Brexit - What does it mean for Kiwi businesses and their IP?
By Sue Ironside, Baldwins partner
On the 29th of March 2019, the UK is set to leave the EU.
The EU and UK Commission have published details of the draft agreement outlining the continued protection of trade marks from this date, including details of a transition period until 31 December 2020.
Brexit will affect EU-registered trade marks, registered and unregistered Community designs, plant varieties, and geographical indications. If an EU trade mark is registered before 31 December 2020 it will be covered, but if it is pending as at 31 December 2020, the final registration will cover the other 27 European countries and not the UK. Patents will not be affected.
What does Brexit mean for NZ businesses?
Many New Zealand businesses have commercial interests in the UK so it is really important to be aware of, and to prepare for, any implications that Brexit will have on the protection and enforcement of their IP in the UK and EU markets.
The EU envisages that an owner of an EU trade mark will have a right to file a UK national trade mark claiming priority from the pending EU trade mark from the 31st December 2020 until 30 September 2021.
From the 30th of March, 2019, New Zealand businesses will be able to trade with the UK in its own right while continuing to trade with the other 27 countries in the EU.
Brexit will create opportunities for New Zealand businesses.
What impact does Brexit have on IP owners on this side of the world?
The UK and other EU countries have been traditional markets for New Zealand businesses for a long time. More than $12 billion worth of imports come from Europe into New Zealand annually – which involves mostly cars, medicine, and tourism and around $8 billion worth of exports head offshore from New Zealand to Europe, which are mostly meat and fruit.
Even for those businesses who do not currently have commercial interests in the UK or the EU, these are both significant and potential export markets. It’s therefore important for New Zealand businesses to be aware of, and prepare for, the implications that Brexit will have on the protection and enforcement of their IP in the UK and the EU markets - as new opportunities arise for businesses to be able to trade with the UK in its own right and the EU separately.
New Zealand businesses shouldn’t wait for Brexit to happen in 2019 before doing anything.
At the moment, it’s business as usual. You can still seek protection for a trade mark or design in the UK and the EU given that nothing has changed yet.
Under the current draft Withdrawal Agreement, it is provisionally agreed that UK rights arising from any registered EU trademark, international trade mark designating the EU or Community Design will continue to be enforceable in the UK post Brexit – due to the automatic creation of a corresponding UK right. The UK government has recently indicated that this will be free of charge.
The issue really centers around whether you can then maintain your separate EU and UK rights following the ‘split’ of the UK. For example, in the UK use is deemed to be use of your trade mark in the EU. Once the UK is no longer part of the EU, you may be unable to show use to maintain your EU Registration and someone could potentially use this as an opportunity to remove your trade mark.
What is likely to happen with IP rights post Brexit next year?
It has been provisionally agreed that all EU trade marks, international trade marks that designate the EU, and community designs (which are registered as at the 31st December 2020) will automatically create identical rights in the UK, free of charge.
What does this mean for Kiwi businesses planning to register IP in the EU?
Kiwi businesses intending to expand or move into the EU and/or the UK market should consider filing any EU trade mark or community design applications now.
This would increase the chances of the applications being registered before the end of the transition period, and therefore automatically creating identical rights in the UK. If not, it would still allow Kiwi businesses to claim the early priority date from any pending European applications at the end of the transition period.
The European Commission’s proposal does not detail how the administrative split will be managed, but they have suggested that it be automatic and will only involve administrative burden on the owners of the intellectual property rights.
It is clear that the UK will need to implement new legislation in order to achieve some of the goals. For example, the UK does not currently have legislation on the protection of Geographic Indications.
What should Kiwi business owners with IP registrations in the UK/Europe do to prepare for Brexit?
Kiwi businesses should prepare for Brexit by ensuring that they are prepared to maintain their registered rights in at least one of the remaining 27 European countries, and then also maintain use of their trade mark in the UK separately. This would include, for example, ensuring that they will be able to make genuine use of their registered trade mark in both these jurisdictions.
How will IP rights in the UK or Europe be enforced post-Brexit?
If an EU trade mark, international trade mark designating the EU, or a community design is invalidated or revoked in the EU from a process that was still ongoing at the time of the transitional period, i.e. 31st December, 2020, any corresponding UK right will also be invalidated or revoked from the same date.
After the transition period, IP rights in the UK and Europe will need to be maintained separately. This means a registered trade mark in the EU will need to be maintained through use of the trade mark within at least one of the remaining 27 EU countries.
Similarly, a corresponding registered UK trade mark will need to be maintained through use of the trade mark in the UK. The EU Commission’s proposal states that UK rights should continue to be enforceable in the UK in accordance with European law following Brexit.
What’s the biggest risk Brexit poses for Kiwi businesses with IP rights?
The biggest risk for Kiwi businesses with registered trade marks or registered community designs in the EU is to ensure that they maintain their IP rights post Brexit.
Registrations in the EU and the corresponding identical UK registered rights will need to be separately maintained. That is, a European trade mark registration will need to be used within at least one of the remaining 27 European countries, while the corresponding UK registration will need to be maintained through use of the trade mark within the UK.
Going forward, it’s important that New Zealand businesses see trade with the European Union as business as usual and continue to seek trade mark protection. The UK was New Zealand’s biggest export destination in the EU with 35% of all EU exports landing there. New opportunities may arise through Brexit for New Zealand businesses to be able to trade directly with the UK in its own right without being caught by EU import and export restrictions. There is also the possibility of trade with the UK via a new free trade agreement, post Brexit.
In regards to what to do now, it’s advised that businesses continue to seek protection in the UK or EU, depending on what markets are of interest to you.
Don’t wait to see what happens as Brexit unfolds – continue to seek protection for your trade marks and designs now.
You can file in the UK using the national system and obtain a trade mark registration, if the market of interest to you is just the UK.
If you need protection in both Europe and the UK, then it’s advisable to seek your European trade mark protection now and use the transition period from Brexit to get the identical registered right in the UK.
However, it’s important to be conscious of the fact that if you have an EU registration and you are not using in any of the member states of the EU, then your trade mark registration will be vulnerable to removal on the basis of non-use.
This is an issue for New Zealand companies as many companies only use their trade mark in the UK. If you have a EU trade mark registration post Brexit you will need to ensure use of your trade mark is in one of the 27 European countries. Use in the UK will only support a UK trade mark registration.
In summary, whilst Brexit will see some big changes in the coming years, it’s business as usual for now and our recommendation is to continue to focus on your trade mark protection and making sure that you are also aware of the opportunities that may arise for your business with Brexit.
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