In the coming months, establishments who will undertake mergers and acquisitions should be aware of the potential influences on IP right posed by the end of transition period of Brexit. 

Trademark

During the transition period, the EU trademarks will remain valid in British. However, when the transition period will be ended on 31st December 2020, several changes in The Brexit Deal will pose influences on trademark proprietors. 

Of which, the most important change is Britain will no longer be bound by European Union’s Trademark Regulations after the end of the transition period. EU trademarks will no longer be protected in Britain. As a result, Britain will no longer belong to EU trademarks or covered by international registration which are designed EU. However, a kind of “Cloning” right will automatically provide proprietors with 2 kinds of registered trademarks, i.e. one covers other members of EU, another one covers Britain. Similarly, the international registration designed EU will also apply to this regulation.     

When the acquisition and merge business related to EU trademarks will be completed after the end of the transition period, both parties (i.e. seller and buyer) shall claim or provide details regarding the “Cloning” right. 

Industrial Design

Influences on Community Design are similar with EU trademarks. Regulations on Community Design divides design rights into unregistered community design (RCD) and registered community design (UCD). RCD and UCD will no longer be protected in Britain will be the biggest impact after the end of the transition period. However, proprietors of RCD or UCD will automatically be proprietors of relevant industrial design in UK. 

Buyers should note that applications for RCD and pending EU trademark at the date of Brexit could not be cloned automatically, the applicant could file corresponding application to UK within 9 months. Once the trademark or RCD is subsequently licensed in Britain, the applicant shall use it positively in Britain, otherwise, applicants will be at the risk of losing their rights. After the end of transition period, the EUIPO will no longer judge the reputation of EU trademarks solely on the basis of the use in Britain, reversely, UKIPO is most unlikely to recognize a trademark’s reputation on the basis of the use outside Britain.

Patent

Patents are largely unaffected by Brexit. The Brexit will not affect currently existing EU patent system which is set up based on European Patents Convention (EPC). Establishment of EPO and management EPC authorized by EU patent are treaties among parties but not the part of EU legislation. 

Similarly, the PCT which allows applicants to file patent applications in several designed jurisdictions, is not part of EU legislation, will also not be affected. 

Thus, after the Brexit, the national patent granted by UKIPO and EU patents to be granted into effect by EPO will remain in place. 

More importantly, Britain still be the member of Paris Convention, this convention is the basis for the global protection on intellectual property rights. This means applicants who apply for protection on patents in UK still can claim the priority of the application of the patent in other countries/regions and vice versa.  

Domain Name

Domain name means the website where a company can obtain the operation right via a domain name registrar. Due diligence on domain names has become more difficult since the introduction of GDPR, because GDPR led to the removal of details of domain name operators from the public area, furthermore, to end the practice of independent searches. As a result, buyers can only rely on the asset information of the domain name disclosed by the target company. 

Ownership of Britain organizations with “.eu” domain name will be influenced by Brexit, because UK will become the “Third Country” after it left EU, and will influence citizens and institutions to register, hold and update the domain name with “.eu”.

During the transition period, European Commission has confirmed that the EU supervision frame on the top domain name “.en” will remain applicable in UK. However, after the transition period, regulations on EU domain name will no longer be applied to UK unless new agreement allows to remain the current existing use and application rights. 

The Britain organizations which are established in UK other than in EU, and non-EU citizens live in UK will not register or renew domain name with “.eu”, their domain names will be revoked. Furthermore, Britain registered trademark will no longer offer domain names with “.eu” with protection on registration, and agreements with suppliers of “.eu” domain names cannot solve disputes through UK law system. 

Other results related to intellectual property right posed by Brexit

Buyers should also review the intellectual property right license agreement signed by the target company. With the background of Brexit, the definition of “territory” in the license agreement of intellectual property right will pose important influence, because after the expiration of the transition period, if the “territory” will be defined as EU, then, it will no longer include UK. 

Payment of license fee will be influenced by the Brexit, because payments on the basis of “net sale amount” shall be paid extra tariff.