With the recent debates about an in-out EU referendum rumbling on, the relationship between the UK and the EU is under continuing scrutiny. The political and economic issues of a withdrawal may take newspaper headlines, but the impact on Community trade marks and registered designs should not be forgotten either.
It has become increasingly common for businesses, instead of registering trade marks or designs on a national basis within the EU, instead to register a Community trade mark or design – this is a single registration which covers all EU member states and which has been praised for administrative ease and cost effectiveness.
Whilst Community trade mark and design legislation provides for the extension of Community trade mark and design protection to new countries joining the EU, the possibility of any country leaving the EU appears to have been regarded as inconceivable. The legislation is silent to what would happen if, for example, the UK were to leave the European Union.
After Ireland left the United Kingdom in 1921, owners of existing UK trade marks and registered design were entitled, on payment of a fee and within 6 months of the commencement of the relevant legislation, to register their UK trade mark or design as an Irish trade mark or design (without any change in the priority date).
If a similar procedure were to apply in respect of CTMs and CRDs on the UK leaving the EU, this would place the onus on owners to apply to have their trade marks and designs separately registered in the UK, failing which they would lose protection in the UK (unless there was already a corresponding UK registration). Apart from placing a considerable administrative burden on the UK IP Office, this could also result in significant costs to owners of large portfolios, who would have to pay additional registration and renewal fees.
Other alternatives include (i) allowing existing CTMs and CRDs to continue to apply to the UK until they are up for renewal; or (ii) automatically converting existing CTMs and CRDs into UK registered trade marks and designs administered by the UK IP Office.
But that bit is actually the easy bit when you consider the other issues that will need to be resolved:
1. Exhaustion of rights
Community trade marks and design legislation provides that owners of CTMs and CRDs will not be entitled to prohibit their use in relation to products which have been put on the market in the EU by them or with their consent. This is known as the “exhaustion of rights”.
- If the UK were to leave the EU, would owners of the “descendant” UK trade marks be entitled to prohibit the importation into and sale in the UK of products, which they first placed on the market elsewhere in the EU Member States?
- If so, would it be relevant whether these products had first been placed on the market before or after the UK left the EU?
- What would happen if ownership of the “descendant” UK trade mark were to be transferred to an entity different from the owner of the corresponding CTM? Would a trade mark owner be entitled to oppose the importation of products lawfully bearing an identical UK trade mark into EU Member States, even though that trade mark originally belonged to a subsidiary or affiliated company?
- What would happen to EU-wide licences of CTMs and CRDs? Would the licence also continue to apply to the “descendant” rights in the withdrawing state and would the licensor be prohibited from transferring its ownership to another party?
- How would a licence expressed to be granted in respect of a CTM or CRD even be read after a split?
And a final, more economic point for brand owners to note - if the UK does end up outside the EU, however CTMs and CRDs are dealt with, it is more than likely that businesses wishing to protect their trade marks and designs in Europe will be faced with additional registration costs.
Written by Richard Plaistowe