On June 23rd the UK will vote to stay in the EU or leave. Bookmakers make a stay vote favourite, but the odds are narrowing on Brexit. If the vote is for Brexit, as the UK tide flows out of the EU we might see who’s swimming denuded of trademark rights and…as in life, if you are swimming in the nude nothing should be taken for granted!
Because European Union trademarks offer low-cost rights in all EU Member States, many UK and Irish companies hold these instead of national trademarks. These are particularly common in Ireland and the UK with the prevalence of cross border trade between our countries. Right now, the registered trademark landscape in the UK is made up of national trademarks filed in the UK, European Union Trademarks as these apply throughout the EU and WIPO Madrid System trademarks that designate either the UK or the EUIPO Trade Mark Offices. There are over one million European Union Trademarks, with 115,000 new applications in 2015 alone. UKIPO handles about a third of that figure each year in national applications.
There is currently no legal mechanism in place for the continued recognition of European Union trademarks in the UK following Brexit. So, what would Brexit mean for your EU trademarks? In a new order after Brexit will there be a complete break, or a common trademark recognition and law regime between the UK and the EU? Will Brexit be the beginning of the end of the UK trademark? Could it be the first step of an all-Ireland trademark? Nobody knows for sure, not politicians nor your trademark attorney.
Brexit, the EU Trademark and the law
Legally speaking (and it’s a beautiful language!), the EU Trademark is a unitary trademark right that covers all 28 EU Member States. You may trade in only one or some of these countries but enjoy trademark rights that allows your business time to expand into other parts of the EU, protecting your brand in those countries before you do.
A simple definition of the term ‘unitary’ is single, but the concept of unitary goes further than that. An EU Trademark shall not be registered, transferred or surrendered or be subject to a decision revoking the rights of its owner or declaring it invalid, nor shall its use be prohibited except in respect of the EU as a whole. In effect, EU Trademarks have equal footing throughout Member States. Not only does this trademark registration system apply across the EU, so does its legal system and legal decisions.
If the UK leaves the EU, as it currently stands, EU Regulations and consequently community trademarks would no longer have any effect in the UK. This is of particular concern to businesses trading in the UK who hold Community Trademarks rather than a national UK trademark, including UK businesses. These will be left with no legal protection within the UK unless they enjoy common law rights based on goodwill and reputation through use in the UK. Even among businesses that hold both UK and Community trademarks, differences in goods specified may mean that their protection in the UK is no longer as wide as it once was. Why?
The Sound of Silence
The EU Trademark, formerly called the Community Trademark, was created to promote trade in the internal market throughout ‘the Community’, itself now called the European Union. The Regulation establishing the Community Trademark is full of references to ‘The Community’ and ‘Member States’. Although it sets down rules for the enlargement of the territorial reach of these trademarks by accession of new Member States, it is silent on exits from the EU.
The Regulation is also silent on the extension of EU Trademarks to the EEA (whose members enjoy access to the common market) and non-Member State countries. This is natural, historically trademarks apply in their country of registration only, save for very well-known marks.
Following Brexit, the UK will not be part of the EU. There is no bilateral trademark treaty between the EU and EEA countries or other countries such as Switzerland who enjoy access to the common market. There is no history of recognition of trademarks between the EU and those countries. And there is currently no mechanism to do so, whether or not that country is a former Member States or not. There is only the sound of silence.
If we’re not in Kansas anymore, what does lie over the rainbow. In the absence of some clear roadmap, let’s enjoy a bit of speculation…
Hello darkness – new treaty talks?
It is perhaps difficult to foresee a bilateral treaty between the UK and the EU for mutual recognition of UK and EU Trademarks, if that would impose a ‘unitary’ legal framework dominated by EU law. Would the first step of a post Brexit UK government be to adopt EU strictures?
This path also introduces a real lack of clarity around the scope of the EU Trademark. Even if the UK is a former Member State, will it be treated differently to other EEA and unaligned countries. Where will the EU Trademark start and end? Will these other countries enter such a treaty or would it be the UK only. Would the unpalatable effects of Brexit on EU trademarks be enough to make every Member State agree a UK special case status?
Restless dreams – is Jersey the cream of approaches
Jersey is not part of the EU, but it has enacted legislation recognising the EU Trademark. This is a one way street; the EU does not recognise Jersey trademarks. However, the EU has allowed Jersey applicants to apply directly for EU Trademarks.
Jersey’s recognition of the EU Trademark may have been driven by its recognition of UK trademarks. Politically closer to London than Luxembourg, without this would Jersey have taken this step? Will it in a post Brexit world? Will it be allowed to, because under the laws governing the UK’s accession to the EU, the Channel Islands are treated akin to Member States for customs and trade purposes and this will be gone.
If London does feel an imperative to recognise EU Trademarks, would a new UK law go as far as specifying the law and precedent UK courts must follow? A drawback of this Jersey approach is that it will be based on national UK legislation which could be changed at any time, importing an inherent lack of certainty in the protection of EU Trademarks in the UK.
Unless the UK recognises the primacy of EU law for EU Trademarks, would the EU grant anything more than direct applicant status to the UK?
The vision that was – An Irish Solution to a UK Problem
In 1921, the Republic of Ireland became independent from the UK. UK trademark holders were given the opportunity to register their trademarks in Ireland as Irish Trademarks. Could a similar option work now?
Before independence there was no divergence in Irish and UK trademark law and little expectation of meaningful divergence between Republic of Ireland and UK trademark laws for some time. There is now a complex playing field of trademark rights to navigate and secondly the massive number of Community Trademarks that would want to include the UK in 2016 compared to the Ireland of 1921.
The UK Intellectual Property Office could yet be overrun by a logistical nightmare. One possible solution would be to restrict the recognition of prior EU trademarks only to those that can prove substantive use in commerce within the UK in the five years prior to the application for recognition. Yet that would negate a core principle of unitary EU Trademark protection where a prior trademark is trading in a substantive part of the EU even if not in the UK. The expectation of protection, even if not trading in a Member State, is the foundation of many business plans globally.
This approach may also be a charter for trademark squatting in the same way as cyber-squatting became a scourge of commerce.
Flash of a neon light – Super Split
Just to make it even more complex, post Brexit, what will the UK be? If the UK does vote out, countries like Scotland and Northern Ireland might then seek to re-negotiate their own relationship to the UK and the EU. Different parts of what is now the UK may adopt different approaches.
There is no reason to suppose that there would not be a second Scottish referendum and Northern Irish unionists may wish to align with Scotland whilst nationalists may call for an alternative of an all-Ireland unification referendum in the event of Brexit. Possible economic troubles ensue and reduction in regional funding could increase agitation to leave the UK, and the EU could offer a generous regional funding support package and fast track membership applications to UK regions.
If the UK does split, will Northern Ireland decide that its business interests lie with mutual trademark systems with parts of the UK or might this start a mutual-recognition, all-island of Ireland trademark right.
Interesting times ahead as Brexit might truly fragment UK trademark law and lead to new re-alignments.
Trademark attorneys are often possessed of an ideological instinct to test the legal boundaries of EU trademark regulation in the courts. Do not rule out any solution cobbled together by the UK and the EU facing a legally well-constructed, albeit rather theoretical challenge in the future, in both the UK and the EU.
Like it or not, whether we foresaw it or not, admire it or not, the EU is a central part of our commercial lives. This has led to greater trade integration than other international trade agreements. How easy will it be to unravel? Who knows and it’s hard to see anything other than a cobbled together solution that lacks long-term certainty.
It seems clear that instead there will be a massive scramble to register UK trademarks while trademark owners await the possible deconstruction of the UK trademark system itself. The huge numbers of EU Trademark recognition applications could be a challenge for the UK Intellectual Property Office to cope with.
Trademarks may seem a small thing among many small things, but do dare disturb the sound of silence and ask your politicians what will be the future trademark regime in the UK post Brexit, now, before you vote.
Message from TMR Fitzsimons Trademarks
If you have any questions about dealing with your trademark issues or other intellectual property matters call Michael Fitzsimons directly on +353 (0)41 9843534 for advice.