EU IP developments and the impact of BREXIT for holders of EU IP rights
17 Nov 2016
A number of changes, which came into force on 26 March 2016, were made to the EU Regulations, affecting EU trade marks and designs.
The Office for Harmonisation in the Internal Market (OHIM) is now known as the European Union Intellectual Property Office (EUIPO) and a Community trade mark (CTM) is now referred to as a European Union Trade Mark (EUTM).
Article 28 of the Regulations provides that trade marks registered for class headings will now only be protected for goods/services that fall within the literal meaning of the goods/services listed in the class heading (and any other goods/services specifically listed). This will severely limit the scope of protection of some EU trade marks and trade mark proprietors will now no longer be able to claim wide rights in an entire class heading. Owners of EU trade mark applications/registrations filed before 22 June 2012 and which were filed covering the broad class headings were allowed to amend their specifications to use more specific/precise wording by submitting a written Declaration between 23 March 2016 and 23 September 2016, in line with the requirements of the EU Regulations. No extension of the deadline of 23 September was allowed. The Regulations provide that the Declaration would be examined and published in the EU Bulletin. If no acceptable Declaration was filed in time, proprietors’ EUTM registrations are deemed to protect only the goods/services covered by the literal meaning of the class heading.
Changes to fees payable for trade mark applications were also implemented after 23 March. The official fee to file one application now only covers one class, where it previously covered up to 3 classes. A number of changes were also introduced regarding the enforcement of EUTM applications but I will not detail any here.
The Regulations also provide that “in order to allow for more flexibility while also ensuring greater legal certainty with regard to the means of representation of trade marks, the requirement of graphic representability should be deleted from the definition of an EU trade mark. A sign should be permitted to be represented in any appropriate form using generally available technology and thus not necessarily by graphic means, as long as representation is clear, precise, self-contained, easily accessible, intelligible, durable and objective“. The removal of the graphic representation requirement should make it possible to apply for the registration of non-traditional trade marks in the EU.
The European Commission has expressed clear intentions to reform and harmonise copyright law across the EU in terms of its Digital Single Market Initiative. It has been submitted that this will be the EU’s most significant copyright reform. On 14 September 2016, the President of the European Commission, Jean-Claude Juncker, at his State of the Union Address, addressed problems with current EU copyright laws. The most controversial of the proposals is a new reform to provide publishers with rights already afforded to authors, performers, film and record producers (similar to current copyright laws) for online use of their news publications, so that they would be fairly remunerated for their work made available online. The proposal would also allow publishers to benefit from possible future restrictions to hyperlinking, following the recent CJEU decision in GS Media BV v Sanoma & Others. The idea is to allow publishers to secure license fees from search engines and other intermediaries who use their content for up to 20 years from publication and to place extra obligations on them for when users and third parties upload infringing content.
The proposed reforms have been welcomed by many news and media agencies, saying the proposal has addressed the unsatisfactory situation whereby high quality content produced by press publishers contributes to the success of many online platforms that do not make a significant contribution to the content and where publishers do not benefit from an appropriate share of the value produced. However, the proposals have also been heavily criticised and petitioned by many who feel that they are more of a regression in the digital area (rather than amounting to reform) and will have the effect of limiting access to information and/or increasing the price of content online.
Mozilla, the creator of internet browser Firefox has stated that the proposals will create an environment of legal uncertainty for online users/businesses and result in blocking of freedom of speech and innovation online and create unnecessary barriers of entry for small businesses. They also stated that clauses relating to fair dealing or fair use in a clearly defined way should have been included in the proposals and that it is up to the European Parliament and EU member states to review the proposals and make amendments. OpenMedia.com have said the proposals strike a blow at the very foundations of an open internet and if made law, the EU will fall behind when it comes to digital innovation. Concerns have mounted that what will follow will be similar to what happened in Spain when the introduction of a similar law led to the closure of many businesses who relocated to countries and markets outside of the EU. There are clear competing interests at hand but nevertheless, Mr Juncker expressed on 14 September that the EU Commission is on track to implement the reforms by the end of this year.
IMPACT OF BREXIT FOR HOLDERS OF EU IP RIGHTS
There is a general consensus that the UK’s decision to exit the EU has and will continue to affect how clients do business across various sectors in the UK and EU. While we may have already witnessed some economic effects, we are yet to see the long term consequences that Brexit will have on the UK’s trade, imports and exports, banking and financial services, various areas of the law, etc. It is impossible to cover all the likely ramifications relating to Brexit in a simple article but I will say that the legal consequences are likely to develop and materialise over some length of time. Here, I discuss the possible impact Brexit may have on intellectual property rights, with a particular focus on trade marks.
Currently, a single trade mark application filed in the EU (EUTM) provides protection in 28 member countries of the EU, once it has proceeded to registration. A registered community design (RCD) is similar in that it also provides protection in the EU by way of a single registration. Brexit will not affect UK national trade mark and design registrations. However, Brexit has sparked concerns regarding clients’ trade mark and design rights in the UK where they secured protection via an EUTM or RCD. In a recent Adams & Adams article by Claire Bothma and Simon Brown (dated 24 June 2016), it was stated that in the short term, a UK exit from the EU will have no effect on existing EUTM registrations but that once the UK’s withdrawal from the EU has been ratified, we believe that current EUTM registrations would no longer cover the UK. The article also states that we expect that appropriately enacted legislation will be implemented to ensure that such rights continue to have force in the UK and that there will likely be transitional provisions available to partially convert existing EUTM registrations into UK national trade mark registrations, which may also enjoy the same (earlier) filing dates. As such, the mentioned article provides that, for now, clients’ trade mark rights in the UK, covered by an EUTM registration, appear to be secure.
However, uncertainties do remain until the UK formally exits the EU. We hope that transitional arrangements will be implemented to partially convert registered EUTMs to national UK trade mark registrations, at the UK Trade Mark Office, while preserving their original filing dates, but there is speculation that this would be an enormous administrative undertaking and may not be feasible. By contrast to EUTM applications, a national UK trade mark application requires the applicant to declare either that the mark is in use or that the applicant has a bona fide intention to use the mark in the UK. As such, the UK Trade Mark Office might require proof of use before EUTM registrations can be converted into national trade mark registrations in the UK (if they are vulnerable to a non-use attack). There are also questions regarding the validity of registered EUTMs whose geographical use is specific to the UK. With regard to the latter, proprietors of registered EUTMs who have used their trade marks only in the UK for now, should consider operating in other EU member states to avoid cancellation actions on the basis of non-use.
As a result of the uncertainties present and in order to minimise any risks during the transitional period (where negotiations to exit the EU may be a lengthy process), it is advisable that owners of EUTM registrations which consider the UK to be an important market, to consider filing national UK trade mark applications now, rather than wait and see what happens when the UK formally exits the EU. One could also consider applying to extend an existing International Registration (in terms of the Madrid Protocol) to the UK, if that country was not originally designated at the time of filing an International Registration. For any new trade marks requiring protection, I recommend filing in both the EU and UK, if both territories are important to clients’ businesses.
By virtue of its current EU membership, the UK enjoys benefits of various Free Trade Agreements (FTAs) that the EU has negotiated with third countries, including the U.S.A. The free movement principles currently provide that most goods can be traded and moved between EU member states without tariffs and customs duties, irrespective of the origin of the goods. It has been submitted that after the ratification of Brexit, there is a strong likelihood that the UK will lose those benefits and will have to re-negotiate its own FTAs with various countries, separately from the EU, at the same time that it negotiates its withdrawal from the EU. This will undoubtedly have an effect on clients’ UK IP rights as anything influencing trade, generally, influences IP rights.
Current EU legislation provides that judgments of a court in one EU country will generally be recognised in another EU country. Having regard to the UK’s close relationship with the EU for many years, there has generally been a gravitation towards a “European” interpretation of its laws. Now, the question is how will English judgments be treated post Brexit? Will there be a movement away from a “European” interpretation of the law? Currently, it is not clear to what extent EU principles and laws will continue to apply in the UK. Some commentators have advised that, in general, EU laws will no longer apply in the UK unless they have been implemented in the UK by Acts of Parliament. Some commentators have expressed the view that if the UK remains part of the European Economic Area (EEA), most of the UK’s intellectual property laws are likely to stay closely aligned with EU law but if the UK steps out of the EEA, its laws may begin to depart from EU law over time. Clients enforcing their IP rights will most likely need to initiate proceedings in the EU and UK separately, once the UK formally withdraws from the EU, which will increase IP enforcement costs.
Since some of the UK’s copyright law is based on international Conventions (such as the Berne Convention and WIPO Copyright Treaty), the UK’s copyright law should remain unaffected by Brexit and it is unlikely that the UK will repeal its national copyright legislation (i.e. the Copyright Designs and Patents Act 1988). In this regard, it has been submitted that the UK will retain EU law influences derived from the EU Copyright Directive and decisions of the CJEU (Court of Justice of the European Union). In the long term, however, UK copyright law might start to diverge from EU law. This remains to be seen. It is currently uncertain whether or not the UK will be involved in the EU’s Digital Single Market initiative (mentioned above).
UK patent law is based on national UK legislation, in the form of the Patent Act 1977. Currently, patent applicants may secure protection for their inventions in the UK in 2 different ways: a) by filing a national patent application at the UK’s Intellectual Property Office (IPO) or b) by filing a European patent application at the European Patent Office (EPO). On 2 August 2016 the IPO published its first official Statement since the EU referendum regarding the impact of Brexit on IP rights in the UK. The primary message in the Statement is that the UK remains a part of the EU until the negotiations to exit are concluded. Regarding patents, the IPO confirmed that the UK will remain part of the European Patent Convention system since this Convention was not established through EU legislation. As such, it will still be possible for applicants to apply for European patents designating the UK via the European Patent Office. However, the UK’s involvement with the EU’s proposed unitary patents and Unified Patent Court (UPC) system has been the topic of much debate since the Brexit vote.
The EU member countries have spent over 40 years trying to establish a unitary patent that would cover multiple EU countries and a common Court for patent disputes. This, to simplify patent processes and reduce costs for businesses. Twenty five of the EU states signed the Unified Patent Court Agreement (UPCA) in 2013 in this regard. It was required for the UPCA to be ratified by 13 countries (including the UK) in order for the Agreement to come into force. 10 countries have ratified the Agreement so far and it was expected that the UK would do so before the end of 2016 and that the new unitary patent system would come into force in early 2017. After the EU Referendum vote, much speculation followed as to whether the proposed unitary patent and UPC would happen at all (as the UK was a required signatory to the agreement and one of the countries needing to ratify the UPCA for it to come into force) or whether it would be delayed. Another question raised was whether the remaining UPC countries would possibly re-negotiate a new UPC Agreement specifically excluding the UK. On 2 August, the IPO advised that for now, while the UK is still a member of the EU, it will continue to participate in meetings regarding the proposed unitary patents and Unified Patent Court (UPC) system. The Chartered Institute of Patent Attorneys (CIPA) has indicated a strong preference for the UK to participate in the proposed Unified Patent Court.
On 13 October 2016 at the London IP Summit, Alexander Ramsay (the chair of the UPC Preparatory Committee) said that delays to implement the UPC System on account of Brexit should be avoided and that the UK government should make a swift decision as to whether it still wants to be part of the UPC or not. He confirmed that the UPC will continue regardless of whether the UK participates or not and that if the UK opts out of the UPC, or cannot provide a definitive answer, the agreement would have to be re-negotiated. Another panellist at the summit, Dr Ben Grau (patent attorney), advised that he believes it could be up to 5 years before a decision is made and a solution is reached. It seems there will only be clarity on the issue once the UK formally withdraws from the EU and all Brexit related negotiations have been completed.
Various contracts involving IP rights such as, inter alia, license agreements and manufacturer and distribution agreements will need to be reviewed by clients in terms of Brexit implications, e.g. whether to identify the UK separately from the EU in certain clauses and whether to specifically identify UK laws associated with IP enforcement. If negotiating new contracts, clients should consider whether provisions should be included to cover the transitional period and likely changes after the UK’s formal withdrawal from the EU.
On 8 June 2016 following a proposal from the European Commission, the European Parliament and the Council adopted a Trade Secrets Directive that aims to standardise the national laws in EU member countries against the unlawful acquisition, disclosure and use of trade secrets. According to the European Commission, “a trade secret is a form of intellectual property that is a valuable piece of information for a business that is treated as confidential and which gives that business a competitive advantage”. Member states of the EU are required to implement the Trade Secrets Directive by 9 June 2018. Following the Brexit decision, it is now unclear if the UK will implement domestic legislation to enforce the Trade Secrets Directive by the abovementioned deadline.
Brexit should not affect the UK’s membership of the World Intellectual Property Organisation (WIPO), set up under the WIPO Convention.
The UK and EU are also members of the World Trade Organisation (WTO) in their own right but the European Commission alone represents the EU and all EU member states (including the UK) in practically all WTO meetings. As such, the influence of Brexit on the UK’s membership of the WTO and how the UK will engage in future meetings will now need to be addressed.
Although EU intellectual property laws will remain in effect until the UK formally withdraws from the EU (i.e. at least another 2 years away), clients (including South African businesses) should be mindful of the anticipated changes in securing and maintaining their IP rights in the UK. Feel free to contact us should you have any questions relating to the above.
(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)