Law Report: Legal consequences of Brexit for the fashion industry

On 24 December 2020, after intense negotiations, the EU and the UK signed the Agreement on the New Partnership which comprehensively regulates their future relationship. With the UK’s provisional withdrawal from the single market and the customs union on 1 January 2021, Brexit is formally completed, subject to the approval of the European Parliament.

Since the British "Leave" in 2016, Brexit has been a source of concern, especially for internationally operating businesses in the fashion industry. Initially, there was the fear of a "no deal Brexit". Now, the concerns are about the foreseeable effects that Brexit will have. These include, for example, the end of the free movement of persons and goods , customs formalities or new customs duties on goods manufactured in Asia and delivered from the UK to the EU (so-called re-exports).

But what about the "crown jewels" of most fashion companies, i.e. their trademarks and designs? Have “EU trademarks” (European Union trademarks) and "EU designs" (registered community designs) lost their protection in the UK? Is there a need for securing these rights?

Let’s see:

Registered EU trademarks and EU designs: one becomes two

Registered EU trademarks and EU designs have ceased to be valid in the UK on 1 January 2021. However, such rights have automatically turned into national UK trademarks and designs (so-called "comparable trademarks" and "re-registered designs"). The UK Intellectual Property Office (UKIPO) has simply converted all registered EU trademarks and EU designs into UK national trademarks and designs. This required neither an application nor the payment of a fee. The “new“ rights retain their filing and priority date and any applicable seniority claims. Future fees, however, e.g. for renewal, will have to be paid "twice”, for the EU and the national UK rights. There will also be changes with regard to the respective authorized representatives after the expiry of certain transitional periods.

The following picture reflects the situation for EU trademarks:

Proprietors of comparable UK trademarks or re-registered designs who do not wish to remain proprietors of these UK rights may declare to “opt out” of the protection in the UK.

International trademark and design registrations – international becomes national

Contrary to what had been considered originally, international registrations designating the EU will be treated in the same way as "regular" EU trademarks and EU designs registered with the EUIPO. Hence, they will also become national UK trademarks and designs. The option to “opt out” exists, too.

Pending applications for EU trademarks and EU designs as well as international registrations: conversion only if applied for

Proprietors of EU trademark and/or design applications pending on 31 December 2020, that were not yet registered and published on that date, may convert those applications into UK trademark or design applications, while retaining their EU filing and priority dates (and any UK seniority date). In order to do so, corresponding applications with the UKIPO have to be filed no later than 30 September 2021.

Licenses, security rights, assignments and transfers: everything is optional

For many fashion houses, licensing is essential to their business. Therefore, the clauses of the corresponding license agreements are of utmost importance. Licenses granted for EU trademarks or EU designs with effect in the UK, whether or not previously recorded in the EUIPO register, continue to be effective in the UK unless the respective agreement provides otherwise. Licenses recorded in the EUIPO register will not automatically be recorded in the UK register. Any license agreements concluded prior to 1 January 2021, whether or not previously recorded in the EUIPO register, may be recorded in the UK register throughout the year 2021. The same rules apply to security interests recorded in the EUIPO register.

If an EU trademark or a an EU design had been assigned or transferred prior to 1 January 2021 and the new proprietor was not recorded in the EUIPO register, a request to record the new proprietor may be submitted to the UKIPO. The new proprietor will then be entered in the UKIPO register.

Pending infringement proceedings: remains to be seen

For court proceedings initiated prior to 1 January 2021, the provisions on the competence of courts provided for in the EU trademark regulation and the EU design regulation will continue to apply in the UK as well as in the remaining EU member states.

This means that infringement proceedings initiated before 1 January 2021 will continue to run. The fact that the EU trademark and design courts in the EU member states and the UK retain their jurisdiction does, however, not answer the question on the potential legal scope of their decisions. As there is no provision governing this aspect, it is not clear what scope corresponding decisions will have. In particular, it does not seem to be clear yet whether UK courts can rule on an infringement of an EU trademark or EU design with effect for the EU-27 and revoke or declare invalid an EU trademark or design. Also, the question of whether an EU trademark or design court in the EU-27, even though it has jurisdiction over the territory of the UK, can take a decision finding infringement or non-infringement of a new national UK trademark or design, is still unresolved.

TO DOs?

What do owners of EU-wide protection rights need to bear in mind? Owners of registered EU trademarks and EU designs and of applications for such rights should review their trademark and design portfolios and, if necessary, realign their IP protection and strategy.

It should also be checked whether agreements relating to EU trademarks and EU designs (e.g. licensing agreements, security rights, etc.) apply to the UK. If necessary, contractual arrangements will have to be found to take account of the UK's withdrawal from the EU. This also applies to co-existence agreements.

This article is for information purposes only and does not constitute legal advice. Written by Dr Thomas J. Farkas, LL.M. (London), and Dr Julia Traumann, Eversheds Sutherland (Germany). Thomas and Julia both focus on advising national and international clients in all areas of IP Law (e.g. trademarks, designs, copyright, unfair competition) and related commercial law. Their sector expertise includes FMCG and fashion.

Photo credit: Pexels, Dominika Gregušová