The European brand owners association, MARQUES, has issued a position paper setting out its proposals for the future of IP rights after withdrawal of the UK from the EU, slamming the UK government’s lack of engagement with this “very technical area of law”, which it says is causing grave damage to European business interests.
Inaction a threat to businesses
The paper, which follows those issued by the Chartered Institute of Trade Mark Attorneys (CITMA) in July 2017, and the European Commission two months ago (which I posted about here), is the most detailed on the subject yet. It warns that Brexit has the potential to be a material threat to a significant number of businesses that own and/or rely upon IP rights protected in the EU, and that continued inaction by the negotiating parties whilst the Brexit clock is ticking will only cause uncertainties to grow.
Key objectives to be achieved
MARQUES calls upon the governments of the UK and EU27 Member States and the European Commission to provide “early certainty” on what it considers to be the key objectives: that there be no loss of existing IP rights or diminution in the level of IP protection in the UK and EU27 Member States post-Brexit; and that businesses should not face any cost or administrative burden in order to maintain their IP rights.
It considers that, in order for these objectives to be achieved, a breadth of complex legal and procedural matters need to be resolved through detailed negotiations between the parties, which must be concluded before 30 March 2019, when the UK is due to leave the EU.
MARQUES expresses deep frustration and “serious concern” that dialogue between the parties is yet to even begin, which it says is undermining confidence in the trade mark, design and geographical indicator systems of the EU, causing businesses to incur additional and possibly unnecessary costs, which affects not only the businesses themselves but also their employees, consumers and investors.
Practical suggestions for harmonised pan-EU rights
MARQUES’ paper is split into twelve sections, which each provide practical suggestions for dealing with particular aspects of the pan-EU rights requiring priority treatment at Brexit (registered EU trade marks (EUTM), registered community designs (RCD), unregistered community designs (UCD) and protections of designated origin and geographical indication (PDO / PGI)).
The extensive harmonisation of these rights across the EU naturally dictates that the extraction of UK rights from them will be complex and multi-faceted, and so MARQUES calls for as much of this harmonisation as possible to survive Brexit, whether or not the UK remains in the Common Market or joins the EEA.
Novated UK equivalent rights
MARQUES supports most of the principles set out in the Commission’s paper including, unsurprisingly, the general principle that the holder of any right having unitary character within the EU before the withdrawal date be recognised, after that date, as having an enforceable right in the UK, comparable to that provided by EU law. MARQUES suggests that these be called “novated” UK rights and that they benefit from the same priority, application, registration and renewal dates as their EU counter-part and be identified by the same number (perhaps preceded by the letter N to indicate novation).
No cost, administrative burden or “opt-in” for rights holders
Crucially, and reflecting its role as representative of the interests of brand owners, MARQUES proposes that the novation process be automatic, not requiring holders to opt-in, complete any forms or incur any additional fees, and that the affected rights should not be subject to any form of re-examination by the UK Intellectual Property Office (UK IPO) before novation can take place. MARQUES also considers that a declaration of genuine intention to use a EUTM in the UK should not be a pre-condition to novation, because that would indirectly introduce an opt-in process.
If adopted, this approach would be welcomed by businesses short of the time and resources that a more cumbersome opt-in or fee-paying process might require.
Risk of increase in fraudulent “official” invoices
MARQUES sensibly flags the increasing EU-wide problem of unsolicited mail being sent by companies requesting payment for trade mark and design services. It warns that the introduction of any additional cost or opt-in requirement to transpose EU rights into novated UK rights is likely to result in a rise in fraudulent “official” invoices from companies not connected with the EUIPO or UK IPO demanding unjustified payments to “secure” UK rights. Such invoices often fool the most astute businessperson, and MARQUES recognises that one way to decrease this risk is to adopt a novation process that is free and does not require action by rights holders.
Pending applications and challenges
MARQUES proposes that EUTM and RCD applications pending at Brexit should only complete the UK novation process after completion of all the normal EU steps for acceptance onto the register.
The paper also sets out specific guidance for applications that are the subject of a challenge pending at Brexit, and suggests that the holder of a right that has the potential to be novated into a UK right should be able to start opposition, cancellation or infringement proceedings in the UK post-Brexit in reliance on the anticipated novated right even though the novation process is not complete. MARQUES considers this approach to be vital in ensuring the right holder’s position is preserved as if their EU right still covered the UK.
Litigation based on EU rights
MARQUES recognises the “numerous complexities” of pending litigation involving EUTM, RCD, UCD and PDO / PGIs which will need very careful consideration.
On behalf of its members, it seeks “early clarity” on a range of issues, including in relation to pan-EU injunctions, invalidity and revocation counter-claims, and references to the Court of Justice of the European Union, highlighting the importance of avoiding re-litigation of decided cases.
Businesses in the midst of IP litigation or due to commence proceedings shortly will be particularly keen for some certainty around these issues which might directly impact upon their prospects of success.
Existing contracts and recordal of contractual interests
MARQUES mirrors CITMA’s suggestion that references to the EU in contracts formed pre-Brexit be construed as continuing to include the UK post-Brexit, and goes further by inviting the UK government and EU27 Member States to adopt legislation to that effect.
This would avoid any uncertainty for businesses whose portfolios include IP agreements, the scope of which are dependent upon a clear and certain definition of the relevant territory.
Similarly, MARQUES considers that any interests of licensees of, or holders of security or related interests in, an EUTM or RCD that are recorded at the EUIPO should have those interests recorded at the UK IPO in relation to the novated UK right automatically and without cost, recognising the importance that there is no loss of such protection by default of any action or payment.
This approach would avoid the risk of businesses inadvertently breaching the terms of any existing contracts that oblige them to maintain the recordal of licence or security interests, and further reduce the administrative burden that Brexit might otherwise have on their day to day operations.
Customs, .eu domain names and creation of new UK rights
Among other things, MARQUES also calls for:
- A prolonged transitional period to allow registrants of .eu domain names that do not have a place of business within the EU27 countries to maintain their registrations and for feasible solutions to be sought, which might include treating UK residents as the equivalent of EEA residents for the purposes of .eu domain names.
- The UK government and EU27 Member States to retain as much as possible of the current level of cooperation between the customs offices around the EU, along with some form of centralised notification of rights system that includes the UK.
- The creation of national rights equivalent to the UCD and the PDO / PGI regime to be created in the UK, which would ensure that businesses benefit from the same level of protection for those rights in the UK as they do in the EU27 Member States.
MARQUES calls upon the UK government to end its “complete silence” and respond to the Commission’s position paper which, although sets out key principles which MARQUES agrees with, only “scratches the surface of the myriad issues to be addressed”.
MARQUES considers that the most valuable next step would be for the UK IPO and EUIPO to jointly issue their own papers, identifying all matters needing resolution, publicly confirming those upon which they can already agree, and negotiating those that require greater thought. Only then, it says, might uncertainties for businesses lessen.
Good news for businesses
Businesses should be buoyed by this assertive contribution to the IP post-Brexit conversation which is still very much in its infancy.
It is clear that, when talks do reach a stage where IP rights are on the agenda, there will be a lot to tackle and the political dynamic is likely to determine which recommendations are ultimately adopted.
However, as a key stakeholder, MARQUES is likely to be called upon by the negotiating parties for commentary on the options proposed before any implementing legislation is drafted, and so rights holders concerned about the future of their IP portfolios can take encouragement that they will have MARQUES on their side.