18 July, 2016
By now you would be aware of the UK's vote to leave the European Union ("EU").
"Brexit" in a nutshell
The UK now needs to activate her formal exit process by an executive (or legislative) decision. It is a process hitherto unchartered; no member state has ever left the EU. The exit process is expected to take at least two years, possibly longer. The long term future is as yet unclear as we enter a period of change and transformation towards the birth of a new post-Brexit order. The exit process will involve complex negotiations to determine the model for the UK's future relationship with the EU; it will require extensive preparation to establish the necessary framework for the new order.
Implications for brand protection
Presently an EU Trade Mark[1] ("EUTM") automatically includes protection to the UK.
Since the UK would no longer be part of the "internal" EU market when she ultimately leaves the EU, it is likely that an EUTM would in future no longer cover the UK.
It is also likely that the use of a trade mark in the UK would not be treated as use in the EU, and vice versa. This renders an EUTM registration potentially vulnerable to a non-use challenge where its use has been confined to the UK, unless some "protection mechanism" or transitional provisions are introduced.
There is likely to be some "conversion mechanism" for pre-existing EUTM rights to be recognised and maintained in the UK after she leaves the EU. However, it is unclear what that mechanism will be, how it will operate, or whether there will be any fees payable.
The conversion mechanism itself could face operational and administrative challenges and delays, given the sheer number of EUTMs.
Tips for brand owners
Keep calm and keep using the EUTM regime for protection in the EU. The EUTM regime is still one of the most cost-effective ways of obtaining a basic breadth of "blanket" protection across all EU-member states (with or without the inclusion of the UK). There is still continued protection in the UK for now, and a likely conversion mechanism to extend existing EU-wide rights to the UK after her exit.
However, if the UK is of specific or particular interest, we would suggest filing both an EUTM and a national UK-specific application now, to avoid having to rely on a conversion mechanism later on. This is in fact consistent with the double protection strategy in the EU which we would typically advocate – combining the breadth of EU-wide protection with the depth of a country-specific national registration – in cases where there are predominant interests in a particular member state(s), having regard to the possible vulnerability of EUTMs[2].
Consider the non-use vulnerability of your EUTM registrations while balancing your business and commercial considerations. Where EUTMs are used only in the UK, you may wish to consider expanding your use in the EU to defend your EUTM registrations; and/or consider filing independent national UK applications which would survive any possible future demise of your EUTM based on non-use.
For any queries about any matters raised in this update, please contact Lorraine Tay, Gene Kwek or Siew Lin Lim.
[1] The European Union Trade Mark (EUTM) regime (formerly known as the Community Trade Mark or CTM regime) offers a unified system of protection throughout the European Union (EU) with the filing of a single application. If successful, this one application results in a single EUTM registration for blanket protection in all 28 member states of the EU- Austria, Benelux (Belgium, the Netherlands and Luxembourg), Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Laos, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.
It is not possible to select countries in the EU which you wish to designate but it is useful in providing blanket coverage across all the EU member states.
An EUTM is not a defence against infringement as prior rights may exist in individual member states.
[2] The main disadvantage of an EUTM registration is that EUTM applications are not assessed against prior rights which may exist in individual member states. An EUTM can thus be defeated by any prior rights in any member state. In short, an EUTM could be more vulnerable to challenge and could encounter a greater risk of opposition.
Once an EUTM is defeated, you will lose rights in all member states (save for the possibility of national transformation in some circumstances). It is therefore an "all or nothing" bundle of rights.
