The United Kingdom’s exit from the European Union on January 31, 2020 is having an important impact on how many South Carolina businesses protect their intellectual property. After all, the State is home to nearly 100 companies that are British subsidiaries and countless more that do business in the UK, according to the South Carolina Department of Commerce. If some part of your product, operations, or customer base is positioned in the UK now or may be in the future, Brexit will change some elements of how you protect your intellectual property.
Some in-house counsel reading this may be thinking, “Our intellectual property is already protected through the U.S. Patent and Trademark Office. Why do we need additional protections overseas?” Others may not even be registered through the USPTO. In today’s business climate, where the market is global and the world has become smaller, intellectual property theft is a significant risk. In the countries where you do not properly protect your patents, trademarks (“trade marks” in EU parlance), and other key IP assets, a competitor can pirate it, make it, use it, and sell it all day long – and it’s entirely legal.
Take trademarks as an example, which are the type of intellectual property that will see the biggest immediate changes as a result of Brexit. If a competitor starts using your brand name on one of its products in the UK or another European country where you don’t currently have protections, the copycat can actually gain priority rights on that brand name. The fight to win a trademark for it would then ultimately cost your business a lot more money than it would have to complete the registration process in the first place.
Fortunately, certain aspects of Brexit have created an immediate opportunity for companies that are looking to make their trademarks official in the UK, or to protect additional ones.
Your trademark is heading for the (Br)exit
The opportunity is all about the current transition period that the UK and the EU have entered. From when the UK exited on January 31 until the end of 2020, everything more or less stays the same while the UK and the EU try to hammer out a long-term trade deal.
“If a brand owner files an EU trade mark application now, if unopposed, the application should become registered before the end of the transition period,” says Richard Wylie, a partner in HGF’s Leeds office who we often work with. “This means the brand owner would automatically, and without cost, gain a UK trade mark registration alongside the EU registration at the end of the transition period.” Alternatively, owners of existing EU registrations that have no interest in having a UK registration will be provided an opportunity to opt out.
In other words, there is currently an incentive for companies to hurry to get grandfathered in. Trademark filings go through an EU government agency called the European Union Intellectual Property Rights Office (EUIPO). Like many other aspects of the EU structure, the idea was to create one system that would work across the entire Union. As a result, companies do not have to go through the registration process for each EU country they want protection in – they receive that protection in all 27 member countries. This saves companies significant costs both initially and also down the road: they only pay one fee for registration and one fee for annual maintenance, whereas those fees are unique and separate to each country in most of the rest of the world.
“In the same way as before Brexit day, an EU registration granted during the transition period will lead to the automatic generation of a UK ‘clone’ or ‘grandfather’ registration,” says Simon Goodman, a partner in Reddie & Grose’s Cambridge office who we also work frequently with. "So if we file an EU application now, and it reaches registration before the end of the transition period, then a UK clone will be generated. But if an EU application filed now is opposed, or is otherwise slow to be registered, then registration may be too late to obtain a UK clone. In that case, a separate UK application would be needed.”
Simon and Richard agree that a smooth application usually takes only four to five months to completion, so companies should file by June to be safe. Partnering with intellectual property counsel who have experience in the EU can be especially valuable because of this tight timeframe, as they can perform clearance searches and adjust accordingly to give companies better chances of avoiding objections.
After December 31, the UK will no longer use the EUIPO system. It will have “cloned” all the EUIPO trademarks and moved them onto its own registers. The next time one comes up for renewal, the owner will have to pay a separate renewal fee in the UK or else it will lapse there.
“After Brexit, a renewal of a UK trade mark will be a separate process, involving the payment of separate fees and filing of separate forms,” Richard says. “However, it is good to know that compared to the USA, renewals in both the EU and UK are straightforward. There is no need to file affidavits or specimens of use. There will therefore be a little more cost, but no significant additional work for brand owners.”
Where the significant work does come in is if companies do not have any trademark protection in effect by the end of this year in either the UK or EU. In that case, if they do eventually decide they need the protection, they will have to go through separate registration processes in the UK and in the EU and pay double the fees.
Does the “clone” deadline apply to patents too?
The Brexit transition does not create the same level of urgency for patent rights. In fact, nothing changes for either the registration or renewal of patents after the transition.
There’s a common misconception in America that the EUIPO handles patents as well as trademarks, as is the case in the States with the USPTO. But the regulatory body that oversees patent rights in Europe is separate from the EU government. It is called the European Patent Office, and it is similar to the EUIPO in how it has also streamlined the system for businesses. You only have to get through one application process with the European Patent Office to be eligible for protection across Europe.
However, the streamlining stops there. After making it through the application process, companies then have to pay a fee to have their patent validated in each of the European Patent Office’s 38 member states where they want protection. And going forward, they also have to pay an annual maintenance fee in each country they choose. For that reason, it is important to be strategic in determining where in Europe the benefits are most likely to outweigh the costs. Importantly, despite Brexit, the UK remains a member state of the European Patent Office.
Companies also have the option of filing applications with individual countries instead of with the European Patent Office. This alternative often can be practical if you are unlikely to need protection in additional countries. But if you do business in at least two European countries or are likely to in the future, it makes sense to go through the European Patent Office to avoid multiple examinations and to reduce costs.
Another reason to file with the European Patent Office is to buy your organization some time. Let’s say your company has a new product you have been selling for a year or two. Sales are expanding but you’re not quite sure of where all it might take root and be commercially viable. If you file it in the European Patent Office, then you have some additional time to see whether it has legs in each of the EPO countries. You don’t have to decide until the back end which countries are worth paying the validation and annual maintenance fees.
Across the board, companies have to make reasonable predictions and take on reasonable expenses. Experienced patent counsel can help with these assessments.
How about copyrights?
As for copyrights and Brexit, “the short answer is that there will be no major immediate impact,” Richard Wylie says. “There is no EU copyright system, instead each country of the EU is responsible for copyright law at a national level, albeit in accordance with international treaties, often guided by EU legislation. These international treaties mean that most copyright works, such as literary works, artistic works, films and music, will continue to be protected in both territories where they were before.”
However, Richard does note that there are “specific changes relating to specialist areas such as satellite broadcasters, for example, so it is advisable to seek bespoke advice for your business.”
Longer term, Simon Goodman says there could be changes as a result of Brexit.
“One of the aims of the UK government in the Brexit process is to be able to control UK laws independently of the EU,” Simon says. “The UK will also leave the jurisdiction of the European Union Courts. This means that there is a possibility that copyright law in the UK and the EU may diverge over time.”
Brexit is creating important changes and meaningful deadlines for trademarks. Not much will be different, at least initially, with patents and copyrights though.
In navigating all of the above, you need to play both offense and defense at the same time. Before calling attention to your own position in the UK, consider partnering with intellectual property counsel to make sure there’s not somebody else there who could claim superior rights. That type of partnership can also be valuable in figuring out where the investment of fees would make business sense.