Brexit - what to do now about trade mark disputes

This note addresses how parties might approach trade mark disputes if there is a No Deal Brexit or Deal Brexit. It should be read alongside our notes on trade mark protection and Brexit (No Deal and Comparison between Deal and No Deal).

• By "No Deal Brexit" we mean that the UK leaves the EU on 29 March 2019 without the benefit of the Withdrawal Agreement or any other agreement between the UK and EU governing how EUTMs will be dealt with in the UK going forwards. The Trade Marks (Amendment etc) (EU Exit) Regulations 2018 (the "Regulations") will then apply. They passed through the UK Parliament on 6 February 2019 and will come into force on 29 March 2019 if there is a No Deal Brexit. They set out how the UK will deal with EUTMs after that date. There is limited guidance on how the EU will deal with EUTMs after this date. This will ultimately be decided by the Court of Justice of the EU (the "CJEU").
• By "Deal Brexit" we mean that the UK and EU enter into the Withdrawal Agreement substantially as currently drafted. This means that there will be a transition period starting on Brexit day, 29 March 2019, and ending on 31 December 2020 (or such later date as is agreed) during which time the UK will continue to be bound by EU laws and benefit from the existing EU IP regime. Thereafter, the UK will deal with EUTMs as agreed in the Withdrawal Agreement. However, this only sets out minimum standards on certain issues to which the UK must adhere. Anything not dealt with in the Withdrawal Agreement will be decided unilaterally by the UK and will probably follow the Regulations mentioned above. Again, there is limited guidance on how the EU will deal with EUTMs after 31 December 2020. This will ultimately be decided by the CJEU.

Should brand owners take urgent action?

• No Deal Brexit. The UK could leave the EU as early as 29 March 2019. Brand owners should make contingency plans now for this possibility.
• Deal Brexit. The UK will be part of the EU – and nothing will change as regards IP - until 31 December 2020. However, given the length of many disputes, brand owners should plan ahead now.

What general approach should be taken in EUTM disputes?

• No Deal Brexit. As a general rule, prior rights holders will benefit if a final decision is issued before 29 March 2019. They will also bolster their chances of success by relying on a mix of UK and non-UK prior rights. Conversely, the holders of EUTMs under attack and/or later users will benefit if a decision is issued after 29 March 2019 (unless the dispute can be resolved quickly and easily beforehand). However, there are exceptions to the general rules on timing. For example, the position is more complex if any prior rights being relied upon are themselves under attack.
• Deal Brexit. The position is similar for a Deal Brexit although the advantages of delaying or accelerating proceedings are generally fewer. This is because, where an EUTM is declared invalid or revoked after 31 December 2020 (by the EUIPO or a designated EU member state court) in an action that was pending on that date, then the comparable UK registration will also be declared invalid or revoked except where the grounds for invalidity or revocation do not apply in the UK. This does not apply to EUTM oppositions or infringement decisions concerning EUTMs, only invalidity and revocation actions.

Should EUTM applicants try to resolve pending oppositions ASAP before Brexit?

• No Deal Brexit. Applicants for EUTMs should consider whether any oppositions can be successfully resolved (either by negotiation or obtaining a final decision) before 29 March 2019. The aim is for the EUTM to register before that date so that it is automatically protected as a comparable UKTM registration for free and without any loss of priority/filing dates. If the EUTM is not registered before that date then the owner simply has a right to apply for the same mark in the UK for a period of 9 months (ie to 29 December 2019), claiming the benefit of the EUTM priority/filing date, but that application will be examined anew by the UKIPO and may face new objections and oppositions.
• Deal Brexit. The position is likely to be the same as for a No Deal Brexit except that the relevant date by which EUTMs must be registered in order to be protected as comparable UKTM registrations is 31 December 2020.

How should EUTM oppositions which cannot be resolved be handled?

• No Deal Brexit. Where an opposition cannot be resolved quickly, cheaply and without significant concession, EUTM applicants should consider trying to delay any opposition decisions to after 29 March 2019 in four scenarios. First, where the action is based solely or mainly on UK prior rights. This is because there is a good chance that UK prior rights will not be taken into account in post-Brexit EUIPO decisions (even though they will have been relevant prior rights at the priority/filing date of the EUTM being opposed). Secondly, where the action is based solely or mainly on prior EUTMs which are more than 5 years old and which have only been used in the UK in the relevant 5 year period. This is because there is a possibility (albeit relatively small) that pre-Brexit use of EUTMs in the UK will be disregarded in post-Brexit EUIPO decisions. Thirdly, where the action is based solely or mainly on prior EUTMs which have a reputation in the UK only since it is possible that such reputation will be ignored in post-Brexit EUIPO decisions. Fourthly, where the opposition is likely to be successful against the EUTM but might not be successful against a UKTM application for the same mark. By delaying the opposition, the EUTM applicant will at least have the right to apply for the same mark in the UK without any loss of priority/filing date (whereas if a final decision is issued pre-Brexit refusing the EUTM application then any subsequent UKTM application will not be able to claim the benefit of these dates). EUTM opponents will want to avoid delays and try to get a final decision issued before 29 March 2019 (if feasible) in these scenarios. Where possible, they should also ensure that they rely on a mix of UK and non-UK prior rights, and that any evidence of use and reputation submitted for their EUTMs is not confined to the UK. After 29 March 2019, opponents should monitor new UK filings in case the EUTM applicant applies for the same mark in the UK in the 9 month priority period.
• Deal Brexit. The position is likely to be the same as for a No Deal Brexit except that the relevant date is 31 December 2020.

How should new or pending EUTM invalidity actions be handled?

• No Deal Brexit. The position is the same as for oppositions above. Indeed, the advantages to delaying are arguably more pronounced for invalidity actions. By delaying, the EUTM owner will obtain a comparable UKTM registration which it might be able to defend if the grounds for invalidity arguably do not apply in the UK (or at the very least which the other side will have to go to the time and cost of invalidating in separate UK proceedings). Conversely, if a decision is issued before 29 March 2019 finally invalidating the EUTM, then no comparable UKTM registration will come into existence. Whilst the EUTM owner could apply to convert the EUTM registration into a separate national application in the UK that would only be possible if the grounds for invalidity have been held not to apply in the UK and they would have the time, cost and risk of prosecuting the UK application. There is also a potential advantage to the EUTM owner delaying if the action is based solely or mainly on absolute grounds which apply to the UK only since these might be disregarded in post-Brexit EUIPO decisions. Applicants for invalidity will want to avoid delays and try to get a final decision issued before 29 March 2019 (if feasible) in these scenarios. Where possible, they should ensure that they rely on a mix of UK and non-UK prior rights, that any evidence of use and reputation for EUTMs is not confined to the UK and that it is clear that any absolute grounds apply not just to the UK. Lastly, the parties should budget for possible separate invalidity proceedings in the UK if the EUTM proceedings might not finally resolve by 29 March 2019.
• Deal Brexit. Where an EUTM is declared invalid after 31 December 2020 (by the EUIPO or a designated EU member state court) in an action that was pending on that date, then the comparable UK registration will also be declared invalid except where the grounds for invalidity do not apply in the UK. Notwithstanding the fact that the fate of the comparable UKTM registration is to some extent tied to the fate of the EUTM from which it derives, there might still be some merit to the owner of the EUTM in delaying the action in the situations mentioned above. Clearly, there will be no such benefit if the action is based on prior EUTMs or absolute grounds which apply to the UK and elsewhere in the EU since – if the EUTM registration is declared invalid - the comparable UKTM registration will suffer the same fate. EUTM owners will want to provide strong evidence and arguments that the grounds for invalidity do not apply in the UK so that – if the EUTM is invalidated - the corresponding UKTM registration remains in force. Applicants for invalidity should consider opposite strategies and address the issues mentioned above for a No Deal Brexit scenario.

How should EUTM revocation (for non-use) actions be handled?

• No Deal Brexit.The owners of EUTMs that are subject to revocation proceedings might benefit if the decision is delayed to after 29 March 2019 where the revocation action is likely to be successful. This is particularly so where there is evidence of use of the EUTM in the UK which is arguably sufficient to maintain any comparable UKTM registration but not the EUTM registration. By delaying, the EUTM owner will obtain a comparable UKTM registration (which it might then be able to defend or at the very least which the other side will have to go to the time and cost of revoking in separate UK proceedings). If a decision is issued pre-Brexit then the EUTM owner will only obtain a possible right to convert the EUTM registration into a UK trade mark application, with all the time, cost and risk of conversion. Conversely and importantly, where the EUTM has been put to genuine use in the UK only and that use is likely to be sufficient to maintain the EUTM registration, EUTM owners should consider expediting the action as pre-Brexit use of EUTMs in the UK might be disregarded in post-Brexit decisions. More generally, EUTM owners should ensure that any evidence of use they submit in revocation actions is not confined to the UK. Those applying to revoke EUTMs should consider adopting opposite strategies, where feasible. The parties should budget for possible separate UK revocation proceedings if the EUTM proceedings are unlikely to resolve by 29 March 2019.
• Deal Brexit. Where an EUTM is revoked in an action that was pending at Brexit, the comparable UKTM registration will also be revoked unless the grounds for revocation do not apply in the UK. Notwithstanding the fact that the fate of the comparable UKTM registration is to some extent tied to the fate of the EUTM from which it derives, there might still be some merit to the owner of the EUTM in delaying (or expediting, as appropriate) the action in the specific situations mentioned above. Again, applicants for revocation will want to consider opposite strategies. There might also be reason for applicants for revocation to at least apply to revoke an EUTM before 31 December 2020 if the action is based on non-use and the EUTM has not been used anywhere in the EU in the last 5 years. This is because there is a possibility that the comparable UKTM registration will be given a whole new 5 year period to start use in the UK. It means that if you are aware of a third party EUTM that will be split out on exit day, which poses a threat and which has not been used anywhere in EU in the last 5 years, then you will want to file a revocation action before 31 December 2020 otherwise you might only be able to revoke the remaining EUTM and not the comparable UK registration for 5 years. Provided the revocation action was pending on 31 December 2020, then the UK registration will also be revoked if the EUTM is revoked. If you miss the 31 December 2020 date, then the only option might be to apply to have the comparable UK registration cancelled before the 5 year period ends on the basis of bad faith (no genuine intention to use) but this is untested in this context.

What about use of a comparable UKTM made after the EUTM revocation was filed?

• No Deal Brexit. One question that is currently unclear is whether a comparable UK registration will be revoked if use in the UK has commenced/re-commenced after the EUTM revocation action was filed but before any revocation action against the comparable UKTM is filed. Given the uncertainty, EUTM owners should consider whether there is scope to put any EUTMs that are subject to revocation actions into use in the UK.
• Deal Brexit. Commencing or recommencing use in the UK will not save the comparable UK registration. This is because the fate of the comparable UKTM is tied to the fate of the EUTM from which it is derived.

What will happen to UKTM opposition/invalidity actions based on prior EUTMs?

• No Deal Brexit. It is thought that prior EUTMs will still be taken into account since they will have been relevant prior rights when the later UK mark was filed. However, for a belt and braces approach, those opposing/applying to invalidate UKTMs should seek to rely not just on EUTMs but national UK rights (registered and/or unregistered), wherever possible and might also want to aim to achieve a final decision before 29 March 2019 (if feasible). Where the prior right being relied upon is an EUTM application it might also be prudent to re-file in the UK at the start of the 9 month priority period (in case a prior UK right is required).
• Deal Brexit. As for a No Deal Brexit except that the relevant date is 31 December 2020.

How will Brexit affect pending EUTM infringement actions filed in the UK courts?

• No Deal Brexit. UK courts will no longer be able to determine questions of infringement of EUTMs occurring in other EU member states or invalidate or revoke EUTM registrations. However, they will still have power to consider pre-Brexit infringements of EUTMs taking place in the UK. Indeed, the Regulations give the UK courts power to grant injunctions to prohibit unauthorised use of comparable UKTM registrations which derive from EUTMs where proceedings were pending at Brexit. They also provide that, where the pending proceedings involve a counterclaim for revocation or invalidity of the EUTM, the UK court may revoke or invalidate the comparable UKTM registration which derives from the EUTM. Those claiming for infringement should consider trying to obtain a final decision on infringement before 29 March 2019 (where feasible) if they are seeking remedies for use outside of, as well as in, the UK. This potentially avoids the need for separate proceedings in other EU member states post-Brexit. Having said that, they might also want to delay the action if their EUTM is itself under attack for the reasons mentioned in the invalidity and other sections above. The appropriate strategy will vary depending on the particular facts of the case. Defendants will need to consider opposite strategies (and are likely to want to delay and appeal to take advantage of split actions). They might also want to consider introducing a claim for revocation or invalidity (even if weak as regards the EUTM) so that it opens the door for the UK court to consider the validity of the comparable UKTM. More generally, the parties should contingency plan for the possible need for separate proceedings elsewhere and consider tactically when they should be commenced.
• Deal Brexit. There is nothing in the Withdrawal Agreement on this. However, the position is likely to be the same as for a No Deal Brexit except that the relevant date is 31 December 2020. It is possible that an agreement will be reached between the EU/other EU member states and the UK such that they will respect each other's decisions on infringement, as well as invalidity and revocation, of EUTMs in actions pending at Brexit. However, nothing has been said on that so far. Note that the UK has agreed to continue to be bound by post-Brexit ECJ preliminary rulings requested by the UK pre-Brexit.

What will happen to existing injunctions covering the UK for infringements of EUTMs?

• No Deal Brexit. The Regulation provides that injunctions granted before 29 March 2019 will remain in force in the UK (but under the comparable UKTM registration not the EUTM) unless there is an order of the court to the contrary. Clearly, those subject to such injunctions will look to try to over-turn them post-Brexit on the basis that the grounds for infringement do not apply to the UK.
• Deal Brexit. There is nothing in the Withdrawal Agreement on this. However, the position is likely to be the same as for a No Deal Brexit (except that the relevant date is 31 December 2020).

How should pending EUTM infringement actions that cover the UK but are being dealt with by other member states courts be handled?

• No deal Brexit. Any decision on infringement or remedies granted post-Brexit by other designated member states courts will not have effect in the UK. Claimants might therefore want to consider trying to obtain a final decision before 29 March 2019 (if feasible) so that they obtain damages and other remedies for the UK (including an injunction that will apply to the UK as described above). Having said that, they might also want to delay the action if their EUTM is itself under attack for the reasons mentioned in the invalidity and other sections above. The appropriate strategy will vary depending on the particular facts of the case. Defendants will need to consider opposite strategies (and are likely to want to delay and appeal to take advantage of split actions). The parties should contingency plan for the possible need for separate proceedings in the UK.
• Deal Brexit. Any decision on infringement or remedies granted post-Brexit by other member states courts will not have effect in the UK. Claimants might therefore want to consider trying to obtain a final decision before 31 December 2020 so that they obtain damages and other remedies for the UK. (The UK is likely to recognise existing injunctions as described above.) This is particularly so if the EUTM on which the claim is based is more than 5 years old and has only been used in the UK in the relevant period (in case that use is disregarded). Having said that, Claimants might also want to delay the action if their EUTM is itself under attack in the circumstances mentioned in the invalidity and other sections above. The appropriate strategy will vary depending on the particular facts of the case. Defendants should consider opposite strategies. The parties should contingency plan for the possible need for separate proceedings in the UK. It is possible that an agreement will be reached whereby the UK will respect post-Brexit decisions on infringement (in the same way as has already been agreed for decision on invalidity and revocation) of other member states courts where that action was pending at Brexit. However, nothing has been said on that so far.

What else should be considered?

• No Deal Brexit. Some of the actions mentioned above might prove unnecessary if there is a Deal Brexit with a transition period or Brexit is deferred. Likewise, they might not be necessary if the party concerned has a good chance of success in the EUTM action. Specific advice should be sought on a case-by-case basis. With its network of leading IP teams in 10 EU Member States, Taylor Wessing has all the contingency plans in place to continue handling the full range of actions and disputes before the EUIPO, General Court and ECJ without client service disruption.
• Deal Brexit. The position is similar to a No Deal Brexit.