The government has published a further Brexit IP Regulation, the Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020 (draft).

The draft Regulation corrects and clarifies certain provisions in the five Brexit IP Regulations that came into force last year. It also incorporates the UK's obligation in the Withdrawal Agreement to ensure that the outcomes of EUTM and Registered Community Design (RCD) cancellation actions that are pending at the end of the Brexit transition period – currently 31 December 2020 – bind the comparable UK right. The latter was not included in the original Brexit IP Regulations since those Regulations were drafted with a no deal Brexit in mind and so did not cover all the UK's obligations under the Withdrawal Agreement. 

The new procedure will be relevant to anyone involved in EUTM or RCD cancellation actions at the end of 2020. We summarise the new procedure and review the latest UKIPO and EU Commission Brexit guidance below.

New cancellation procedure

What is covered?

• Where an EUTM is finally cancelled (ie revoked or declared invalid on absolute and/or relative grounds, whether wholly or partially) as a result of proceedings that were pending at the end of the transition period, the comparable UK trade mark deriving from that EUTM will also be cancelled to the same extent as the EUTM. 
• However, there is an exception. The comparable UK trade mark will not be cancelled where the grounds on which the EUTM was cancelled would not apply or would not have been satisfied in relation to the comparable UK trade mark if the comparable UK trade mark had existed as at the date the cancellation proceedings were instituted, and an application for cancellation of the comparable UK trade mark based on those grounds had been made on that date under section 46 or 47 of the Trade Marks Act 1994.
• Proceedings are pending if they have been filed (and not subsequently withdrawn) with the EUIPO or a designated Member State court and meet the requirements for being accorded a filing date. Applications and counterclaims for cancellation are included. A decision is finally determined when it has been determined and there is no further possibility of the determination being varied or set aside (disregarding any power to grant permission to appeal out of time).
• Note that EUTM oppositions are not being treated in the same way. It will therefore be important to monitor new UK applications (deriving from EUTMs that are currently under opposition) and oppose them separately in the UK, where desired.

What is the procedure?

• The comparable UK trade mark will only be cancelled if the Registrar has received notice (a cancellation notice) of, or otherwise become aware of, the matters stated above. There is no long-stop date but presumably the UKIPO could, if it wished, keep track of EUTM cancellation actions pending at the end of the transition period.
• A cancellation notice can be submitted to the Registrar by any person. It must contain various details about the EUTM in question and be accompanied by a copy of the cancellation decision and any appeal and a statement confirming that the decision is final.
• As soon as reasonably practicable after receiving a cancellation notice or becoming aware of a cancellation, the Registrar must notify the proprietor of the comparable UK trade mark (including providing a copy of any cancellation notice).
• The proprietor of the comparable UK trade mark is given an opportunity to submit a written notice (a derogation notice), together with a statement of reasons as to why the grounds for cancellation of the EUTM would not apply or be satisfied in relation to the comparable UK trade mark together with supporting evidence. These must be submitted at the same time as the cancellation notice if the latter is submitted by the proprietor of the comparable UK trade mark or, otherwise, within such other period (of not less than one month) as specified by the Registrar. Failure to submit these documents will result in the comparable UK trade mark being cancelled to the same extent as the corresponding EUTM unless the Registrar directs otherwise.
• There are no provisions in the new Regulation allowing third parties to submit observations on the cancellation or derogation notice. However, it is possible that these could be provided for elsewhere. It would also be open to third parties to apply to cancel the comparable UK trade mark in separate proceedings.

How will cases be decided?

• The Registrar will determine whether the comparable UK trade mark should be cancelled. In doing so, they must have regard to the statement and evidence of the proprietor of the comparable UK trade mark. The Registrar must provide written notice of their decision with reasons. The usual routes of appeal will apply with the date on which the notice is sent being the date of the decision.
• It is not yet clear how the Registrar will come to a view in non-straight forward cases, for example, where an EUTM is cancelled on the basis of a reputation-based claim where there is no reputation in the UK or on the basis of the strongest earlier right (even though other prior rights including those in the UK might apply). There are also likely to be a small number of cases where, despite applying largely harmonised law, the outcome would be different for a UK mark compared to an EUTM. It remains to be seen how deeply the Registrar will delve into cases, although it is not expected that they will review evidence or re-decide the case.

What is the effect of cancellation?

The cancellation of the comparable UK trade mark will be deemed to take effect on the same date that the cancellation of the EUTM is deemed to take effect under the EUTM Regulation.

Subject to any claim for compensation for damage caused by negligence or lack of good faith on the part of the proprietor or a claim for restitution based upon the unjust enrichment of the proprietor, the cancellation of the comparable UK trade mark will not affect:

• Any decision arising from infringement proceedings which has been finally determined and which has been enforced prior to the date on which the cancellation is entered on the UK Register (the decision date).
• Any contract entered into prior to the decision date to the extent that it has been performed prior to the decision date, subject to the right of a party to the contract to claim the repayment of any consideration paid under the contract where, having regard to the circumstances, it is fair and equitable for such repayment to be made.

What about designs?

The provisions in relation to re-registered designs are identical except that they only apply if the corresponding RCD is declared invalid (there being no relevant revocation action for RCDs).

What should I do next?

Those involved in EUTM and RCD cancellation actions that are unlikely to be finally resolved by the end of 2020 should seek advice. There might be strategic advantages to accelerating or decelerating the action. Likewise, those about to file a cancellation action should carefully consider the grounds and prior rights relied upon.

Updated UKIPO and EU Commission Brexit guidance

The UK has updated its guidance on the implications of Brexit for IP rights. It confirms that comparable UK trade marks deriving from International registrations (IRs) designating the EU will be national UK rights, falling outside of the International (Madrid/WIPO) system. They will therefore have to be administered and renewed separately from the IRs from which they derive. The same is true for International designs designating the EU.

The EU Commission has also issued a new Notice to Stakeholders on the implications of Brexit for trade marks and designs and exhaustion of rights. The latter confirms that, after the transition period, IP rights will not be exhausted in the EU if goods protected by the IP right have been lawfully put on the market in the UK. Rights-holders might therefore be able to object to the import of goods from the UK into the EU on the basis of their IP rights.