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Brexit Creates Long-Term Uncertainty in U.K. Trademark Law

Feb. 3, 2020, 11:31 AM

The U.K.'s departure from the European Union frees it from parts of the bloc’s trademark law that British courts have viewed skeptically, attorneys say.

EU laws that provide guardrails for national statutes, and EU court precedents that for decades have created the binding case law guiding trademark conflicts, won’t apply in the U.K. British judges may continue to look to EU case law, but there are parts of trademark law where they have chafed at EU policy. That makes it tough to predict how U.K. courts will act.

The disruption of legal precedent is “deeply unsettling,” trademark attorney Daniel Selmi of Three New Square said.

“It’s taken decades to this point. To suddenly have a divergence on those key issues is going to be hugely problematic,” the London-based Selmi added. “We know what’s going to happen at the end of the year. Beyond that, that’s completely uncertain.”

Other attorneys aren’t as worried. Trademark attorney Neil Coulson of Baker Botts LLP in London said that despite inevitable changes to trademark law in coming years, the U.K. won’t completely disregard EU precedents immediately, even if they aren’t binding.

“There may be cases where our court says this diverges from EU practices, and we’re going to make our own,” Coulson said. “But I think in the short-term principles will continue to apply.”

Along with loss of binding EU precedent, the future need for separate EU and U.K. trademark rights could muddy complicated trademark licensing deals and settlement agreements involving businesses operating in both jurisdictions. Companies also will have to strategically manage new wrinkles in their applications and renewals at the end of an 11-month transition period, during which EU trademark rights still apply in the U.K.

Going It Alone

The U.K. could decide to change its trademark law, which no longer has to follow EU guidance. U.K. courts will also be able to diverge from EU case law—and likely will, Eleanor Coates, director of trademarks at Murgitroyd & Company Ltd. in Glasgow, Scotland, said.

“I think we will see some divergence going forward. The U.K. judges, through comments in case law, have suggested they will diverge from EU law in certain regards,” she said.

Coates pointed to a dispute between Sky and SkyKick, on which the Court of Justice for the EU ruled Jan. 29 that overbroad classification can block an application, but can’t be used to cancel a mark.

EU trademark applicants can seek to have a prospective mark apply to all aspects of relevant goods or services, she said, which “is not really something the U.K. courts like at all.”

Another area of possible divergence, attorneys say, will be on the question of intent to use. The EU allows a five-year grace period, so even if a trademark registrant never uses or even intended to use a trademark on a class of products, a challenger can’t get it revoked for half a decade after registration.

“The U.K. has always been troubled by the EU view that you don’t have to have an intention to use the mark, since that’s the point of a trademark,” Coulson said.

Selmi said that even where precedent might not be ideal, it at least provides certainty. He said trademark attorneys have long awaited a decision in the SkyKick case.

“We may or may not like it, but at least everyone in the EU has legal certainty,” Selmi said, adding that there would have to be a period where case law was at least used for guidance. “We’re not going to disregard EU case law, that would be absolute madness.”

Practical Questions

Companies also must consider basic logistical decisions as the two trademark systems split.

Existing EU trademark holders will receive automatic, free identical registration in the U.K. at that Dec. 31 deadline, effective until their previously set renewal deadline. But after Dec. 31, changes could impact the rights of companies doing business across borders.

Brexit’s transition period keeps most aspects of law in the U.K. unchanged through the end of the year. If the period isn’t extended, trademark holders will need to ensure they have separate rights in the U.K.

Trademark owners can file 10-year renewals up to six months before a registration expires under EU law. But the renewal doesn’t take effect until the expiration date. If a company owns an EU trademark due for renewal in early 2021, but applies for renewal in late 2020, the renewal wouldn’t apply in the U.K., Coates noted.

Applicants likely have to file by June to register in both the U.K. and EU in time because of a roughly five-to-seven month processing time, Coates said. Companies with applications pending on Dec. 31 can have them copied and passed along to U.K. trademark authorities, but doing so isn’t free or automatic the way registrations are, she said.

But Coulson said there might not be as much of a rush to get applications through the EU so that they’ll be “cloned” on Dec. 31 as some might think. The small price of an extra U.K. application might be worth the certainty of protection in both markets, rather than rushing an uncertain deadline, he said.

Meanwhile, companies with cross-border businesses may have to closely examine existing contracts to see who holds what right, such as licensees with exclusive rights to use an EU trademark in the U.K. Deals settling trademark conflicts may also have been written without contemplating the possibility that EU rights might at some point not apply in the U.K. or vice versa, Kimberly Maynard, U.S.-based a trademark attorney at Frankfurt Kurnit Klein & Selz PC said.

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com; Keith Perine at kperine@bloomberglaw.com

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