Out-Law / Your Daily Need-To-Know

Brexit and IP rights: impact on the fashion industry

Out-Law Analysis | 03 Mar 2021 | 3:33 pm | 6 min. read

Changes to the intellectual property (IP) rights regime stemming from Brexit should prompt clothes retailers operating in Europe to explore their options for ensuring continued protection for their brands and designs.

The end of the Brexit transition period, together with the finalisation of the EU-UK Trade and Cooperation Agreement (TCA), has resulted in a number of changes to IP laws which were previously harmonised across the EU – including those concerning trade marks, design rights and, to a lesser extent, copyright. 

Though unitary EU IP rights existing prior to the end of the transition period have been automatically converted to comparable UK rights, those with ongoing applications for EU IP rights, or that wish to register rights in the EU going forward, need to be aware of the these changes so they can make informed choices about the IP protection they need and ensure there are no gaps in that protection.

IP rights holders should also consider whether the changes around parallel trade between the European Economic Area (EEA) and UK will impact on their businesses.

Connor Iain

Iain Connor

Partner

Trade marks are fundamental to fashion brands to allow them to control the first sale of goods in a particular territory

Trade marks

Trade marks allow fashion brands to protect distinguishing features such as designer names, logos and slogans. This is a powerful brand protection tool.

Previously, holders of registered EU trade marks (EUTM) could enforce a single registered trade mark across the whole of the EU. Brands could also protect their trade marks in the UK and Isle of Man alone, through the use of a standalone UK registered trade mark.

Holders of EUTMs registered before the end of the transition period retain a EUTM that applies in the remaining 27 EU member states and were automatically given a comparable, but separate and independent, UK trade mark when the transition period came to an end. These comparable rights will retain their original filing date and priority. Whilst owners of EUTMs did not need to take any action, the comparable UK trade mark will require a separate renewal and fee in the future.

Businesses with ongoing applications for EUTMs that were not registered before the end of the transition period, and that want to retain filing dates and priority, have until 30 September 2021 to apply for equivalent rights in the UK. Those that want to register a new EUTM going forward can make an application to the EU Intellectual Property Office (EUIPO) at any time.

Supply of goods between the EEA and UK

The real significance of a EUTM is in its role as part of the EU's single market that among other things allows goods to move freely between member states.  At the same time, goods entering the single market from third countries. including the UK, are subject to border checks and controls. 

Trade marks are fundamental to fashion brands to allow them to control the first sale of goods in a particular territory and, in certain circumstances, to control sales channels such as selective distribution networks. "Parallel trade" is term applied to the activities of resellers of goods who seek to make a profit from the difference in resale prices in particular territories. This is where trade marks and the TCA come in.

Goods first placed on the UK market no longer benefit from exhaustion of IP rights in those goods within the EEA. This will benefit fashion houses that want to protect against the resale of their UK goods in the EEA by third parties. For now, parallel imports from the EEA to the UK are not affected and therefore goods purchased in the EEA can be imported to the UK without consent of the IP rights holder. However, a formal consultation on exhaustion of IP rights and parallel trade is due to be held by the UK government in early 2021, so the current position may change.

Any benefit that might arise for the UK from the current position is likely to be limited as most fashion items are not made in the UK. Only goods originating in the UK are subject to preferential treatment under the TCA. That means that a lot of fashion items that are exported to the EU do not enjoy tariff-free access.

Design rights

Fashion brands can protect their designs – encapsulated in sketches and prototype creations – through registered and unregistered design rights.

Before the end of the transition period, design rights known as registered Community designs (RCD) and unregistered Community designs (UCD), were enforceable across the whole of the EU. Since the end of the transition period, RCDs and UCDs no longer provide protection in the UK but, as for EUTMs, holders of RCDs and UCDs existing before the end of the transition period now own comparable but independent rights in the UK.

As for EUTMs, businesses with ongoing applications for RCDs that were not registered before the end of the transition period have a nine month grace period within which to register their rights in the UK, expiring on 30 September 2021.

Unregistered design rights are particularly important for the fast-fashion sector, where new designs are being created continuously and rights arising automatically without the need for registration are crucial.

Because UCD protection lasts for three years from the date of its first publication in the EU, the new comparable UK continuing design will provide protection for the remainder of the original three year term.

Owners of designs created after the end of this transition period will be able to protect their designs in the UK via two types of unregistered design rights. Fashion brands will need to think carefully about which one to seek protection under due to the differences in duration and type of protection for designs.

Connor Iain

Iain Connor

Partner

It remains to be seen whether first disclosure on the internet, through social media or live streaming of catwalk shows, is sufficient to gain the maximum protection

Designers can protect their designs under a UK unregistered right. This is an existing UK right which protects 3D designs from the date of their creation for a maximum of 15 years. This is now only available to designers from a category of qualifying countries, to which EU member states, for the moment, do not belong.

The UK has introduced a new supplementary unregistered design right (SUD) to replace the European UCD which recognises 2D as well as 3D designs and protects them for a three year period. Again, this is only available to designers from a category of qualifying countries, not including EU member states. Under the SUD regime, a design is only protected in the UK and protection arises after first disclosure in the UK.

The differences between first disclosure requirements under the new UK SUD and UCDs mean that the owners of new designs must carefully consider the location in which their designs are first disclosed. If first disclosure takes place in the UK, designs will automatically be protected by the UK SUD and will not be eligible for protection under the UCD. Designs first disclosed in the EU will have UCD protection but will not be eligible for protection under the new UK SUD.

The consequence of simultaneous first disclosure in the UK and EU is not yet known but fashion brands are advised to launch their collections on the same day in the UK and EU. It remains to be seen whether first disclosure on the internet, through social media or live streaming of catwalk shows, is sufficient to gain the maximum protection. This is unchartered territory and the consequences for unregistered design protection under the new regimes are yet to be explored fully.  

Copyright

Copyright is a national right that protects forms of artistic expression. As such, it is an important IP right for businesses in the fashion industry as a way of protecting core elements of their brands such as logos and sketches of designs.

International treaties on copyright govern protection for copyright works between the UK and EU. Therefore, copyright owners should not see any significant changes in the scope of copyright protection now that the Brexit transition period has expired.  

However, the TCA states that the UK and EU should each ensure that designs, registered and unregistered, should also be eligible for protection by copyright from the date the design was created or fixed. This suggests that copyright protection in the UK may be extended to designs that would not have previously benefitted from this type of protection. This could be significant for the UK fashion industry and developments in this area should be monitored closely.

Certain EU rules which govern e-commerce, and which touch on copyright, have been "retained" in the UK post-Brexit and, continue to have effect domestically.

Co-written by Alice Pringle of Pinsent Masons.