On September 7, 2017, the European Commission published a position paper on intellectual property rights (including geographical indications) for transmission to the EU 27 (the Member States of the European Union minus the United Kingdom) which sets out the main principles of the EU position, to be presented to the United Kingdom (UK) in the context of negotiations under Article 50 of the Lisbon Treaty.
This position paper was expected since the withdrawal of the UK from the European Union (which is currently expected to occur in March 2019) will create uncertainty for UK and EU27 stakeholders alike not only in relation to the scope of protection in the UK of certain intellectual property rights but also for the treatment of applications for certain rights and to the exhaustion of rights conferred by intellectual property rights.
Indeed, it its important to recall that Union law (including all primary law, in particular the Treaty on European Union and the Treaty on the Functioning of the European Union, as well as the secondary law and international agreements) will cease to apply to the UK on the date of entry into force of the Withdrawal Agreement.
For the European Commission, it is particularly important that the Withdrawal Agreement should ensure that:
- the protection enjoyed in the UK on the basis of Union law by both UK and EU 27 holders of intellectual property rights having unitary character within the Union before the withdrawal date is not undermined by the withdrawal of the UK from the European Union;
- procedure-related rights (e.g. right of priority) in relation to an application for an intellectual property right having unitary character within the Union still pending on the withdrawal date are not lost when applying for an equivalent intellectual property righ in the UK;
exhaustion before the withdrawal date within the Union of the rights conferred by intellectual property rights is not affected by the withdrawal of the UK from the European Union.
According to the position paper, the holder of any intellectual property right having unitary character within the Union and granted before the withdrawal should, after that date, be recognised as the holder of an enforceable intellectual property right in relation to UK territory which is comparable to the right provided by Union law, on the basis of specific domestic legislation to be introduced if need be.
Intellectual property rights having unitary character include European Union trade marks, registered Community designs, unregistered Community designs, Community plant variety rights, protected geographical indications, protected designations of origin and geographical indications for agricultural products and foodstuffs, wines, spirit drinks and aromatised wine products.
In the specific case of protected geographical indications, protected designations of origin and other protected terms in relation to agricultural products protected under Union law before the withdrawal date, this principle should also imply that the UK puts in place, as of the withdrawal date, the necessary domestic legislation providing for their continued protection. Such protection should be comparable to that provided by Union law.
Indeed, there is currently no domestic legislation in the UK on the protection of designations of origin and geographical indications as well as on other protected terms in relation to agricultural products.
In this regard, the situation of the « holders » of current European protected geographical indications and/or designations of origin is far less comfortable that the situation of the holders of current EU trademarks.
Indeed, the holder of a current EU trademark, if he wants to avoid the Brexit uncertainty, has already the choice either to convert his EU trademark into UK national right (even though conversion is only possible in a limited number of circumstances) or to file a UK trademark application.
On the contrary, the « holder » of an European protected geographical indication and/or designation of origin has no choice but to wait for the establishement of a new and specific UK domestic legislation.
The questions arises whether the holders of famous European protected geographical indications or designations of origin like « Champagne » or « Cognac » will be protected and, if so, to what extent, if they are victim of an act of infringement committed within the UK territory just after the withdrawal date and if, on that date, the UK has not put in place the necessary domestic legislation providing for their continued protection.
It is also important to note that the position paper of the European Commission calls for the automatic recognition of an intellectual property right in the UK on the basis of the existing intellectual property right having unitary character within the Union. The implementation of this principle should not result in financial costs for the holders of intellectual property rights having unitary character within the Union. Any related administrative burden for such holders should be kept to a strict minimum.
If this is agreed between the EU 27 and the UK, this should facilitate the transition of European Union trade marks and registered Community designs into the UK as national rights.
An area of concern in relation to European Union trade marks in particular relates to their use.
Specifically, according to Article 51 of Regulation (EC) No 207/2009, the right of the holder of an EU trade mark shall be declared to be revoked if, within a continuous period of five years, the trade mark has not been put to genuine use in the European Union in connection with the goods or services in respect of which it is registered, and there are no proper reasons for non-use.
The question arises whether an European Union trade mark which has been used sufficiently throughout the EU 27 to maintain its validity, but has not been used for a period of five or more years in the UK, will be able to remain validly registered in the UK after UK’s withdrawal from the EU.
The European Commission paper urges that the recognition of a trade mark in the UK should not be refused on the grounds that the equivalent European Union trade mark had not been put into genuine use in the territory of the UK before the withdrawal date.
Similarly, the European Commission asks that the owner of an European Union trade mark having reputation in the European Union should be allowed, after the withdrawal date, to temporarily exercise in the UK rights equivalent to those found in Article 9 (2) of Regulation (EC) No 207/2009 and Article 5 (3) (a) of Directive 2015/2436 in respect of the equivalent national mark, even if the equivalent national mark does not yet have a specific reputation in the UK.
It will be interesting to see whether this specific point is accepted by the UK Government and, if so, how long they will interpret « temporarily » to be.
With regard to applications for intellectual property rights having unitary character within the Union, the position paper suggests that when this application has been submitted before an Union body (specifically, the EUIPO) before the withdrawal date and the administrative procedure for the grant of the right concerned is still on-going on that date, the applicant should be entitled to keep the benefit of any priority date in respect of such pending application, when applying after the withdrawal date for an equivalent intellectual property right in the UK.
On the question of exhaustion of rights, the position paper suggests that rights conferred by intellectual property rights which were exhausted in the European Union territory before the withdrawal date should, after that date, remain exhausted in both the EU 27 territory and in the UK territory.
However, we don’t know if this principle should also apply to intellectual property rights exhausted after the withdrawal date.
The position paper remains silent of the very important questions of contracts and intellectual property litigation (like a trademark infringement litigation between a French company and a UK company pending before a French court, for instance) which are ongoing on the withdrawal date.
However, on July 13, the European Commission published a position paper on judicial cooperation in civil and commercial matters.
According to this paper, the following principles should apply in accordance with Union law on the date of entry into force of the Withdrawal Agreement:
- the relevant provisions of Union law applicable on the withdrawal date on the applicable law for contractual and non-contractual obligations should continue to apply to contracts concluded before the withdrawal date, and (regarding non-contractual liability, such as trademark infringement, for instance) to events which occured before the withdrawal date;
- the relevants provisions of Union law applicable on the withdrawal date establishing the Member State whose courts are competent should continue to govern all legal proceedings instituted before the withdrawal date;
- choices of forum made prior to the withdrawal date should continue to be assessed against the provisions of Union law applicable on the withdrawal date;
- and the relevant provisions of Union law applicable on the withdrawal date on recognition and enforcement of judicial decisions should continue to govern all judicial decisions given before the withdrawal date.
If these principles are accepted by the UK, this should ensure that legal certainty is maintained throughout the process of withdrawal so that businesses and individuals are given sufficient time to adapt to both transitional arrangements and any agreed new legal framework.
Finally, it is worth to note that this position paper says no word on the Unitary Patent, on the Unified Patent Court (UPC), on copyright and on representation in proceedings before the EUIPO and CJEU.
Indeed, participation in the UPC Agreement is open only to EU Member States, so it is unclear whether the UK could continue to be a party outside the EU. The UK has made progress towards ratifying the UPC Agreement but there will be tough negotiations to remain in the UPC and Unitary Patent system post-Brexit.
Moreover, EU membership and the fact that the UK, by virtue of its membership to the EU, is also a Member State of the European Economic Area (EEA), currently allow UK solicitors, barristers and trade mark agents to represent their clients before the EU courts and/or before the EUIPO.
What will happen after the withdrawal date, when the UK will not be anymore an EU Member State and if, as a result of the withdrawal from the EU, the UK decides to exit the EEA as well, remains very unclear.