Second Brexit Case Study: Is your trademark vulnerable?

Considering the real risk that the parties will be unable to conclude a Withdrawal Agreement by 30 March 2019, now is the time to figure out how your trademark is to be protected after Brexit. A proactive approach to protect your trademark is to apply for a UK trademark directly. If opting for this approach, companies are advised to initiate the filing process soon, as it is likely that case processing times for UK trademarks will increase the closer we get to the end of the transitional period.

A manufacturer of goods based in Denmark

It is common for companies wishing to protect their corporate identity or a product's brand name to apply for the EU trademark. 

At times, we have been asked to advise on how a company's trademark, which today is only covered by a registered EU trademark, will be affected by Brexit. In this second Brexit case study, we will elaborate on how a Danish manufacturer, after Brexit, is most likely to be granted a UK trademark giving him a right equivalent to his current EU trademark. We will then address another key consideration for our manufacturer after Brexit; the importance of the UK trademark being put to 'genuine use' within the territory. 

Case: A manufacturer of goods based in Denmark is planning to introduce a new product line to the UK market. The manufacturer has invested heavily in marketing activities to reinforce brand recognition. Because the strength of the manufacturer's brand is closely tied to the recognition of the trademark, the trademark, in turn, is vital for the success of the new product line. In other countries than Denmark, the trademark is currently protected by the EU trademark and has been actively used in those countries, but never in the UK. The manufacturer, however, has concerns about the on-going Brexit negotiations. 

Our manufacturer may be granted a UK trademark

As a starting point, the manufacturer's EU trademark grants the manufacturer the right to exploit the trademark within the EU, but not in 'third countries' (meaning countries other than the 28 – after Brexit 27 – EU member states). After the 'withdrawal date', currently 30 March 2019, the UK will be construed as a 'third country'. Thus, following 30 March 2019 EU trademarks registered prior to the withdrawal date will cease to enjoy protection in the UK. Similarly, EU trademarks registered as of the withdrawal date or later will, in principle, not be protected in the UK.  

The worst-case scenario for our manufacturer, who has a registered EU trademark but no corresponding national UK registration, is that the manufacturer would have no registered right within the UK and would have to rely solely on the rights granted to unregistered trademarks by UK common law. Therefore, the manufacturer would not be able to rely on his EU-based rights when enforcing his trademark in the UK.

Fortunately, on 19 March 2018, the European Commission published a draft version of the UK/EU Withdrawal Agreement. Article 50 of the draft provides that the holder of an EU trademark registered or granted before the end of a transitional period (31 December 2020) will be granted an equivalent right in the UK. Also, the new equivalent right will not be liable to revocation on the basis that the EU trademark had not been put into genuine use in the UK before the end of the transitional period. Whether the registration of the corresponding UK trademark will entail any cost to the right holder is still undecided. 

Our manufacturer should put the trademark to 'genuine use' 

The proposed automatic protection has been agreed at negotiators' level and is therefore likely to make it into the final version of the Withdrawal Agreement, which is good news for our manufacturer. That said, the agreement is still not final, and holders of EU trademarks – like our manufacturer – should therefore continue to follow the negotiations as they proceed. There is a real risk that the UK and EU will not be able to agree on a Withdrawal Agreement and that the proposed protection therefore will not apply.

Our manufacturer should also make sure that he is not vulnerable to cancellation of his EU trademark, or its UK equivalent, due to non-use after the expiry of the transition period. 

In both the EU and the UK, trademarks must be put to genuine use within the relevant territory. If a trademark is not actually used, then the validity of the trademark can be challenged by a third party. If our manufacturer is granted a right in the UK, corresponding to an EU trademark, the manufacturer should therefore be vigilant and put the trademark into genuine use before or at least by the time the transitional period ends. 

Also, if a holder of an EU trademark mainly uses it within the UK, then the holder should be aware that after the transition period the use of an EU trademark in the UK will not constitute 'use in the EU'. 

If our manufacturer or other right holders are in doubt as to whether they will sufficiently fulfil the 'genuine use' requirements after the transition period or if they have other questions regarding the impact of Brexit on their existing EU trademarks, we will be happy to elaborate further. 

In some cases, right holders may even wish to adopt a proactive approach and simply apply for a UK trademark directly, especially considering the real risk that the parties will be unable to conclude a Withdrawal Agreement. If so, we recommend considering whether it may be beneficial to initiate the filing process soon, as it is likely that case processing times for UK trademarks will increase the closer we get to the end of the transitional period.