BREXIT: Implications for Indian IP Owners

Vaneesha Jain | July 2016

On 23rd June, the UK voted to leave the European Union (“Brexit”). The split will have important repercussions, not just within the regional economies, but the world over, and it will significantly affect Indian companies operating in the UK given that India invests more in the UK than in the rest of Europe combined.

The rights of Indians holding intellectual property in the UK/EU would be affected to the extent that these rights are dependent upon territorial boundaries. For example, Indian brands operating in the EU and the UK will be faced with the need to replace or supplement their EU-wide trademark or design rights with UK national rights. This is discussed further below.

In order for Brexit to come into force, Article 50 of the Lisbon Treaty, which details the procedure to negotiate the terms of the UK withdrawal, must been invoked. Once invoked, it provides a two year time limit for reaching a deal. This time should be used to optimise strategies for brand protection and enforcement.

The implications of Brexit on Indian IP owners will be felt mainly in the arenas of trademark and design, where communitywide rights can be obtained through a single application, which are then applicable to all the member states of the EU. However, territorial rights such as copyright will not be affected, as they differ across different EU countries. Similarly, since membership to the European Patent System is independent of membership to the EU, patent holders will not be affected by the split.

IMPLICATIONS OF BREXIT ON TRADEMARK REGISTRATIONS BY INDIAN APPLICANTS

Until Brexit comes into force, Indian companies doing business in the UK can obtain trademark protection in two ways; first, they can obtain national rights through registering with the UK Intellectual Property Office (UKTM) and second, they can separately obtain EU-wide rights through registering with the European Union Intellectual Property Office for a European Trademark (EUTM – earlier called ‘Community trade mark’ (CTM)). ManyIndian businesses have opted for the latter method as it is a cost-effective means ofobtaining protection both in the UK and in the European market.

SHOULD INDIAN EUTM OWNERS NOW SEPARATELY APPLY FOR UKTM?

Given that the UK is an important marketplace for Indian investors, separate trademark protection would be required in the UK and the EU post Brexit for any new applications. As far as existing registrations are concerned, Indian entities that have chosen to obtain only an EUTM registration without a corresponding UK national trademark could consider supplementing their EUTM registration with a corresponding national application, to ensure that national rights in the UK are readily available, should the need arise. However, it seems likely that instead of a sudden loss of rights within the UK post Brexit, transitional provisions will be put in place instead, which would allow for EUTM rights holders to simply convert their rights into a national trade mark. Article 112 of the EUTM Regulation already provides a system for creating a UKTM from an EUTM by conversion, which could form the basis of the approach taken on Brexit. Converting an existing EUTM application into a UK national one as opposed to filing a new UK application will confer the benefit of the original filing date, priority or UK seniority as the parent EUTM application, and also help in avoiding potential clashes with existing UKTMs.

The process to be followed for the conversion may not be entirely straightforward, however, as it would have to take into account certain differences between the conditions for grant of trademark rights between the UK and the EU. For example, as per Section 32(3), Trade Marks Act 1994 (applicable in the UK), an application for a UKTM requires the applicant to make a declaration to theeffect that the mark is in use or that the applicant has a bona fide intention to use the mark applied for, which need not be made for an EUTM application. Such a declaration could be problematic for conversion of EUTMs which have never been put to use in the UK.

OTHER IMPLICATIONS OF BREXIT ON INDIAN EUTM OWNERS

Apart from the need to convert existing EUTM registrations to national ones or supplement them with new national applications, Indian trademark holders should also be aware of the increased vulnerability of their trademark rights to revocation for non-use in both the EU and the UK.

This is because a brand owner must establish genuine use of the mark in the territory to which the right applies, in order to defend a claim for revocation of an existing trademark on grounds of non-use. Before Brexit, owners of EUTMs could rely wholly or substantially on use in the UK to establish genuine use in the EU, and use anywhere in the EU would be sufficient for the trademark right to apply in the UK. Post Brexit, owners of EUTMs will find their EUwide registrations more vulnerable to revocation for non-use if their primary use has been in the UK, and vice versa.

Another potential fallout is that the law in respect of UKTMs may eventually diverge from that applicable to EUTMs, as UK courts would no longer need to follow the CJEU’s decisions which are based on EU instruments. However, given that the provisions of the Trade Marks Directive (which is the basis for the Trade Marks Act in UK national law) and the EUTM Regulation are for the most part equivalent, CJEU decisions in relation to EUTMs could continue to guide UK courts’ approach to UKTMs.

APART FROM TRADEMARKS, WHAT OTHER IP RIGHTS OF INDIAN OWNERS, ARE LIKELY TO BE AFFECTED BY BREXIT?

Similar to the trademark regime, Registered Community Designs (RCD) would, subject to transitional arrangements, cease to apply in the UK, while national design rights would no longer be enforceable in the EU. Unlike the trademark regime, while there is no existing mechanism to convert a Community registered design right into a bundle of national registered design rights, such a mechanism for conversion may be evolved post Brexit through transitional provisions. For new design applications, applicants should consider seeking separate UK registered design protection in addition to filing a Community registered design right. This would bring certainty and the assurance that rights are readily enforceable in the UK.

Further, Community Plant Variety Rights and geographical indications will cease to have effect in the UK, and the Regulations under which they were granted and enforceable will no longer have force in the UK.

All transactions including intellectual property provisions will need to be reviewed post Brexit. This is because contracts which cover the EU as a defined territory, or which concern Communitywide IP rights will not apply in the UK anymore.

Finally, Brexit is likely to have important consequences on IP litigation in UK courts. Indian IP owners should be award that since Community rights such as trademarks and design would no longer apply in the UK (as discussed above), UK courts will no longer be able to grant pan-EU injunctive relief for infringement of these rights. Enforcement proceedings against infringements would, therefore, need to be brought separately in the EU and the UK, and existing pan-EU injunctions would need to be supplemented by a UK-specific injunction granted by a national court, in the absence of which they may cease to apply.