This article was originally published in Managing IP and can be accessed here.
Brexit and brand protection – lessons learned six months on
Brexit has had far-reaching implications for brand owners, in particular for trademark protection. The process for registering, managing and enforcing trademarks across the EU and the UK has become more complex because there are now two separate systems of registration and enforcement in place. During the transition period, the EU Trade Mark Regulation continued to apply in the UK, so the legal position effectively only changed from January 1 2021. With the Trade and Cooperation Agreement between the EU and the UK now in place in addition to the Withdrawal Agreement, and the English courts starting to grapple with IP protection in a post-Brexit world, we look at the effect Brexit has had on brand protection and trademark litigation six months on.
Post-Brexit trademark law: the main changes
Since December 31 2020, European trademarks (EUTMs) and international registrations (IRs) designating the EU under the Madrid system continue to be valid in the 27 EU member states but no longer have effect in the UK. The Withdrawal Agreement sought to limit any loss of IP rights that would otherwise have arisen from the UK’s departure from the EU. The key trademark-related provisions are set out in Articles 54, 55, 59 and 61 of Part 3, Title VI.
Owners of EUTMs that were registered before the end of the transition period automatically became owners of comparable trademarks (EUTMs or IRs) without any re-examination or application fees being required, unless they validly opted out. If an EUTM was declared invalid or revoked in proceedings that began before the end of the transition period, the corresponding comparable trademark was cancelled as of the same date.
Comparable trademarks have the same status and effect as those registered under the UK Trade Marks Act 1994. They have the same renewal dates and deemed filing or priority dates as the corresponding EUTMs.
They will not be liable to revocation on the ground that the corresponding EUTM was not put to genuine use in the UK before the end of the transition period – use of a trademark in the EU prior to December 31 2020 will count as use of the comparable trademark in the UK.
Comparable marks will continue to benefit from reputation acquired in the EU before the end of the transition period. However, since December 31 2020, the assessment of use and reputation of a comparable trademark is based solely on use in the UK.
The UK government introduced secondary legislation in 2019 and 2020 to revoke the retained EU trademark legislation and to implement the provisions of the Withdrawal Agreement, principally by introducing two new schedules to the Trade Marks Act 1994: Schedule 2A in respect of comparable trademarks (EUTMs), and schedule 2B covering comparable trademarks (IRs).
Title V of Part Two of the Trade and Cooperation Agreement covers IP but, in relation to trademarks, it is largely limited to (i) setting out minimum standards that the EU and the UK must adhere to, and which are already enshrined in EU and UK law; and (ii) holding the UK and the EU to their existing international treaty obligations.
Some complexities and inconsistencies remain to be ironed out with regard to the current hybrid regime applied to exhaustion of rights with the European Economic Area, and brand owners will have to assess the impact of new UK legislative proposals when they are promulgated in due course.
Brexit implications for trademark litigation
Enforcement and jurisdiction
One of the main changes resulting from Brexit for IP disputes is that the rules on jurisdiction and the enforcement of judgments as set out in the Brussels Regulation (recast) no longer apply to the UK.
Also, since January 1 2021, the England and Wales High Court is no longer classed as an EU trademark court and the English courts can no longer grant remedies relating to EUTMs. This includes cancellations and injunctions, subject only to transitional provisions in respect of proceedings that were ongoing at the end of the transition period. If an injunction was in force on December 31 2021 that prohibited acts of infringement of an EUTM or international mark (EU) in the UK, an equivalent injunction has effect in respect of the corresponding comparable trademark, subject to any court order to the contrary.
Departing from retained EU case law
During the transition period, decisions of the Court of Justice of the EU (CJEU) continued to bind the UK courts in the normal way. The European Union (Withdrawal) Act 2018 (EUWA 2018) removes the competence of EU institutions to legislate for the UK but at the same time provides for the retention of EU-derived legislation, rights and principles as domestic law – known as retained EU law – in order to promote legal certainty and continuity. As a general principle, retained EU law continues to be interpreted in line with retained EU case law, which broadly means the principles laid down by, and decisions of, the CJEU before December 31 2020.
Under the EUWA 2018, only the UK Supreme Court could depart from retained EU case law. However, since the European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020 SI 1525 came into force at the end of the transition period, the exercise of this power now extends to the Court of Appeal (as well as to other appellate courts in the UK).
Given that the European Trade Mark Regulation was revoked in the UK and no longer forms part of retained EU law, there was some uncertainty over the weight which the English courts would be giving to retained EU case law. Two recent Court of Appeal judgments provide some helpful insight into how the English courts are proposing to apply retained EU case law.
The first is TuneIn v Warner Music & Another, which concerned an internet radio website being sued for copyright infringement; it was probably the first case to consider the power to depart from retained EU case law. The court ultimately declined to depart, finding that there had been no change to the domestic legislation (i.e., to retained EU case law) or the international legislative framework (implying, therefore, that it may depart where there has been a change to relevant legislation). The court will exercise its power to depart where it appears right to do so essentially in exceptional circumstances and with great caution.
In Lipton v BA City Flyer, the Court of Appeal provided some useful analysis in determining whether a regulation forms part of domestic law. While not itself an IP case, the analysis is nevertheless equally applicable in the context of IP law. Under Regulation (EC) 261/2004 (which used to have direct effect but now applies in the UK as a result of the EUWA 2018), passengers whose flights are cancelled or significantly delayed are entitled to compensation. The Lipton case considered whether a pilot suddenly becoming ill before take-off constituted “extraordinary circumstances” (an exception which allows airlines to refuse compensation). The conclusions set out by Lord Justice Green outline how the English court should generally approach retained EU law. This includes using CJEU case law made prior to the end of the transition period to determine the meaning and effect of a measure and using provisions of international law that have been incorporated into a relevant regulation by reference to aid interpretation.
In view of the above, recent case law does seem to suggest that the English courts will be continuing to follow EU case law in IP matters, at least for the time being. That said, the current legal regime is of course still fairly new and, as pointed out by Lord Justice Green in Lipton, nothing of relevance has so far changed with respect to CJEU case law. Evidently, the analysis will become more complex as CJEU case law evolves and differences between EU law and UK law begin to emerge.
UKIPO Tribunal Service
Statutory guidance has been published to clarify the main impact on users of the UKIPO’s Tribunal Service following the end of the transition period on December 31 2020, including examples when a derogation is likely to be successful or not (see: Tribunal Practice Notice (2/2020) End of Transition Period – impact on tribunal proceedings).
Practical tips – what trademark owners should do now
While the Withdrawal Agreement put in place sensible measures aimed at preventing a loss of protection for EUTM owners, trademark owners should continue to monitor forthcoming changes to UK law and be prepared for when those changes come in. Here are our top 10 practical tips:
- Check that any registered EUTMs (and any international marks designating the EU) correctly transitioned into comparable trademarks at the end of the transition period. New trademarks now require separate applications in the EU and the UK.
- As EUTM applications pending as of December 30 2020 no longer cover the UK, ensure that an application for a UK national trademark is filed before September 1 2021 to preserve the same filing, priority and seniority dates as the corresponding EUTM application.
- Specific rules apply where a comparable trademark expired within six months of IP completion day, so it is worth checking your portfolio to see if any rights are affected.
- Rights owners should consider re-filing EUTMs in the EU if they have only been used in the UK in the past five years.
- Review pending opposition and cancellation actions filed against EUTMs, as well as pending and threatened infringement actions. Pending proceedings will have received appropriate procedural directions by now; trademark protection and enforcement now require separate proceedings in the UK and the EU.
- As existing licences relating to an EUTM will be deemed ex lege (as a matter of law) to apply to the corresponding trademark, brand owners and licensees should review any existing licence agreements to clarify the rights covered and ensure that the creation of any new comparable right does not infringe any existing agreement.
- UK representatives who no longer met the requirements of Article 120 of the EUTM Regulation lost their capacity to act in proceedings as of December 31 2020 where representation was mandatory (i.e., not for filings or renewals). Brand owners should review their panel of external advisers and ensure that appropriate representation is in place.
- Keep the UK legislation on exhaustion of rights under review as it evolves and consider the implications for parallel imports.
- Budget for the increased costs of portfolio management and enforcement.
- EU customs authorities previously co-operated with trademark protection by seizing counterfeits, but they will no longer enforce UK IP rights at their borders. A new system of cooperation has not yet been developed, although there are proposals for discussion. In the meantime, this creates the risk of gaps in the fight against counterfeits.