Has Brexit Already Impacted Brand Protection?

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For the first time since the economic crisis of 2008-2009, filings of EU Trade Mark and EU Design applications by applicants in the UK have fallen, suggesting that the consequences of Brexit are now being recognised and considered by UK businesses.

Other than a drop in 2008-2009, filings of EU Trade Mark applications have risen steadily year-on-year since 2002.  However, the total number of EU Trade Mark applications filed by UK applicants in 2016 fell to 11,643, compared to 12,514 applications filed in 2015, a decline of nearly 7%.  The filing of EU registered design applications by UK applicants dropped at a lower rate, around 2%, but again the steady increase in filings that had been seen before then has now come to an end.

The decline in trade mark filings is particularly notable in the fields of fashion (a drop of 13%), financial services (a drop of 11%) and food and drink (a drop of 8.5%).  Filings in relation to pharmaceuticals and healthcare saw a lower drop of just under 7%, with GlaxoSmithKline being the top UK filer of EU Trade Marks irrespective of industry sector. Conversely, filings in the fields of alcoholic drinks and tobacco increased slightly during 2016.

The decline in EU filings may be indicative of a degree of increased pessimism in the economy in general.  On the other hand, the reduction in EU applications might suggest that UK businesses may no longer perceive the EU as the most obvious and accessible export market, and that other countries may now offer more attractive opportunities for export.  This view is supported by statistics from the UK Trade Marks Office, which shows that in August 2016 the filing of national UK applications was over 30% higher than in the August of the previous year.  A rise in national UK applications, coupled with a drop in EU applications, suggests that UK businesses are focussing on their home market rather than exports to the EU.

Intellectual property rights, and trade marks in particular, remain vital for maintaining and developing a business, especially in times of economic uncertainty.  In addition to providing additional sources of income through licensing and franchising opportunities, trade marks provide a means of preventing competitors from unlawfully taking advantage of the hard-won reputation acquired by a business.  As such, registered trademarks can protect the existing customer base of a business, making it more difficult for competitors to increase their market share at the expense of the market leaders.

Furthermore, IP rights can also be invaluable in securing additional funding.  Not only can IP rights be used as security for debt financing, it is now common for registered IP rights to be an essential requirement for equity finance and grant funding.  Such financing may well be essential if a business is to grow and find new markets, particularly if the EU is no longer the easiest and most accessible target for exports.

It remains to be seen if the downward trend of EU applications filed by UK applicants will continue, and if indeed UK businesses will find export markets beyond Europe, or if the downturn merely reflects the current uncertainty as to the terms of the UK’s exit from the EU.  In any event, traders in the UK should continue to ensure that their intellectual property rights are protected in relation to both the geographic areas and the product ranges of commercial relevance to them.  Assuming that the EU continues to be an important export market in the future, UK businesses will still require protection for their IP in Europe and the EU Trade Mark system remains a highly cost-effective means of securing such protection, even though separate national protection in the UK will be required alongside such EU rights.

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