Brexit & the Reformed EUTM System
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Just as we are getting to grips with the recent changes to EU trade mark law, we are now faced with the possibility that the UK will vote to leave the EU at the referendum to be held on 23 June. Although the full implications of a so-called Brexit are far from clear, the potential impact on trade mark rights is of relevance to many businesses across the globe, and not just those based in, or trading in, the UK.
There are two ways in which EU membership affects trade mark rights in the UK:
- National trade mark laws across the EU are harmonised in relation to many keys issues;
- Membership of the EU means that the unitary EU-wide trade mark, known as the EUTM, provides protection in the UK.
Harmonisation
At present, the national trade mark laws of all 28 EU Member States have certain key features in common, such as a five-year non-use period. Further harmonisation has been sought by the recent updates to the Trade Marks Directive. Key areas addressed include the removal of graphic representation requirements when filing trade mark applications, and the endorsement of the "literal meaning" approach to class heading coverage, the latter resulting from a UK-driven test case. If the UK leaves the EU it will no longer need to worry about harmonisation and will not be obliged to implement the new Directive. However, many areas covered by the new Directive are already part of UK law, and existing harmonisation would remain.
It is therefore likely that we would see little impact on this side of things in the short-medium term, especially as any withdrawal from the EU would take some time to come into effect and a further push towards harmonisation is unlikely to occur anytime soon.
The EUTM
An EUTM registration is a single registration that provides protection in all 28 Member States of the EU. It is a much cheaper alternative to obtaining (and maintaining) national trade mark registrations in all Member States, and became more cost effective with the recent changes to the fee structure, especially as regards renewals.
As no Member State has left the EU, and as the law does not currently set out what would happen in such a situation, it is again a case of speculating on the likely approach and consequences.
The aim of the recently introduced reforms to the EUTM system was to refine and improve upon a system that, as a whole, was considered to be successful and well-functioning. However, if the UK does leave the EU it will not fully benefit from these reforms, for example, EU-wide certification marks are unlikely to have effect in the UK.
It is almost inevitable that if the UK were to leave new EUTM registrations would only provide coverage in the remaining 27 Member States. National protection would be required on top for those with interests in the UK as well as other Member States, increasing overall costs.
For those with existing EUTM portfolios, it is expected that a mechanism would be implemented to enable UK rights to be extracted from EUTM rights or to sit alongside them. This is likely to involve the payment of fees, and could become complex for EUTM registrations with UK seniority claims. However, in a similar vein to conversation of EUTM rights, any extracted UK rights would probably maintain the filing or priority date of the EUTM rights, meaning that utilising any extraction mechanism is likely to be a more sensible option for many than filing new UK applications.
Another key issue in relation to EUTM rights could be the treatment of non-use issues. At present, use in a substantial part of the EU is needed to maintain an EUTM registration. Depending on the goods and services at issue, use in just one Member State can be enough. Where such use is primarily in the UK, those with EUTM rights could find that in a post-Brexit world they are unable to maintain their EUTM rights as they do not have sufficient use in the Member States that remain within the EUTM system. Conversely, those with use in Member States other than the UK who extract their UK rights and turn them into national rights could find that these national rights are vulnerable to attack from the outset, and therefore of limited value.
Conclusion
As with all areas, how a Brexit would affect trade mark rights remains uncertain at this stage. Although a vote to leave the EU would be followed by a period of around 2 years before the UK ceased to be a member, this would come at a time when resources are being devoted to ensuring the smooth introduction of the recent reforms, some of which do not come into force until late 2017.
