been the subject of significant litigation as producers’ associations seek to maintain the exclusivity of their products.

However, protecting geographical indications is nothing new to the British parliament. The UK is a signatory to the TRIPS Agreement, by which it agreed to provide the legal means to prevent use of a geographical indication that misleads the public as to the geographical origin of the goods. There is also a wide range of British businesses benefiting from protected statuses. Producers of Scotch Beef (PGI), Whitstable Oysters (PGI), Cornish Clotted Cream (PDO) and Traditionally Farmed Gloucestershire Old Spots Pork (TSG) are just a few examples.

It is also worth noting that the European Union (Withdrawal) Bill, if implemented in its current form, will result in all EU laws on this issue (and more) being automatically mirrored in UK law, unless or until amended, repealed or improved as the government sees fit.

So the Commission’s specific mention of protected statuses in reality goes no further than flagging it as an area of priority, and giving the press a bit of headline fodder.

Rights to remain exhausted post-Brexit

The Commission also sets out its expectations for exhaustion, proposing that rights that were exhausted in the EU before the withdrawal date should remain exhausted throughout both the EU and the UK after that date. If accepted, this will mean that affected goods can continue to be parallel traded between the UK and the EEA after withdrawal until their stock is depleted, enabling UK consumers to benefit from lower prices in the interim. The negative effect this will have on the profits of parallel traders re-selling into the UK will no doubt give rise to litigation around whether or not particular goods were on sale before Brexit, and encourage the introduction of new stock post-Brexit.

UK response anticipated

The Commission’s paper is a useful indication of its overall approach to intellectual property as part of the Brexit negotiations. Its principles are in line with much of the Chartered Institute of Trade Mark Attorney’s July 2017 position paper, with the focus seemingly on maintaining the status quo and continuing to recognise existing rights. It remains to be seen how the UK greets the proposals, whether it seeks to add items to the agenda such as UK’s involvement in the European patent package, and how the detail of each proposal is agreed upon. However, the government’s commitment to providing certainty and continuity upon Brexit makes it unlikely that we will see any notable divergence from the principles set out in the Commission’s paper.

Jennifer Phillips

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