The current mad dash that surrounds the last-minute negotiations regarding Britain’s exit from the European Union is as predictable as it is unhelpful in signaling the ultimate terms or date of such withdrawal.
With an extension until Jan. 31, in light of the rough and tumble of British and EU politics, regardless of extensions, it might be worthwhile to take a second look at current strategies to be certain U.S. companies are in the best possible position regardless of when and under what conditions Brexit occurs.
There are some additional steps U.S. IP owners can take now to ensure optimum protection for their IP assets and for the companies in the United Kingdom and EU currently using those assets.
1. The current EU withdrawal agreement and IP rights
The good news for U.S. planning purposes is that the new withdrawal agreement negotiated by Prime Minister Boris Johnson does not alter Theresa May’s previous withdrawal agreement with regard to IP rights protection. For companies that already have in place dual U.K.-EU registrations for critical marks and designs, recommended in my January 2019 column, such strategies should prove sufficient even if Parliament alters other aspects of the withdrawal agreement.
For U.S. companies relying instead on Britain’s stated policy to grant “equivalent” rights for EU marks and designs, there may be gaps in protection in the short term.
IP rights that require registration — trademarks, designs and patents — require the most immediate attention. The status of the Unified Patent Court, and the benefits it could bring to U.S. patent owners, remains uncertain for now. But there are new regulations governing trademarks and designs, post-Brexit, that provide much greater detail on which ones will receive automatic protection on “exit day” and which ones might require future action by the rights holder.
2. Trademark protection post-Brexit
Under the current Designs and International Trade Mark (EU Exit) Statutory Regulations of 2019, registered European Union trademarks will automatically be granted an “equivalent” U.K.-registered mark “without charge” or application on exit day.
These “equivalent” marks, referred to as “comparable trade marks” in the regulations, will retain the same EU priority and U.K. seniority claims as their related EUTMs. Comparable marks will also be granted the same registration number as their related EUTMs, with the addition of the numeral nine at the front to distinguish the two.
The registration of a comparable mark should not affect the validity of its related EUTM in remaining EU member countries. Post-Brexit, however, comparable marks will be subject to U.K. law, including administrative processes, fees and validity determinations. Furthermore, in light of the extension, it is worth checking EUTM renewal dates so that registrations do not lapse before exit day.
There are provisions for allowing comparable mark treatment for certain expired EUTMs, but they are limited to those within the six-month renewal grace period.
Automatic comparable mark treatment will also be available on exit day for “international marks” registered under the Madrid Protocol that designate the EU. Parties that do not want their EUTMs or Madrid Protocol marks registered in the U.K. can opt out by written notice to the U.K. Intellectual Property Office.
Such notice must be delivered no earlier than the day after, and no later than two months after, exit day. Notice to relevant third parties regarding such opt out is also required. Opt out, however, will not be available for marks “used” in the U.K., including in litigation based on the comparable U.K. right.
Comparable mark status will only be available for marks that are registered in the EU as of Britain’s date of exit. For pending applications, owners have a nine-month period post-exit in which to “refile” registration applications with the UKIPO. Such re-filed applications will receive full recognition of all filing dates and EU priority and U.K. seniority claims contained in the related EUTM application. Similar U.K. re-filing rights exist for pending Madrid Protocol applications designating the EU.
Although the transfer of EUTM and Madrid Protocol marks to U.K. comparable trademark status is a simple administrative process, it is not clear how long the process will take or what protections will exist against unauthorized uses of such marks while the transfers are completed.
Rights should arise upon exit, regardless of any administrative delay in processing the actual U.K. registration status. If not, U.K. law only protects unregistered marks under a “passing off” theory that generally requires use in the U.K. to establish the necessary “goodwill.” See generally Starbucks (HK) Ltd. v. British Sky Broadcasting Group PLC,  UKSC 31.
3. Design protection post-Brexit
The protection scheme for designs follows the same general pattern as the one for comparable trademarks, yet it is also more complex because of its protection for unregistered designs. Under the regulations, community registered designs will receive automatic “equivalence” on exit day, with carryover EU priority and U.K. seniority claims and opt-out rights similar to those granted EUTMs.
These “equivalent” registered designs are referred to as “re-registered designs.” Similar to EUTMs reregistered designs will also receive the same registration number as their related community-registered design, with the addition of the numeral nine at the front to distinguish the two. “Reregistration” will be available without charge or application.
Reregistration rights will also be extended to designs registered under the Hague Agreement. Similar to trademarks, pending Community and Hague Agreement design applications may be “refiled” with the UKIPO within nine months after the exit day to secure EU priority and filing dates and U.K. seniority carryovers.
Reregistered designs could face the same problems as trademarks with regard to expiration before exit day and the impact of delays in administrative processing on potential challenges to unauthorized users. It is worth rechecking registration renewal dates now to avoid unanticipated problems in the future.
Unregistered designs, protectable under EU law for three years after their public disclosure in the EU, will also receive an “equivalent,” if slightly different scope of protection. Britain will continue to protect such unregistered designs post-Brexit for the full three-year term of EU protection.
Britain has also created an unregistered design right, referred to as a supplementary unregistered design, or SUDs.
SUDs will also have a three-year term of protection, but rights will only attach from the date of the design’s public disclosure in the U.K. after exit day. Absent an agreement to the contrary, disclosures in an EU member state will not establish SUD rights, but could adversely impact the design’s required “novelty” under U.K. law. This will make future disclosure decisions decidedly more difficult.
For up-to-date information on these issues, as well as detailed information regarding additional post-Brexit IP issues, including U.K. government position papers and legislation, I recommend checking the U.K. government website and signing up for the offered Brexit emails.
4. Hard border issues and U.S. workers
Although relatively little attention has been paid by the Johnson government to clarifying remaining gaps in IP protection post-Brexit, there are other areas that have received strong attention, in particular, immigration and border security. One of the most problematic aspects of Brexit has always been its impact on foreign resident workers on both sides of the Brexit border.
For companies that have created a Brexit strategy that includes creating EU- and U.K.-subsidiaries staffed by noncitizen officers and employees, with a no-deal exit, such foreign workers could become undocumented aliens, potentially subject to deportation.
The British government has already established a system for qualifying foreign residents to receive permission to remain post-Brexit — the EU settlement scheme.
It has also extended the deadline for qualification until Dec. 31, 2020 (no-deal Brexit) provided the applicant is a resident in the U.K. on exit day, or June 30, 2021, under the proposed withdrawal agreement so long as the applicant is a resident in the U.K. by Dec. 31, 2020.
Further details and application forms are available on the U.K. website. If they haven’t already done so, key EU citizen officers and workers that intend to remain in-country should begin the process as soon as possible to avoid the predictable crunch that will arise post-Brexit.
Unfortunately, there is no consistent EU approach for U.K.-citizen workers in the face of a no-deal Brexit. Even if the withdrawal agreement, with its current transition period until July 2020, is enacted into law, at some point current EU protections for such U.K.-citizen workers will end.
The only question is how much time U.S. companies will have to create affiliates outside the U.K. to gain EU privileges for its workers and business operations. If the EU is a critical business region for a U.S. company and that company has not yet established a subsidiary or affiliate in a country other than Britain, the reasons for this decision should be re-examined.
5. Protecting U.K. and EU supply and distribution lines
For those U.S. companies that have manufacturing, supply and distribution centers that operate across the borders between the EU and Britain, including between Ireland and Northern Ireland, arrangements to secure those chains should be taken now.
In simple terms, without an agreement to the contrary, on Britain’s exit from the EU, a hard border — with full customs, immigration and tariffs, will circle the U.K. The critical benefit of EU free trade, without customs delays, will disappear. Even if the withdrawal agreement is enacted, only the border between Ireland and Northern Ireland will be “soft,” although not nonexistent.
The U.K. government is already warning its citizens and businesses to expect shortages due to supply chain delays across borders.
More troublesome may be the underreported problem of smaller U.K. companies failing to secure import-export licenses, referred to as an Economic Operator Registration and Identification, or EORI, number. An EORI will be required to import from, or export to, the EU most goods, post-Brexit.
Failure to secure export-import licenses now will only exacerbate anticipated shipping delays later. It is worth confirming that critical supply lines have in place necessary EORI registrations as soon as possible to reduce the inevitable disruptions Brexit poses for cross-border business activities.
More information about EORI numbers and application procedures are on the U.K. government website.
6. Some final critical checklists
For those planning on using the transition period under a negotiated withdrawal agreement to finalize their Brexit strategies, it is worth at least checking out the numerous rudimentary checklists the U.K. government has posted on its Brexit business guidance site to begin to determine the scope of issues a company may face post-Brexit.
Waiting until it becomes clearer whether there will be a hard Brexit despite the granted extension to begin to fill any remaining gaps in planning remains a risky strategy at best.