The Mishcon Academy Digital Sessions. Conversations on the legal topics affecting businesses and individuals today.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
In this episode, 1 January 2021 is fast approaching and with it, the end of the Brexit transition period. What steps do businesses need to take now to minimise disruption to their intellectual property portfolio? What measures are being put in place to preserve EU-wide rights? And how should businesses change their brand protection strategies going forward?
Hello and welcome to the Mishcon Academy Digital Sessions podcast. I am Nadim Meer, a Partner and Head of Private Equity at Mishcon de Reya and I’m joined by my colleague, Sally Britton, Head of Brands.
Sally, the end of the transition period looks set to provide disruption. What are the key changes from an intellectual property perspective and how can any disruption be minimised?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Thanks Nadim. The good news is that the package of measures in the Withdrawal Agreement has set to minimise any disruption, however, there’s steps that brand owners need to take now. For example, many brand owners have relied on EU-wide rights. Those rights will need to be filed in the UK and the EU after the 1 January so they’ll need to factor that into their plans and budget now.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
So does that mean that clients who’ve got existing EU-wide registrations would have to refile in the UK?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
No they wouldn’t actually because the Withdrawal Agreement ensures that those rights will be preserved in the UK. They will be free of costs, no steps required to be taken, right that’s created in the UK are cloned right or if you have got an application, you will need to think about filing a new application in the UK within the nine month window that is permitted under the Withdrawal Agreement so, until 30 September 2021.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Okay. So, if I was a brand owner, how would I be able to find out about my new rights and this deadline?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Well, listen to a podcast like this or read one of the many pieces of information that we’re sending out, and others are too. There isn’t going to be a notification so brand owners do need to be alive to the changes that are coming along because they could miss on the potential new rights that are being created. Also, the new rights that are being created will need to be renewed separately so they will need to add those rights to their data bases, think about the separate renewal dates and again make sure that no rights are lost over this period.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Apart from owner details, is there anything else that would have to be updated before the end of the transition period?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
So, it’s important because the cloned rights have been created on the basis of the EU-wide rights that are in existence at the moment that the register is kept up-to-date so things like, you know, name and address details as we’ve mentioned but also there is specific provision within the Withdrawal Agreement about licences so, making sure that licences are entered into the EU register so they can equally be registered onto the UK register within the period permitted by the Withdrawal Agreement so it’s important that brand owners think about whether they should be recording those licences and updating the registration in relation to their details.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
What’s the position regarding trademark disputes? If there’s an existing dispute, is that automatically going to be carried over from the EU registry in relation to UK rights that are created as a result of the process?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Well it really depends whether the dispute relates to an application or a registration. If it’s an application, a cloned right won’t automatically be created so it will be up to you, the brand owner, to monitor the UK register and see if the party that you are in a dispute with, it is going to file a new application and if they file a new application, you’ll have to file a separate opposition. So, plan for that and budget for that and look at putting watching services in place. If it’s a registration, there’s a real benefit to filing a challenge against a registration now to an EU-wide registration because the UK Intellectual Property Office has confirmed that they will, unless there are reasons not to, they will respect the decision that’s taken in relation to the newly created cloned UK rights, so it’s important that people think about when the timing of particular disputes, you know what the optimum timing is and they budget more for new disputes in the UK.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
And are trademark registry disputes different in the UK compared to the EU?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
So there are some significant differences so, EU registry proceedings are very much paper based and also if you file an opposition, it will go all the way through to a decision. In the UK, it’s a lot more akin to litigation. You can have case management conferences, you can you have disclosure and you quite often have a hearing so, that’s not only more expensive, it’s also more complex but the good news is that actually, if you file an opposition and the other party doesn’t respond, you automatically win so, there are benefits to filing in the UK but there are also benefits in understanding what the procedure is in the UK as opposed to the EU.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Do you think we are going to see divergence from EU decisions in relation to dispute?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Well, I think we’ve all seen that UK Courts have widely criticised some EU decisions, with some prominent decisions that have been regularly criticised in the UK Courts. It’s been the case for a while that the Supreme Court could challenge existing Court of Justice decisions, CG decisions, but actually now the Appeal Court can challenge them as well and we expect to see some divergence in the future.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Now there has been lots of discussion around protection of unregistered design rights. What do businesses need to consider here?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
So, we’ve been working closely with a number of industry bodies like the British Fashion Council, looking at design rights and gaps in protection because at the moment the reality is that designs, by their very nature, change and a lot of companies rather than investing in registration, they look at securing their rights through unregistered design protections that are available at the moment. At the moment, there is an EU-wide unregistered rights protection which is a go to for many designers. It’s available when that design is disclosed in the EU and quite simply once we leave the EU, if you disclose that design in the UK then it’s likely to destroy that EU-wide unregistered design right and most people wouldn’t have even known it existed until the issue arose so, what we’re asking clients to do to think a little bit more about their design rights and plan a little bit more carefully. The UK Government following lobbying, as I say by various industry bodies which we have been involved in, have created a new design right that’s equivalent to this EU-wide design right in the UK but in that case it’s only a UK-wide right and at the moment it requires rights to be disclosed in the UK so, you know, put it quite simply, if you say did a showcase of your design in the UK, you get rights in the UK, if you do a showcase of your rights in the EU, the current understanding is that those rights would only be in the EU and that’s the EU of course without the UK. So what can designers do? Well, as I say, think about it more proactively. A simple solution is to file more applications for design registrations because that solves the problem conclusively but we are aware there is a cost to that. There is a benefit in doing that at the moment because with the cloning that will take place on the 1 January, there’s still an opportunity to file registrations now and get cloned registrations in the UK, so that’s definitely an option. If that’s not an option then clients are thinking about things like, for example, simultaneous disclosure so, you might show something on the catwalk at London or actually virtually now more so, at London Fashion Week and you might simultaneously show it in the EU to try and get protection in both jurisdictions. Finally, there is a EU decision suggesting that copyright might apply, however, obviously alongside other EU decisions, this may be open to challenge in the UK, we’ll have to see how it’s interpreted. So, pay more attention to your designs than before and actually talk to your marketing and your sales teams and think about integrating things like international disclosure into your strategy which will also give you additional rights from and IP perspective.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
If I’ve got a commercial agreement, say a licence that covered EU-wide rights, what would happen with that?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
So there’s quite a few things to consider here, I mean, by default the UK Government has confirmed that agreements relating to EU TM or EU-wide right design registrations in existence before the 31 December, will cover comparable UK rights but it also will depend on the terms of the party’s agreements. You also want to think about whether you need to notify licensees of the new right and also check, if you’ve got a co-existency agreement in place, for example, you’ve agreed not to register new applications or not to obtain new applications for a certain mark and suddenly you are obtaining them almost by default, think about actually whether you need to use the UK’s process to surrender those rights, there is an opt out process specifically for those rights and also, you know, an obvious one but maybe one that might have been overlooked by many is, check the agreements generally, look at the definition of territory, look at governing law and jurisdiction, many people assume that the EU would simply expand, they didn’t anticipate that it would contract so we can expect a little bit of litigation around there. Of course, people can use that to their advantage to try and renegotiate terms to put them in a better position or they could simply look into them, audit them and, you know, maybe approach it at a later date but do be aware of what you are agreements contain and whether there is any opportunities to address them.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
What’s the position going to be regarding customs and counterfeit goods?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Okay, well there’s a couple of things to think about here so, there is something to encourage customs so a lot of the brand owners that we work with have used Applications for Action which are notifications that you send to customs basically bringing to their attention more readily, I mean they will notify you frequently, you know, when the come across counterfeit goods but many brand owners use these applications to bring their goods to the attention of customs and help facilitate the seizure of counterfeit goods. At the moment there is an EU-wide system. After the 1 January, you’ll need to think about potentially filing new applications. If you filed one of these AFAs via the UK then you’ll need to file a new application in the EU and you can do that now. Similarly, if you filed one in the EU, you’ll need to file one in the UK. So that’s what you need to think about with counterfeit goods again, it’s a separate jurisdiction, it’s about thinking about a little bit more administration but obviously if you’ve already gone through the process of creating an AFA then hopefully that process will be straightforward but it’s important to note that a separate form will be required.
In terms of exhaustion, obviously this is one that’s quite a hot topic at the moment because obviously, because of Covid amongst other things, exhaustion really is all around trademarks whether goods can be kind of sold, a lot of people talk about parallel imports for example, whether someone can restrict the sale of a product with a trademark from one territory to another. At the moment, if you put something on the market in the EEA, whilst we’re in the transition period, that trademark is exhausted so you can’t prevent its resale within the EEA and there’s a lot of case law around this, it’s quite a complex area which obviously I would invite anyone to discuss with us. There’s different positions in relation to exhaustion post the 1 January. If you are someone who has put something into the market in the UK, you will likely need to seek permission from the right’s owner to put it onto the market in the EEA so, you know, you won’t necessarily have the permissions to put it on the market in the EEA. Conversely, if something is put on the market say in France after the 1 January, the person who does that will be able to freely sell it into the UK so that’s something for agents/distributors to think about, particularly those based in the UK and those with relationships with others in the EEA. So, that’s exhaustion but that is, again, a hot topic. The UK Government said that exhaustion will be considered and obviously this is a position that’s considered at the moment, for example, it facilitates drugs to come into the country and other items so, at the moment, we have EEA exhaustion.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Okay. Sally, dot EU domain names? Personally, I can’t say that I’ve seen too many of them but if you were to have any, what would you need to consider?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
I think you are right, they haven’t really taken off but they were introduced quite a few years ago, maybe ten or so years ago, but not too many people have used them but some people do and some people have them in their portfolio but there is a requirement of ownership and UK citizens and entities who are not resident in or do not have an established place of business in the EU – and that’s the EU without the UK of course – will not be able to register or renew them so, people need to think about this because if they’re, for example, using it for a kind of website or an email, it will be potentially revoked and disabled so from the 1 January it will no longer work essentially and I do sometimes come across, less so I haven’t really come across it a great deal but I do occasionally see potentially as a consumer people who have chosen to use EU because, you know, the domain name they wanted was available, do think about the fact that that may trip you up and do plan because obviously it’s a big issue if your website suddenly goes down and your emails are not available so, do look into that.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Sally, we’ve covered a lot of ground here. If you were going to summarise?
Sally Britton, Partner, Head of Brands
Mishcon de Reya
Yep, in summary, there’s going to be a huge kind of environmental change in terms of intellectual property. Particularly trademarks and designs, on the 1 January. Just to kind of simply put, to give it some kind of context, the UK register currently has about 750,000 trademarks sitting on that register. After we get all these cloned rights, there’s going to be 2.4 million more so there’s going to be many more disputes to deal with and actually, we can expect you know a little bit of disruption so a little bit of organisation I think is an important thing to do. So, what can you do? Well, if you file an EU-wide trademark now, you are not going to get a cloned right, it typically takes four to five months for those trademark rights to register so, think about filing in the UK now before that trademark register, I guess explodes with new rights. Make sure that your records for EU-wide rights are up-to-date because otherwise you are going to have to update two sets of records so, take that step now to make sure that notifications go to the right place and everything is as streamlined as possible. Make sure that you record all relevant dates so, there is this nine month window to file trademark applications, for example, you’ve got another period for recording licences. Make sure that you record those dates, you have them in your diary and you work towards them and, as I say, make sure you capture all the dates in terms of the cloned rights, particularly renewal dates, as I say, some people are a little bit confused about renewal dates because it will show as renewed on the EU register even if the renewal is after the 1 January but there will be a separate renewal required in the UK. Look at agreements, as I mentioned, think about existing and planned agreements, what territories and rights they cover. Finally, budget for extra rights in your portfolio and possibly increase level of disputes. With ongoing disputes, take stock, there may be strategic steps that can be taken.
Nadim Meer, Partner, Head of Private Equity
Mishcon de Reya
Great thanks Sally. Well for now, let’s wrap up there. I’m Nadim Meer and I’d like to say thanks so much to Sally for joining me for this Mishcon Academy Digital Sessions podcast.
The Digital Sessions are a series of online events, videos and podcasts, all available at Mischon.com and if you have got any questions you’d like answered or suggestions of what you’d like us to cover, do let us know at digitalsessions@mishcon.com. Until next time, take care.
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