The European Commission has released a position paper on “Intellectual property rights (including geographical indications)” giving us the first indication of how the Commission will approach the Brexit negotiations with the UK regarding Intellectual Property Rights (“IPR“).

The Commission has set up a Taskforce on Article 50 negotiations with the United Kingdom to prepare the Brexit talks. This task force is currently drawing up a number of position papers to be submitted to the 27 remaining Member States. Those papers are intended to develop opinion amongst the 27 remaining Member States as well as ultimately set out the EU’s position versus the UK. The paper is only five pages long, setting out some general principles which the Commission views as key to the future of IPR in the UK and EU27 post-Brexit.

The paper suggests that the Commission favours continuity of existing protection whereby IPRs are automatically ‘divided’ to grant separate protection as UK rights, with the same benefits as their ‘parent’ EU right, with minimum cost to IP owners. CITMA has commented:

“This European Commission paper in many respects mirrors CITMA’s position paper and is a positive step towards ensuring current EU registered trade mark and design rights continue to cover and be enforceable in the UK post-Brexit, with minimum cost to IP owners.“

The paper covers all IPR with “unitary character within the Union” (“Unitary IPR“) including:

• European trade marks;
• Registered community designs;
• Unregistered community designs; and
• Protected geographical indications/protected designations of origin/plant varieties;

The paper also touches on database rights and supplementary protection certificates.

The general principles set out in the paper are as follows:

Unitary IPR

The holder of any Unitary IPR before Brexit should, after Brexit, automatically be the holder of a new corresponding UK right – if need be, on the basis of specific domestic legislation to be introduced in the UK

This would address maintaining the renewal dates, priority dates, seniority principles, genuine use and reputation requirements.

It would require adaptation of the ‘genuine use’ requirements so that use in the EU prior to the withdrawal date is recognised as ‘genuine use’ for the purposes of the new corresponding UK registration. It would also require adaptation of the ‘reputation’ requirement so that where the EUTM from which the UK registration is derived, pre-Brexit, had a reputation within the EU this reputation would be recognised “temporarily” in the UK, even where the corresponding UK registration does not yet have a UK-specific reputation.

The Commission makes clear that the implementation of this automatic division should not result in financial costs for the holder of Unitary IPR and administrative burdens should be kept to a minimum.

Applications for Unitary IPRs submitted before, and still on-going, as at the withdrawal date should be allowed to keep any priority date when applying for a UK right after withdrawal. The Commission does not make clear whether they intend this to be automatic or at the option of the applicant.

Exhaustion

The Commission proposes that all IPRs exhausted in the EU pre-Brexit (as determined under Union law) should remain exhausted in both the EU27 and the UK post-Brexit, irrespective of any changes made in the exhaustion regime in either the UK or EU27 post-Brexit.

Geographical Indications (GI) and Protected Designations of Origin (PDO)

The UK should put in place, as of the withdrawal date, the necessary domestic legislation providing for the continued protection of geographical indications and protected designations of origin comparable to that provided by Union law. The UK currently has no domestic legislation in relation to GIs or PDOs.

Databases

Databases protected under Union law before Brexit should continue to enjoy protection after Brexit in the EU27 Member States and in the UK. (Unless UK law is amended, the protection granted to databases under the Copyright, Designs and Patents Act 1988, as amended by the Database Directive, would continue to apply)

Supplementary Protection Certificates (“SPCs”)

Applications for SPCs or for an extension of their duration, in the UK, submitted before withdrawal should be completed in accordance with Union law and any certificate granted (or extended) should provide for protection equivalent to that provided by Union law.

Conclusions

This position paper outlines an approach that will be welcomed by holders of EU IPR, aimed as it is at providing continuity and minimising costs. However, there are some potential issues with this approach.

The Commission’s suggestion that the post-Brexit arrangement should result in no financial cost for the existing EU IPR holders seems to indicate that it wants the UK government to foot the bill. The number of registrations at the UKIPO will rise dramatically with the potential for a large number of UK registrations which are never intended to be used in the UK.

The paper deals only with IPR in existence as at the time of the UK withdrawal and many long-term issues would remain to be decided. Issues such as extended protection so UK businesses can continue to benefit from a unitary IP right in Europe; 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 will the UK bona fide “intent to use” requirement be applied to marks that have been derived from an existing EUTM and automatically registered at the UKIPO? (The EUIPO has no ‘bona fide intent to use’ requirements)

The paper also fails to address the ability of UK Chartered Trade Mark Attorneys or UK qualified lawyers to represent clients before the EUIPO and the EU General Court, which is a matter of some concern to them

Although the Commission has indicated that the status quo in terms of exhaustion of IPR should be maintained post-Brexit for goods already on the market pre-Brexit, in practice, the difficult question will be determining which rules of exhaustion will apply as it is fundamentally a political issue. It will be necessary to provide for explicit exemptions, for example where a trade mark right is exhausted when the product carrying the mark is put on the UK market and thereafter shipped into the Internal Market. Under “normal” circumstances the effect would be different when a product hits a domestic market outside the EU/EEA. The paper also does not indicate how the Commission will approach negotiations in relation to exhaustion of rights going forward.

The protection of GIs and PDOs appears to be a significant concern for the EU Commission. As the legislation currently in effect in the UK in relation to GIs and PDOs is solely EU legislation, unless specific UK legislation is enacted post-Brexit, the valuable protection of EU geographically sensitive food and drink products will be lost.  This would enable UK businesses to call English sparkling wine ‘champagne’ and ham ‘Parma’.  Although protection for GIs and PDOs that benefit UK products (such as Cumberland Sausage, Cornish clotted cream and Scotch whisky) would also be lost, there are far more EU GIs and PDOs so the impact on the EU would be far greater. This issue may be a good ‘bargaining chip’ for the UK in any negotiations.