Your EU trademarks and Brexit: strategic consideration is now necessary

April 4th, 2017

Much has been written since the Brexit vote on June 22, 2016.

While it was unclear what the consequences would be, we now need to face facts. The face of the EU will change in the next few years. On March 29, 2017, the UK activated article 50 of the Treaty on European Union thus notifying the European Council of its intention to withdraw from the EU.

Although we continue to face the unknown regarding the various effects of this departure, EU trademarks owners must think about protecting their trademarks in the UK. While there is consensus that there is no need to panic, we are nevertheless of the view that now is the time for strategic consideration.

Undoubtedly, mechanisms for converting or transforming EU trademark rights will be developed to ensure corresponding protection in the UK, which should provide some degree of comfort.

However, those mechanisms remain unknown and may be subject not only to the risks of opposition in the UK at the time of conversion or transformation of EU trademarkrights, but also to determinations by the UK authorities regarding the administrative procedure and prescribed fees that may apply.

The vast number of EU trademarks that would be involved in applications for conversion or transformation of rights to prevail in the UK will undoubtedly create an enormous administrative burden and much delay. Financial considerations also merit special attention. At the time of Brexit, the pound sterling dropped to a historic low. It is conceivable that by the time the mechanisms for converting or transforming EU trademark rights are implemented, the pound sterling will recover, which it has begun to do since June 2016. Furthermore, although the current applicable prescribed fees to register a trademark in the UK are known, those that will undoubtedly apply for the conversion or transformation of EU trademark rights in the UK are not. Such fees may even be an attractive source of revenues for the UK authorities, which will undoubtedly have to supplement UK coffers and which will have the opportunity to determine the applicable prescribed fees. After all, this would certainly not be the first time that a country resorts to trademark prescribed fees for such a purpose - consider recent experiences in the United Arab Emirates, Saudi Arabia, Venezuela and Brazil, to name but a few.

Given the current low cost of registering a trademark in the UK, it may be wise to consider filing a trademark application in the UK if the British territory is important to the company.

The strategic consideration which is now necessary must also focus on determining if a trademark registered in the EU, although used only in the UK, becomes at risk. Any trademark registered in the EU must be used within five years of registration, failing which it becomes vulnerable to non-use cancellation. Therefore, if use of the trademark is limited basically to the UK which will ultimately cease to be part of the EU, the European registration issued more than five years ago would thus become vulnerable to cancellation. It would therefore be wise to expand use of an EU trademark restricted to date basically to the UK, to at least one of the EU countries other than the UK.

In the same vein, the defined territory covered by any trademark license agreement should be reviewed, amongst others. These are just some of the known aspects of the impact of Brexit on EU trademarks and hence relevant for any Canadian company doing business in Europe, in the EU and/or in the UK.

Although there is no need to panic, consideration needs to be given to these significant issues for companies for which the UK represents a major market. The old adage "an ounce of prevention is worth a pound of cure" should apply, especially given the currently low relative value of the pound sterling, which should most likely go up.

Our trademark experts can guide you in your strategic planning, now and in the future. Brexit is only one example of the geo-democratic and geo-political developments that they closely monitor and with respect to which they can assist you in establishing your international trademark protection strategy. Feel free to contact them in this regard.

Johanne Auger for the Trademark team, which also includes Pascal Lauzon, Frédéric Dionne and Chloé de Lorimier.