29 Oct 2018

Following publication of the 'agreed' text of the draft Withdrawal Agreement (the "Draft Text") between the United Kingdom ("UK") and the remainder of the European Union ("EU") on 19 March 2018, our intellectual property ("IP") team has produced a suite of briefings on key aspects of the likely implications of Brexit for IP rights and systems across the EU, to inform our clients what changes they will need to consider making to their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. The topic of this note is how Brexit will impact the protection of designs. 

This note has also been updated following publication by the UK Government on 24 September 2018 of its guidance to businesses, organisations and individuals on the protection of designs in the event of a ‘No Deal’ Brexit (“No Deal Guidance”).

'Continued protection'

The Draft Text makes clear that continued protection, after the transition period, of designs currently protected will underpin negotiations. It is agreed that holders of registered Community1 designs ("RCDs"), unregistered Community designs ("UCDs") and international registrations designating the EU ("IRDs") shall become holders of equivalent UK rights. The same principle is reiterated in the No Deal Guidance, suggesting that rights-holders will not lose protection, regardless of the outcome of the negotiations. 

Whilst agreed in principle, how such continued protection will be implemented is either not agreed, or else completely silent. There is, therefore, still much to be decided in terms of the design protection post-Brexit.  

Registered Community Designs

(i) Granted registrations

It is agreed that the holder of a RCD granted before the end of the transition period (31 December 2020) shall become the holder of a 'comparable' registered, enforceable right in the UK for the same design, without any re-examination2. UK legislation for registered designs3  is modelled on EU law, so the definition and scope of design protection is identical. As both Community and UK design applications go through limited examination already, limited issues are anticipated with this approach. 

The date of filing (or priority), and the first renewal date, in the UK shall coincide with that of the corresponding RCD4, and term of protection of the UK right shall be at least equal to the remaining period of protection under EU law of the corresponding RCD5. In terms of practical steps required, the UK has so far not agreed with the remaining EU Member States that the registration of a corresponding UK right: 

  • will be free of charge
  • will not require an application or administrative procedure on the part of the RCD holder; and/or
  • will not necessitate the right-holder requiring a correspondence address in the UK6.

However, the No Deal Guidance suggests that, in such circumstances, the process for securing a new UK right would incur “minimal administrative burden”, stating that RCD owners would be notified that a new UK right has been granted, and those not wishing to be granted a new UK right would then be able to ‘opt out’. Regarding a correspondence address, the current rules stipulate that applicants for UK designs must supply an address for service which is within the European Economic Area, and the No Deal Guidance suggests no immediate changes would be made to this requirement.

Although holders of a new UK right should not, in theory, receive additional protection over that afforded by the RCD, both the Draft Text and the No Deal Guidance seem to envisage that the corresponding or comparable UK right, whilst granted on the basis of an existing RCD, would not be entirely dependent upon the RCD's continuing subsistence and validity (unlike the current position with it being a unitary property right). 

Under the current draft of the Draft Text, it is suggested that, where a RCD is invalidated or revoked as a result of an ongoing administrative or judicial procedure as at the last day of the transition period, the UK is not obliged to declare the UK right invalid or revoked if the grounds for such do not apply in the UK7. Aside from the potential administrative burden that such assessment places on the UK Intellectual Property Office ("UK IPO") to decide whether grounds for revocation or invalid apply, this potentially extends the holder's UK right beyond the right granted to it by virtue of its RCD, as the 'corresponding' UK right could be allowed to remain registered beyond the invalidated or revoked RCD – potentially putting rights-holders in a better position, whilst preserving their original RCD priority. 

The No Deal Guidance does not make specific reference to assessments of validity through ongoing proceedings, but it confirms the 'independent' nature of the new UK right, clarifying that such a right would be “treated as if it had been applied for and registered under UK law”, despite arising from ownership of a pre-existing RCD. This would mean, amongst other things, that the UK right:

  • would be subject to renewal in the UK
  • could be licensed and assigned independently of the RCD
  • could form the basis for actions at the UK IPO’s Tribunal and in the UK courts

In this regard, the No Deal Guidance also suggests that provision would be made for cases involving RCDs pending before the UK courts when the UK leaves the EU. Strategy in ongoing, pending or contemplated litigation would also require careful consideration, given that as of 30 March 2019, pan-EU injunctions cannot be granted by the UK courts and, where granted by an EU court, would not apply to the UK. 

Practical tip – registered rights: As the UK has agreed to recognise a comparable registered right for existing RCDs, it may be overly cautious to apply for a UK registered design ahead of transition. However, as the UK has not agreed that its corresponding right shall be free of charge, nor made any promises in relation to waiving its right to increase renewal fees, applicants may wish to seize the opportunity to apply now, before the UK IPO has the chance to increase fees. Until negotiations are progressed further, holders of RCDs should be mindful that they may incur costs and/or need to take action in order to secure registered UK protection for the same design based on a corresponding RCD, which may include establishing a contact address in the UK.  

(ii) Pending registrations

Where an RCD application has been filed (and accorded a filing date) but not granted before the end of the transition period, it has been agreed that applicants will have the right to file an application in the UK for the same design in the nine months following the end of the transition period8. Such UK application shall have the same filing and priority date as the corresponding RCD application. The No Deal Guidance confirms these applications would be under the normal application process for UK registered designs. 

Practical tip – pending applications: Given the speed with which the European Union Intellectual Property Office ("EUIPO")  deals with RCD applications – sometimes within hours – it is not anticipated that this procedure will affect many applicants. Needless to say, filing RCD applications as far in advance as possible will give applicants a better chance of protection being granted before the end of the transition period so this issue does not arise. The No Deal Guidance confirms that applicants would be required to cover the costs of filing a new UK application, in accordance with the UK fee structure. Advance consideration should to be given to filing both EU and UK applications where it seems unlikely the RCD will be granted before 30 March 2019, as the UK fee structure may have changed by the end of this period.

International registrations designating the EU

It is agreed that the UK shall take measures to ensure that holders of IRDs pursuant to the Hague system, before the end of the transition period, enjoy protection in the UK for those international registrations9. Unlike for RCDs, the EU has not suggested the means by which protection of such will be achieved, presumably because it involves an organisation, the World Intellectual Property Organization ("WIPO"), which is not party to discussions.

Accordingly, it would seem that the UK would have two choices to implement continued protection for IRDs:

1. With WIPO's cooperation, for each IRD designating the EU, the UK would be added as a designated country of protection (where the UK is not already so listed). Although potentially the easier option, this would impose an administrative burden upon WIPO which it may not be prepared to take as it has had no input in the negotiations between the UK and the EU. 

2. Alternatively, the UK could treat IRDs designating the EU in a fashion similar as for RCDs – by granting a corresponding UK right, for the same design protected by the IRD. If the UK were to pursue this option, this would mean that the administrative burden would fall upon the UK IPO (rather than WIPO), and the issues set out above in respect of RCDs would apply. 

Unfortunately, the No Deal Guidance provides no more clarity on this topic, simply stating that “The government will work, including with [WIPO], to provide continued protection in the UK after March 2019 of… designs filed through the… Hague [system]… which designate the EU”, including practical solutions for pending applications. 

Practical tip: Again, as the UK has agreed that measures will be taken to ensure IRDs holders enjoy protection in the UK for granted IRDs, applying for an additional UK registered design (where possible) may be overly cautious. 

Practical tip – pending applications: It is unclear whether an applicant for an IRD will have the same right as an RCD applicant to file an application in the UK for the same design to preserve the filing and priority date. Unlike the swift RCDs registration process, IRDs can take up to six months from filing to registration; so it is likely there will be a greater number of IRD applications affected by any transitional provisions. 

In anticipation of Brexit, the UK government ratified its membership of the Hague Agreement as a contracting party effective from 13 June 2018, meaning that the UK is able to participate independently of the EU. After this date, applicants will be able to choose whether to include the UK as a separate designation of an IRD application. 

However, as a necessary consequence of designating the UK, the deferment period for publication of designs will be shortened from 30 months (permitted by EUIPO) to 12 months (in accordance with UK law). The alternative would be to file a UK registered design application within the longer deferment period, but there is a risk that the UK application could be frustrated or later invalidated if the design becomes known to the public during the deferment period, before the UK application can be filed. There may also be administrative and cost benefits (e.g. one renewal date and fee) and other motivating factors in determining whether to pursue both UK and EU protection through the Hague system or independent applications. 

Unregistered Community Designs

It is agreed that the holder of an UCD arising before the transition period shall become the holder of an enforceable UK right, affording at least the same level and term of protection as EU law10. Unfortunately, information relating to  UCDs is still limited, so there are still many questions in this regard. For instance: 

  • should the UK take this opportunity to consolidate or amend unregistered design right protection which, until now, has been a patchwork of different rights developed over a number of years? 
  • in view of the above, should continued protection for UCDs after the transition period be achieved by changes to current UK legislation dealing with unregistered protection – such as UK unregistered design right and copyright? 
  • beyond the expiry of UCDs arising before the transition period, should the UK have unregistered rights for protecting designs that are not already covered by rights already established in UK law (e.g. currently surface decoration is excluded from protection under UK unregistered design right)? 

The No Deal Guidance suggests that, in such circumstances, the UK would ensure that UCDs existing at the point of exit would continue to be protected for the remaining period of protection, and that in addition the UK would create a new unregistered design right in UK law – the "supplementary unregistered design right" – which would mirror the characteristics of UCD, so that designs disclosed after the UK exits the EU would be protected under the current UCD protection terms. 

The No Deal Guidance acknowledges that these proposals would likely to require amendments to existing legislation "to ensure that it functions effectively", in particular to accommodate both the "supplementary unregistered design right" and UK unregistered design rights, which will continue to exist for "designs first disclosed in the UK".

The Draft Text contains no discussion on the treatment of other unregistered rights granted to EU citizens by virtue of instruments of UK law, such as UK unregistered design right, the qualification criteria for which currently extends to EU citizens and corporate bodies11. Whether the UK will preserve or remove these rights is unclear, but the No Deal Guidance suggests that some changes will be necessary.

The No Deal Guidance also suggests that, as per RCDs above, provision would be made for cases involving UCDs pending before the UK courts when the UK leaves the EU. 

Outstanding issues

Other areas pertinent to the continuing protection of designs, on which the Draft Text and No Deal Guidance are entirely silent, include: 

  • disclosure in the UK (in relation to UCDs) – both from the perspective of whether this can defeat novelty, and whether this will constitute the trigger for UCD protection, by becoming "known" or "made available" in the Community
  • jurisdiction – which courts will be the preferred forum for claims relating to such rights; and
  • remedies – specifically enforcement, and recognition of any remedies granted, between jurisdictions. 

We will continue to provide updates on this topic throughout the Brexit negotiation period.

[1] "Community" referred to herein is to the European Community, so the rights are European-wide

[2] Article 50(1) of the Draft Text

[3] Registered Designs Act 1949 (as amended)

[4] Article 50(6)(b) and Article 50(4) of the Draft Text

[5] Article 50(6)(a) of the Draft Text

[6] Article 51(1), (2) and (4) of the Draft Text

[7] Article 50(3) of the Draft Text

[8] Article 55(1) of the Draft Text

[9] Article 52 of the Draft Text

[10] Article 53 of the Draft Text

[11] Section 217 Copyright, Designs and Patents Act 1988

How did we arrive at Brexit?

A truly unprecedented process began on 29 March 2017, when the United Kingdom invoked Article 50 of the Treaty for the Functioning of the European Union ("TFEU"), in response to the referendum held in June 2016. 

Never before had a Member State left the European Union. 

Since it joined in January 1973, the UK has operated under the fundamental principle that European laws are supreme and have precedence over, if not direct effect on, national law. Brexit therefore presents, both for the UK and the EU, an enormous legislative challenge in that it is estimated that the accumulated body of European law and rules comprises over 12,000 regulations on top of other forms of legislation.

In few areas will Brexit be more disruptive than for IP rights. There has been considerable harmonisation of IP rights and remedies across the 28 Member States. Moreover, European wide trade mark and design registrations have been created, the first truly multinational unitary property rights. 

Brexit will change all of this. 

At the time of publication, many questions remain about the possible impact of Brexit whether in the sphere of IP or otherwise. Certainly, before the publication of the 'agreed' text of the Draft Text on 19 March 2018, it had not been realistic to provide much by way of constructive advice and detailed guidance. 

Following its release, the IP team of Womble Bond Dickinson analysed the published Draft Text in order to produce this suite of briefing notes on key aspects of the likely implications of Brexit for IP rights and systems across the European Union, to inform our clients on what they will need to consider changing in their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. 

It should be noted the Draft Text confirms the intention of the signatories that, although the UK will leave the EU on 29 March 2019, there will be an extensive transition period lasting until 31 December 2020.