The Global Innovation Index 2016, a report co-published by Cornell University, INSEAD and the World Intellectual Property Organization, placed the UK third among the 128 countries featured in the study. It is becoming increasingly clear to business leaders and policymakers in all corners of the world that innovation is the key driver of competitive advantage and economic prosperity. In its synopsis of the UK, the report identified “creative outputs” as one of the country’s key strengths. Let’s not forget, creativity breeds innovation.
Looking broadly at intellectual property (IP), innovation has traditionally been associated with patents and technology, but there is a real nexus between brands and innovation, in the sense that brands can stimulate innovation and, at the same time, pave the way for innovation to take hold.
No doubt, innovation, driven by brands to remain competitive, is not only beneficial for companies and the national economies in which they operate, but for consumers too. Innovation leads to new products and services, new technologies, greater efficiencies, and to solutions to all sorts of problems.
However, it is critical that companies of all sizes, including startups and small businesses, do not overlook the role that their trademarks, which serve to protect both their brands and their customers, play in the shopping aisles and in their ability to remain innovative. Trademarks not only enable consumers to make quick, confident and safe purchasing decisions, they promote freedom of choice and, in doing so, encourage vibrant competition in the marketplace.
If it is not navigated carefully, Brexit could undermine the ability for UK brand owners to leverage their trademarks effectively by limiting their market access. The impact of Brexit remains uncertain and is largely dependent on the terms of departure that the UK government is able to negotiate with the European Council. Prime minister Theresa May has said the UK leaving the EU also means leaving the single market and that a new free trade agreement with the EU will be sought. Such agreements usually contain provisions on IP rights.
For trademarks, we do know that the system of registration and protection is unlikely to change until the UK actually leaves the EU. Following Brexit, however, there may be a number of changes for brand owners. For one, the UK will no longer be part of the harmonised European Trademark Regime. As a result, EU trademarks will no longer offer protection in the UK. This will be a big problem for any business having a registered EU trademark, but no corresponding UK registration covering goods or services sold in the UK, particularly where that business wants to continue to use its trademark in the UK after Brexit.
The UK government is considering various options to deal with the gap in trademark protection brought about by Brexit. This includes a possible transitional system in which EU trademarks would be converted to UK trademarks that offer protection in the UK only. It is unclear how this system would operate. The conversion could kick in automatically or trademark owners could be required to make a separate application for which there may be an associated fee.
The need for businesses to enter the marketplace, and to register and use their trademarks, will remain necessary no matter how the political landscape may change. In the two years of negotiations ahead, the UK government should treat IP as a priority issue and work to shield brand owners from the potential, negative impacts of Brexit. This will support innovation and allow the UK economy to remain competitive in the post-Brexit world.