BREXIT and Trademark Protection: Dangerous Territory Ahead?

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BREXIT and Trademark Protection: Dangerous Territory Ahead?


There has been much discussion about the potentially dramatic impact of last week’s historic vote in the U.K. to withdraw from the European Union-from the plummeting pound sterling to the reunification of Ireland and the secession of Scotland from the U.K. Perhaps slightly less cataclysmic in the global sense, the Brexit also has the potential to pull the rug out from underneath certain trademark owners in the U.K.  Since its inception in the mid 90’s, the European Trademark or EUTM, provided one-stop shopping to trademark owners seek protection throughout the European Union, including the U.K. Currently, rights holders can rely on the EUTM regime to protect their interests in the UK, either in conjunction with national trade mark registrations or instead of national trade mark registrations. Rights holders who have pursued a strategy of EUTM filings rather than national filings could soon find themselves without any enforceable rights in the UK.

Although the E.U. directives and regulations creating the EUTM contemplate the addition of countries to the E.U. trademark structure, they do not contemplate the exit of a country. Article 165 of the EU Community Trademark Regulation provides that the EUTM shall have a unitary character, with equal effect throughout the Community, and that it shall not be registered, transferred or surrendered or be subject of a decision revoking the rights of the proprietor or declaring invalid, nor shall its use be prohibited, save in respect of the whole Community. Accordingly, most commentators believe that, in the absence of a proactive approach by the government in London, the departure of the UK from the EU would result in the elimination of protection for EUTM’s in the UK.

In order to salvage protection in the UK for EUTM’s, the UK would most likely need to introduce legislation to allow UK courts to continue to apply EU law over UK law in respect of EUTMs only. However, if barriers to trade develop between the UK and EU, then it may not quite so simple to continue EU protection in this way. In addition, over time, since the UK would be operating outside of the European Court of Justice, and as a result, the UK national trademark regime and the EUTM regime would likely diverge. Alternatively, the UK could simply declare unilaterally that the existing European trademark regulations would continue to apply in the UK. However, it is unlikely that the EU would recognize decisions of the UK courts concerning EUTMs–again leading to a divergence over time between UK trademark law and EU trademark law.

A third approach, given the complexity of managing parallel sets of rights, may well be for the UK to provide a sunrise period during which holders or EUTM’s are permitted essentially to obtain UK protection with very little additional process. At the very least, this would then put EUTM holders on a sound footing under UK law and eliminate some of the uncertainty going forward.

Regardless of the direction that the UK takes on this issue, it behooves owners of European Union trademarks to play close attention and consult with EU and/or UK counsel regarding the best approach to maintain protection for its brand in the UK.

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