Brexit update: A backward step in customs enforcement of intellectual property rights?


Current situation

A key battle for IP rightholders is to prevent the flood of counterfeit and pirate goods entering the EU market each year. EC Regulation 608/2013 (the “Customs Regulation”) provides mandatory rules and common procedures which Customs authorities must use to facilitate the enforcement of IP rights. IP rightholders are able to make an application for action (an “AFA”) to request that Customs authorities take action to search and detain goods suspected of infringing their rights. AFAs can be submitted to an EU Member State requesting that either:

i) the Customs authorities of that Member State take action (a “National Application”); or

ii) the Customs authorities in that Member State and one or more other Member States take action based on Community rights (e.g. an EU trade mark or a Registered Community Design) (a “Union Application”). A Union Application is therefore an effective way of involving Customs authorities throughout the EU.

The Customs Regulation has provided an effective and cost-efficient tool for the enforcement of IP rights in Europe. In 2016, approximately 41 million fake or counterfeit articles were seized at the EU’s external borders, valuing €670 million. 77% of these were destroyed or were subject to proceedings to establish infringement or criminal activity.

Separately, under UK law rightholders can apply to the UK Customs authority under Section 89 of the Trade MarksAct 1994 (the “TMA”) and Section 111 of the Copyright, Designs and Patents Act 1988 (the “CDPA”) to request that they take action in relation to goods infringing trade marks and copyright respectively.

There are a number of disparities between the UK and EU Customs regimes. TMA Section 89 and CDPA Section 111 do not apply to goods for which action can be taken under the Customs Regulation. However, the UK regime does apply to parallel imports, whereas the Customs Regulation does not. Further, the current UK regime requires that rightholders state in their application notice the time and place that the goods are expected to arrive in the UK. This is not a requirement under the Customs Regulation (although details should be provided if known).

Brexit and the Notice to Stakeholders: what does it say?

Upon the UK’s withdrawal from the EU (set for 30 March 2019), all primary and secondary EU law – which includes the Customs Regulation – will cease to apply to the UK. However, this is subject to any transitional agreements that may be contained in a possible withdrawal agreement.

The European Commission last month issued a Notice to Stakeholders concerning the Customs Regulations. It states that, as of the withdrawal date:

  1. Union Applications can no longer be submitted to UK Customs.
  2. Union Applications submitted or granted in one of the remaining 27 Member States remain valid in the EU-27 (but not in the UK) even if they list UK Customs as one of the Member States in which action is tobe taken.
  3. Union Applications submitted to and granted by UK Customs are no longer valid in the EU-27.

This is potentially a big backward step for IP rightholders who have chosen to file Union Applications in the UK, which will not just be UK businesses, but many overseas businesses too.

It is hoped that as part of the ongoing negotiations between the UK and the Commission, agreement will be reached along similar lines to the current (“subject to contract”) agreement that existing EU trade marks and Registered Community Designs will automatically convert to comparable UK national rights on withdrawal. Existing Union Applications filed in the UK could therefore also automatically convert into UK National Applications covering the newly converted UK rights. For this to be possible, however, it is likely that the UK would first need to legislate in order to provide an equivalent UK Customs regime because, as mentioned above, the respective regimes are not identical.

The opening wording of the Commission’s Notice is similar to its previous notice regarding EU trade marks and Community Designs, so the fact that an agreed position has subsequently been reached concerning the automatic conversion of EU rights to comparable UK national rights gives us some hope that a similar agreement can be reached in due course as described above.

If that does not happen, however, it will be necessary for any business wanting to obtain protection in the UK and the EU-27 to file a notice in the UK under TMA Section 89 and/or CDPA Section 111 and a Union Application in an EU-27 country.

Simon Clark


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