Brexit and Brands – 77 days to go

Kats can't currently be cloned

Darren Meale has been following the Brexit developments closely and providing IPKat readers with a best guess at what will happen when the clock runs out. As "B-Day" moves ever closer, Darren has been busy reading up on the no deal scenario and has lots of useful tips to share:

The first time I wrote on this topic we had 680 days left. How time flies. Now the UK edges ever closer to “no deal”, largely agreed to be a completely mad turn of events. Assuming that us brands lawyers make it through B-Day alive and well, we will have some rather messy trade mark related stuff to sort out – and we should probably be getting ready right now. 

Two (well three) possible outcomes. In contrast to the complexity of working out the current end state of the UK’s relationship with the rest of the EU, there are really only three possibilities for trade marks in relation to Brexit: (1) Brexit is cancelled – you can delete this post; (2) no deal; (3) the current deal is agreed. The implications of (2) and (3) have ended up being much the same thing save for when they happen, with little prospects (in my view) of changes to (3) even if the overall deal is renegotiated. Both (2) and (3) take a cloning approach to dealing with the effect of EUTMs post Brexit. 

The instruments of interest. In my previous posts here and here, I outlined what was planned in both the no deal and deal scenarios. Since those posts, the UK/EU withdrawal agreement has been agreed at leadership level and the UK Government has published its no deal plan. The key documents we all need to be reading (if we haven’t already) are: 

• UK Government’s Trade marks and designs if there’s no Brexit deal (24 September 2018) (the “no deal” guidance). 
• The Withdrawal Agreement (the “Withdrawal Agreement”) and Political Declaration on the future relationship between the UK and the EU as endorsed by leaders at a special meeting of the European Council on 25 November 2018. 
• The Trade Marks (Amendment etc.) (EU Exit) Regulations 2018 (December 2018) (the “TM Exit Regs”). This is currently a draft instrument to be made under the draft affirmative procedure, but note that under UK Parliamentary procedure statutory instruments such as this cannot “except in extremely rare instances where the parent act provides otherwise, be amended or adapted”. 

We’ve been complaining for the last 600 days that we’ve not had any detail – we now have the TM Exit Regs, which are packed full of it. 

As I understand it, the TM Exit Regs will come into force on “exit day”, which is presently 29 March 2019 at 11pm UK time. However, if a deal is done “exit day” for all trade mark intents and purposes will be at the end of the transition period, currently 31 December 2020. Unless, of course, something else entirely happens! I think the effect of the Regs is also that they will apply in a no deal scenario as well – so there’s no real difference from a trade mark perspective whatever now happens, other than timing. Great negotiating chaps! 

What we now know about the cloning-based regime. Below I’ve taken a high-level walk through the TM Exit Regs to give you an overview of how things will look after exit day. Some of this will be familiar to readers of my previous posts but other bits will be new. The TM Exit Regs are 28 pages of legislation, so I am necessarily going to be skipping some of the detail. If you do read it yourself have your preferred caffeinated beverage handy – it’s hard going. The references are to paragraphs of the new Schedule 2A which will be inserted in the UK’s Trade Marks Act 1994.

• EUTMs will be cloned into UKTMs provided they have registered prior to exit day (1(1)). 
• The new UKTMs will have the snappy title “comparable trade mark (EU)” (1(2)). This is unfortunate – the natural abbreviation is CTM or CTM(EU), which given the EUTM used to be called the CTM is about as confusing as you can get. I honestly can’t think of a useful initialism: I’ll just call them clones. 
• Clones will share the filing (including priority and seniority) and registration dates of their parent EUTM (1(8), 12, 13, 14). 
• There’s no fee or opt-in procedure – it’ll just happen, like magic. Clones must appear in the register “as soon as reasonably practicable after exit day” (3) – be alive to this when conducting trade mark searches shortly after exit day. 
• Owners may opt-out of cloning at any time on or after exit day by serving a notice on the UKIPO (2). However, an opt-out is not possible in certain circumstances: (a) if the clone has been used in the UK; (b) if it has been licensed or involved in certain transactions; or (c) if proceedings have been commenced relying upon it. The first of these – (a) – baffles me: if an EUTM is in use in the UK the day before exit day, would not a clone necessarily also be in use that next day? Put another way: I currently operate my RED DRAGON ice cream business in the UK and I have an EUTM. My business will carry on post-Brexit (if I can import the ingredients I need from the continent), but I will now have a clone and an EUTM. How can I not use my clone other than by shutting up shop? If anyone can make any sense of this, please email me. 
• Renewals are in line with existing UKTM renewals, with some added protection in case you forget about a clone – for any clone renewable in the first six months post-exit, the UKIPO will write to you and notify you of the expiration and you will have six months from receipt of that notice to renew (5). 
• When proving use of a clone with a proof of use period which is wholly before exit day, use in the EU (including the UK) of the parent EUTM will count. If the proof of use period is split part before exit day and part after, use in the EU of the parent EUTM will count only for the part of the period before exit day. Evidence of use during the part of the period after exit day will have to be use in the UK (7-9). This is a sensible solution but pay attention to the dates of your use evidence. 
• Where there is a requirement to prove reputation at a point before exit day, the reputation of the parent EUTM in the EU (including the UK) prior to exit day will count (10). 
• Coexistence agreements and licences and so on which covered EUTMs are deemed to cover the clones unless there is evidence that such documents were not intended to have effect in the UK. If prior to exit day an EUTM owner has consented to you doing something in the UK, the clone cannot be used to bring an infringement action (19). 
• Pending proceedings and injunctions are dealt with at 20 and 21. In effect any action in the UK courts in their previous guise as an EU trade mark court concerning an EUTM continue but the EUTM is swapped out for the clone, potentially significantly diminishing the scope of those proceedings as between the parties – for example a pan-EU injunction would no longer be available from the UK court in those proceedings. Paragraph 21 provides that any existing injunction prohibiting acts in the UK on the basis of an EUTM continues with the clone swapped in. The consequences for any pan-EU injunction ordered by the UK courts pre-exit day are not spelt out and one may have to look to the Brussels Regulation and the likes to work them out. 
• Where an EUTM application is pending as of exit day, it will not be cloned. Instead, the applicant will have nine months to file a new UKTM application for which it will be entitled to claim the same filing date as the filing (or priority date) of the EUTM application (24-27). There is no backstop date for when the EUTM application was filed – if your EUTM application has been held up for years (perhaps owing to prolonged opposition proceedings), you’ll still have the right to re-file in the UK. 
• There are further provisions, including on registrable transactions (licences and so on) (see 16, 17 and 18) and restoration (see 28 and 29), the details of which I can’t quite bear to go into. 

What isn’t explained 

• The no deal guidance indicated that owners of clones will be notified of their new assets, but there’s nothing in the regs to confirm this or how or when it will happen. 
• There’s no mention of EU designations of International Registrations. 
• Designs are not dealt with in the TM Exit Regs, nor is there as yet a separate statutory instrument addressing them. A similar cloning regime for designs is outlined in both the Withdrawal Agreement and no deal guidance 
• Although existing UK court proceedings are addressed, there is no mention of existing contentious proceedings before the UKIPO – eg, existing oppositions against UK trade mark applications relying upon EUTMs. It would be sensible for those to continue with the clones subbed-in, but the TM Exit Regs do not provide for this. 
• There is no provision in the TM Exit Regs to deal with the scenario where an existing EUTM is under attack at the EUIPO. This will be cloned and it would appear that the attacker of the EUTM will need to attack the clone all over again in the UK (if it has earlier rights in the UK by which to do so). This is actually contrary to Article 54(3) of the Withdrawal Agreement. 
• There is nothing on post-exit rights of representation for UK practitioners before the EU trade mark bodies – this will be part of the “future relationship” and will likely be a long time coming. Unless you’ve heard anything to the contrary my view is that there are no assurances coming from anywhere on this. UK law firms and attorney practices are left to work things out for themselves based on the existing rules of representation before the EU trade mark bodies. These are more favourable for UK solicitors than trade mark attorneys and significantly easier to deal with for those of us working in firms with an existing EU mainland presence. 
• Correspondence addresses are an interesting one and relate to rights of representation. For anyone still interested in the politics of Brexit, this exposes how hopeless the UK Government has been in its negotiations. Under present rules, anyone applying for a UK trade mark must supply an address for service in the EEA (European Economic Area, not quite the same as the EU, but we’re probably leaving the EEA too). The effect of this is that the business of UK trade marks is reserved to UK and EU professionals. The same goes for disputes like oppositions, although as I understand it the UKIPO is pretty relaxed when it comes to the types of person who can represent parties in such proceedings, in contrast to the EUIPO position where specific qualifications are required. 
• When the UK leaves the EU, it would be open to the UK to change the address for service rules to require a UK address for service. Although this would create an admin burden for some owners, it would also support the UK legal profession and might offset some of the disruption being caused to us by Brexit. However, in the “no deal” guidance, the UK government says there will be no “immediate” changes on this front. But in the Withdrawal Agreement, it has, for no reason I can fathom and without receiving anything in return, committed to not changing this for three years. Thanks a bunch for looking out for us. Please excuse me while I go lie down, I’m livid. 

For those of you struggling to make sense of all this and for those spending countless hours advising clients on how to deal with it, take comfort in the final sentence of the TM Exit Regs about how easy this all is: “A full impact assessment has not been produced for this instrument as no significant impact on the private, voluntary sector or public sector is foreseen.” My response to that really isn’t suitable for printing on a family-friendly blog. 

As a final point for those who haven’t realised it yet: with EUTMs taking at least four months from filing to make registration (with three of those months being the mandatory opposition period), in a no deal scenario any EUTM filed in 2019 (and probably in December 2018) is not going to be cloned but will need to be re-filed. There is often a lag at the end of the opposition period for the EUIPO to mark an application as “registered”, so I imagine that in the week before exit day there will be a lot of “friendly” phone calls to Alicante asking examiners if they wouldn’t mind awfully hurrying up with it…