Trade Marks (Amendment etc.) (EU Exit) Regulations 2018

Lord Adonis Excerpts

Monday 14th January 2019 Grand Committee

The framework for EU trademarks is set out in EU regulation 2017/1001, which falls within the definition of retained EU law under the withdrawal Act and will be revoked its entirety in the UK on exit day.

[Lord Adonis (Lab)]

My Lords—

[Lord Henley]

My Lords, I am going to complete this sentence and then I will give way to the noble Lord.

The instrument ensures that replacement domestic rights will be provided to those who own EU trademarks on exit day. It gives certainty and confidence to businesses who rely on their trademark rights in the UK. I will now give way to the noble Lord.

[Lord Adonis]

I am grateful to the Minister. He referred to the fees for filing applications, the very large number that will be pending and those which will need to be converted. An issue of real concern that has been raised by those who have looked at the regulations is what those fees will be and whether the fees for filing converted applications will be the same as the normal trademark application fees. Can he tell the Grand Committee what the position will be in terms of the fees that will be charged?

[Lord Henley]

My Lords, again, I was going to deal with that at the end. There will in fact be no costs to business associated with our creation of new UK rights. However, because the UK comparable right will be independent of the EU trademark, there will be a charge for businesses in relation to future renewal. Businesses that wish to maintain their protection in the UK will need to renew their UK-comparable trademark at an average cost of some £300 for a registration period of 10 years. Applications for EU trademarks that are pending but not yet registered at exit day will need to be examined under UK law. The normal UK fee, whatever that is, will therefore apply to those applications. We have committed to respect the relevant filing dates for those applications under this instrument.

[Lord Henley]

My Lords, if the noble Baroness will be patient, the trademark is renewed every 10 years. When it is renewed, a fee will be paid. That does not change.

The instrument provides that these new UK rights will be fully independent UK trademarks which can be challenged, assigned, licensed or renewed separately from the original EU trademark. Such new UK trademarks will, however, retain their original EU filing date and therefore any other relevant dates that were filed as part of the original application.

Finally, there are miscellaneous amendments to the Trade Marks Act 1994 and the Trade Marks Rules 2008 to reflect the fact that the UK will no longer be a member state or a member of the European Economic Area.

In conclusion, these regulations are a small but vital part of ensuring that this part of the intellectual property system continues to function if the no-deal outcome arises. I hope that on this occasion, noble Lords will support the draft regulations. I commend them to the Committee.

[Lord Adonis]

Before the noble Lord sits down —

[Lord Henley]

I have sat down.

[Lord Adonis]

He has not sat down, in the sense that he is perfectly capable of answering a question before he concludes his remarks.

He again has not dealt with the question of consultation, which as he knows is of huge concern to the Grand Committee. We would be grateful if, before we come to our debate, he could set out what consultation has taken place, so that we can discuss whether we think that consultation has been adequate.

[Baroness Bowles of Berkhamsted (LD)]

One small point struck me, not having looked at this before we commenced proceedings. I fully understand the transfer of the pending applications and the ability to file a new application and have it allocated the earlier filing date that the European trade mark had. I do not see any legal difficulty with that, but I wonder if there is a legal difficulty in allowing that to claim the priority date of the EU trade mark, in the sense that it would operate under the Paris Convention, which we and many other countries are party to. I used to take great pleasure in reminding the EU that the Paris Convention of 1883 predated the EU treaties and that they sometimes could not do things. But I wonder whether there has been any advice on that, because there is a discontinuity.

To take a parallel example, in the United States, if you file a continuation in part, there are careful rules so that you can ensure that the priority claim can go all the way through in a continuous way. I wonder whether, through the changing from a European office to the UK office, there is a discontinuity here that would mean that priority date was challengeable. If there was a later priority date UK-only national application from an applicant not from the United Kingdom but from another country that was party to the Paris convention, would there be a clash of rights? It is a question that should appeal to lawyers looking at these things. I cannot answer it without having a longer think, so I am asking the Minister whether he can advise me what advice he may have had on that.

[Lord Clement-Jones (LD)]

My Lords, my noble friend has asked an important technical question, given her long-standing expertise in this area. As with the patent statutory instrument, this does appear to be a solution for trademarks, or to take advantage of the European community trademark. It appears to be a solution devised not just for a no-deal situation, but with a deal or the transition period in mind as well. Again that gives this particular statutory instrument a greater significance because it might be there for some considerable period of time in the event that a deal was reached. Moreover, as the noble Lord, Lord Adonis, has pointed out, similar issues regarding consultation and the impact assessment arise in connection with this statutory instrument as well.

It was interesting to hear what the noble Lord, Lord Deben, had to say about the difference in wording between the different Explanatory Memoranda. Asking a,

“small group of trusted individuals with expertise in trade mark law”,

almost means that the question is asked of people who are not going to give you the wrong answer.

Quite frankly, the really important aspect of this is the impact on business. On the impact assessment, the homework has been done in such a way that it answers the question by bringing the impact under £5 million. I cannot believe that that will be the total cost to business once you have added together all the issues such as the legal advice that will need to be taken and the red tape involved. I know this is a solution that is designed to be constructive but there are inevitably going to be costs. Frankly, the importance of brands being what it is, the actual costs involved to business are going to be quite high. I cannot believe that the figure is not going to be higher than £5 million.

The same issues apply to this statutory instrument as much as they do to some of the earlier ones. However, there are other technical questions. My noble friend has asked one set about the priority date, but another important question is which court will have jurisdiction if the validity of the original EU trademark is challenged in the future. We cannot leave business in a state of uncertainty. Then of course the UK trademark comparable right will be a stand-alone right. Does that mean that in those circumstances an applicant will have to challenge a trademark’s validity both in the UK and in the EU? What is the answer to that? One right derives from another. As a result of that, does someone wishing to demonstrate the invalidity of a trademark have to go to two jurisdictions? If that is not an additional burden on business, I do not know what is.

There are a number of questions to be asked here. We have come back again to the circularity of a quick fix that could have long-term consequences and where the procedure, process, consultation and impact assessment have been grossly unsatisfactory.

[Lord Adonis]

Before the noble Lord sits down, he has great familiarity with the sector, as does the noble Baroness, Lady Bowles. Does he think there are similar concerns in the sectors affected to those referred to earlier by the noble Lord, Lord Warner, that organisations and companies intimately affected by these regulations have not been consulted because they do not count within the,

“small group of trusted individuals”,

referred to in paragraph 10.1 of the Explanatory Memorandum?

[Lord Clement-Jones]

I cannot answer that question. I think that these have been drawn up in an attempt to be constructive. I do not think the initial thought was that these were going to create difficulties for business. The trouble is that at the end of the day any business, when it is looking at its intellectual property, is going to prefer to stay in the EU rather than come out, so there is a fundamental aspect of this which is not business-friendly. I can see what the noble Lord is driving at, but this measure is an attempt to be constructive in circumstances where it is very difficult to get a decent result.

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[Lord Henley]

My Lords, I will try to be brief and as always I will offer to write to all appropriate noble Lords. I think the noble Lord, Lord Adonis, knows what I mean by appropriate.

[Lord Adonis]

And trusted.

[Lord Henley]

Appropriate. The noble Lord will be aware that I trust all noble Lords implicitly and explicitly.

On consultation, I again make clear that the IPO has been engaging with businesses on the implications of exit, and in particular on trademarks, since the referendum result. It has also consulted with specific stakeholders on the technical detail of this instrument. It prefers to fully consult whenever possible but, due to the unique nature of EU exit and sensitivities around negotiations at the time of drafting, we felt the best course on this occasion was to limit consultation.

The noble Lord, Lord Clement-Jones, asked what happens if there is a deal and what the point of the regulations are. I repeat that the regulations will only come into force in the event of no deal. If we secure a deal with the EU, the provisions on intellectual property in the withdrawal agreement will come into effect, and that means EU trademarks will continue to have effect in the UK at least until the end of the transitional period. During the transitional period, it is likely that revised regulations will be drafted which will take into account the result of further negotiations reflecting the future economic partnership.

I will touch on possible costs. The noble Lord, Lord Clement-Jones, doubted that the costs could be less than £5 million. The annual revenue cost has been estimated at between £2 million and £2.7 million, based on a 60% renewal rate in the UK between 2008 and 2017. I would prefer to write to the noble Lord in greater detail on that.

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[Lord Warner (CB)]

The noble Lord made an interesting remark a few moments ago about the fact that he had chosen to limit the consultation. I wonder, after the discussions this afternoon and last week, on what basis the Government are operating on consultations? They are clearly not operating on Cabinet Office guidance on consultations. What guidance has actually been given to civil servants on carrying out consultations on behalf of Ministers? I think that the Grand Committee would like to see the basis that the Government are using for consulting on these regulations.

[Lord Adonis]

Who are the trusted individuals?

[Lord Warner]

With due respect to my noble friend, I am not so worried about that at the moment. I may become worried when I see the basis on which the consultations are taking place. I think the Grand Committee—and I in particular—would like to see what system the Government are using for consulting on these regulations.

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[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

The Question is that the Grand Committee do consider the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018.

[Lord Adonis]

Not content.

[Baroness Crawley]

Not content.

[The Deputy Chairman of Committees]

My Lords, I must remind the Grand Committee that a single call of “Not content” has the effect of negativing the Motion. With that in mind, I put the Question again.

[Lord Adonis]

Not content.

[Baroness Crawley]

Not content.