How Will Brexit Process Resolve Japan’s Concerns About IP In The UK?

Japan’s worries about how intellectual property registered in the EU by companies operating in the United Kingdom will fare after Brexit are potentially valid but depend on how the UK’s exit from the EU is handled, according to a UK IP attorney following the issue. One question will be whether, and how, EU trademarks and designs can be re-registered in the UK.

The Japanese government set out its position in a 2 September 15-page statement, “Japan’s Message to the United Kingdom and the European Union.” The letter is available here.

“Uncertainty is a major concern for an economy; it evokes a sense of anxiety, causing volatility in markets, and results in the contraction of trade, investment and credit,” the government said. “What Japanese businesses in Europe most wish to avoid is the situation in which they are unable to discern clearly the way the BREXIT negotiations are going, only grasping the whole picture at the last minute.” It urged the UK and EU to “regain the confidence of the world” by making the process more predictable and clear as soon as possible.

Many Japanese firms are concentrated in the UK, with nearly half of Japan’s direct investment intended for the EU in 2015 flowing to Britain, the statement said.

Japan listed several “requests directed at the UK and EU,” one of which is the continued protection in the UK of registered Community designs and trademarks. The government wants IP to be uniformly protected in both regions in order not to create disadvantages for the rights holders.

“If the UK’s withdrawal had an impact on the rights and effects of registered Community designs and EU trademarks, this could generate disruption,” the statement said.

Japan “Potentially Has a Point”

On leaving the EU, the UK will have to resolve the questions surrounding EU trademarks and designs, Hogan Lovells (London) IP attorney Sahira Khwaja said in an interview. Both rights are granted by the EU Intellectual Property Office. Once the UK Brexits, EU trademarks would ordinarily not apply, she said, adding that there is an argument that they would continue to apply under UK law, but that is unlikely.

One question is whether EU trademark rights could be grandfathered into UK law after the date of Brexit, and there are several different ways that could done, said Khwaja. But this itself leads to questions about which process to choose and how long it would take, as well as whether EU rights would automatically take effect in the UK or have to be re-examined, she said.

While EU trademarks could be re-examined, doing so with EU-granted design rights would be very difficult, said Khwaja. Trademarks must be distinctive and identified as belonging to a particular business, but they don’t have to be novel, she said. Designs, however, must be new since the rights holder is given a monopoly in the design of an article. Allowing companies to re-register EU designs in the UK would dilute that principle of novelty, said Khwaja.

If the guiding vision is to ensure that no rights are lost through Brexit, the question is how to achieve that without creating a lack of uniformity or differential treatment, Khwaja said. The Brexit process may not lead to that, but it’s almost certain that someone will find a “wrinkle” that sparks a lawsuit, she said.

Japan “potentially has a point” but its IP rights concerns hinge on how the UK’s exit is carried out, said Khwaja. That issue is one that the UK Intellectual Property Office will have “in the forefront of its mind,” she said.