Brexit: Trade mark licensing implications

By Nick Aries

01-2020

This bulletin discusses the implications of Brexit on licensing EU Trade Marks (EUTMs). The bulletin very briefly considers what will happen to EUTMs in the UK after Brexit, before turning to implications for EUTM licences.

The UK Government served formal notice under Article 50 of The Treaty on European Union to terminate the UK's membership of the EU on 29 March 2017 (following the June 2016 UK referendum on EU membership). Following several extensions, the Article 50 notice resulted in Brexit taking effect on 31 January 2020.

The Withdrawal Agreement between the EU and UK has implemented a transition arrangement to the end of 2020. Under this arrangement EU law will have continued application in and to the UK until the end of the transition period.

This note looks at the position after the end of the transition period.

After the transition period, how will unitary EU-wide registered IP rights, such as EUTMs, be addressed with regard to the UK, and what implications are there for EUTM licences? For the purposes of this note, we are assuming that following Brexit the "Norway model" (i.e. EEA membership) will not be applied to the UK and that the UK will be outside the single market. 

Will my EUTM still cover the UK?

The answer is no. However, a new comparable UK trade mark will be created out of the existing EUTM, to cover the UK territory. Accordingly all existing EUTM holders will be granted an equivalent trade mark registered in the UK. In respect of pending EUTM applications, applicants will have a grace period of 9 months to apply in the UK for the same mark to retain the priority date of the original EUTM application.  

What about EUTM licences?

Of equal concern to licensors and licensees is what will happen to existing EUTM licences after Brexit, where the licensed territory includes the UK. Will the UK continue to be covered by the licence? 

The question will be easy enough to answer where wording is used such as "the EU as constituted from time to time" (on the one hand), or "as constituted at the date of this Agreement" (on the other). Where no such wording is used, the answer is likely to depend on the factual background to the licence (assuming it is governed by English law), meaning it requires case by case analysis. Was the "EU" simply being used as convenient shorthand for a list of countries, so the UK would continue to be in scope? Or was the terminology used because it had certain factual or legislative implications on the subject matter of the contract?

Relevant factors might include whether, for example:

  • any national rights (registered or unregistered) are included in the licence alongside the EUTMs;
  • the EU territory was chosen because it is a single market, with ability to protect against unauthorised imports from outside but not to prevent parallel trade of authorised goods within;
  • there are legal or regulatory reasons why the licensee needs to be located in an EU Member State.

Assuming parties are in agreement, they would be advised to amend existing licences to ensure it is clear whether the UK will remain part of the licensed territory after Brexit, and at the same time to clarify the position with regard to future EU joiners/leavers. The same is true for licences currently under (re-)negotiation.

If the correct interpretation is that the UK remains part of the licensed territory, there is a second question about whether the new comparable UKTM right deriving from the EUTM is automatically included in the existing licence without the need to amend the licence. This is covered in the transition UK legislation which states that where a licence permits use in the UK under an EUTM before the end of the transition period it shall treated as being included in the existing licence.

Assume that the UK 'portion' of an EUTM will be replaced by a new comparable UKTM registration (e.g. with the same filing, publication and registration dates as the EUTM). The right being licensed in the scenario contemplated above is likely then to either: (1) change altogether from an EUTM to a UKTM (where the territory is the UK only), or (2) be expanded to include a UKTM (for the UK part of the licensed territory), alongside the existing EUTM (for the EU part of the licensed territory).

This means that the legal rules governing the UK portion of the licence will change. This is because the licensing of UKTMs is governed by sections 28 to 31 of the Trade Marks Act 1994, whereas the licensing of EUTMs is governed by Articles 22 and 23 of the EUTM Regulation. Until recently, this risked creating material divergences between a licensee's rights under the EUTM and under the UKTM portions of the licence. However, the recently enacted UK legislation implementing the new Trade Mark Directive (Directive 2015/2436) will now align the regimes, so that is no longer relevant.

However, licensees in particular should note that a licence of a UKTM is only effective against a third party acquiring a conflicting interest (such as a party buying the UKTM, or a subsequent licensee whose rights conflict) if it has been registered at the UK IPO. The rights of an exclusive licensee to enforce the UKTM in its own name are also contingent on the licence having first been registered at the UK IPO.

Under the UK transition legislation an EUTM licence whose territory includes the UK is registrable at the end of the transition period as if it were a licence for the comparable UK trade mark. If the EUTM licence has previously been registered at the EU IPO there is a period of 12 months to register the licence at the EUIPO. It costs £50 to register the licence against the relevant UKTM with the UK IPO, and this can be done without the licensor's involvement if the licensee supplies a copy of the licence.

This article is part of our Brexit series