On 28 February 2018, the European Commission published the draft Brexit Withdrawal Agreement between the EU and the UK.  The paper is, of course, only a draft and the UK government has not yet commented on or agreed to any of its terms but it is the first time we have had a concrete statement of either side’s position in the negotiations.  It will be discussed by the EU Council and the Brexit Steering Group of the EU Parliament over the next few weeks before it is negotiated with the UK government.

Article 50 et seq of the draft agreement sets out the provisions in relation to the continued protection of intellectual property rights with unitary character (“Unitary IPR”) in the UK, including:

• European Union Trade Marks;
• Registered Community Designs;
• Unregistered Community Designs; and
• Protected Geographical Indications (GIs)/Protected Designations of Origin (PDOs)/plant varieties.

The Withdrawal Agreement also provides for continued protection of database rights (a sui generis right of EU law).

In line with the Commission’s position paper released on 6 September 2017 (which we reported on previously here) the Withdrawal Agreement largely follows the so called “Montenegro” model whereby existing protection of Unitary IPR is continued automatically with equivalent separate UK protection granted to Unitary IPR rights holders at no cost to them. (This only applies to Unitary IPR that has already been granted or registered and not to pending applications). The draft Withdrawal Agreement sets out a “transition period” during which the status quo will be maintained. This transition period will commence on the day of entry into force of the Withdrawal Agreement and end on 31 December 2020.

As well as clarifying the details set out in the earlier position paper, the Withdrawal Agreement also provides further and new details in relation to the following areas:

• Where any Unitary IPR is subject to cancellation proceedings on the last day of the transition period, if the Unitary IPR is subsequently invalidated or revoked, declared null and void or cancelled in the EU, then the parallel UK right will also be declared invalid or revoked, declared null and void or cancelled (Article 50(3)).
• The first renewal date for UK ‘child’ trade marks or registered designs will be the same as the renewal date of the corresponding EU ‘parent’ right (Article 50(4)).
• The priority date for the UK ‘child’ right for any registered Unitary IPR shall be the date of filing or the priority date (or where appropriate the seniority date) of the ‘parent’ Unitary IPR (Article 50(5)(a) and 50(6)(b)).
• The term of protection for registered designs and plant variety rights shall be at least equal to the remaining period of protection under EU law for the corresponding ‘parent’ right (Article 50(6)(a).
• The UK shall ensure that holders of international registrations designating the EU continue to have protection in the UK (Article 52).
• The holder of an EU unregistered design right shall become the owner of an enforceable UK design right affording the same level of protection as that provided under EU law and the term of protection shall be at least as long as the remaining period of protection of the EU right (Article 53).
• A UK ‘child’ trade mark will not be liable to revocation on the ground that the ‘parent’ right has not been put into genuine use in the UK before the end of the transition period (Article 50(5)(b)).
• Rights holders with an EU ‘parent’ trade mark with a reputation in the EU prior to the end of the transition period, shall be allowed to exercise rights in the UK in relation to the UK ‘child’ trade mark equivalent to those they are able to exercise in the EU (Article 50(5)(c)).

Pending EU trade mark applications:

• Where a rights holder has filed an application for an EU trade mark before the end of the transition period, at the end of the transition period, the rights holder will have an ad hoc right of priority for six months from the end of the transition period. The date of priority of the EU trade mark application shall therefore become the filing date of the UK ‘child’ right for the purposes of establishing which rights take precedence. There will be no automatic grant of a ‘child’ right from a pending EU trade mark application. This seems to be a sensible approach that could avoid some of the complications of automatically transferring pending applications.

Geographical protections:

• The Withdrawal Agreement has been drafted broadly to cover a wide variety of rights in relation to geographical protections (GIs, PDOs, traditional speciality guaranteed or use of traditional terms). Article 50(2) provides that the holder of any of these rights protected in the EU on the last day of the transition period, shall, as from the end of the transition period, be entitled to use a right in the UK, granted under the law of the UK, which provides for at least the same level of protection with respect to those rights.

This is likely to be contentious as the UK does not, at present, have any domestic legislation to deal with geographical indications and these are recognised in the UK only as a matter of EU law. In order therefore for the UK to implement these provisions, the UK government will need to implement legislation which would predominantly protect producers in continental Europe. There are UK GIs and PDOs (such as Cumberland sausage, Cornish clotted cream and Scotch whisky) which would benefit from these provisions, but the legislation was predominantly put in place to protect the likes of Champagne and Parma Ham and the UK government may be reluctant to implement these provisions, particularly if it comes under pressure from UK companies who have fallen foul of these provisions in the past.

Comment:

Whilst the draft Withdrawal Agreement does clarify the Commission’s position on Unitary IPRs, some questions still remain to be answered. The Withdrawal Agreement, as may be expected at this stage, does not deal with issues such as extended protection so UK businesses can continue to benefit from a Unitary IPR in the EU; whether use in the UK will allow a right holder to maintain an EU27 registration post division when the only use made of the sign is in the UK; and how the UK bona fide “intent to use” requirement will be applied to marks that have been derived from an existing EUTM and automatically registered at the UKIPO (the EUIPO has no equivalent bona fide “intent to use” requirements). Rules on exhaustion also remain to be negotiated.

As we mentioned in our report on the position paper, the Commission’s suggestion that the post-Brexit arrangement should result in no financial cost for the existing EU Unitary IPR holders also seems to indicate that it wants the UK government to foot the bill. We expect the number of registrations at the UKIPO will rise dramatically with the potential for a large number of equivalent UK registrations derived from EU trade mark registrations which are never intended to be used in the UK. (The lower cost of the EU trade mark has long encouraged people to file for pan-EU protection even though a mark may only have been intended to be used in a few Member States).

Overall, we think that, although some provisions may be controversial (e.g. the provisions on GIs and PDOs) and some issues remain to be dealt with, in general the approach taken is in line with industry recommendations. The Withdrawal Agreement as drafted should pave the way for a transition that is simple and low cost for rights holders, even though it does raise some questions regarding the long-term. The approach also makes most sense if the UK intends to maintain close alignment with the EU IP legal and regulatory environment (see our posts on the UKIPO consultation and implementation of the EUTMD into UK law and the consultation on the implementation of the Trade Secrets Directive).

The next step will be negotiations with the UK government. The UK government’s technical note on separation issues, published on 6 March 2018, indicates that the UK’s position is closely aligned with the EU’s position, which is a positive starting point for the negotiations.

We will be following and reporting on progress on LimeGreenIP as the negotiations progress.