As we reported in our last issue, on 19 March 2018 the EU and UK published a draft Withdrawal Agreement indicating the points which had been agreed so far at the negotiating level. This was updated on 19 June 2018. Although strictly ‘nothing is agreed until everything is agreed’, the draft gives reasonable certainty as to the position of holders of EU-wide intellectual property rights after Brexit with a few points still outstanding. It is disappointing (but predictable) that the Agreement focuses on the exit arrangements, on dismantling the current system, rather than on building future co-operation. Negotiations on the future relationship between the EU and the UK generally are taking place in parallel to finalising the Withdrawal Agreement with a view to agreement by October 2018. The extent to which these will focus on IP issues is unclear.
What has been agreed so far?
EU law will continue to apply in the UK until the end of the transition period on 31 December 2020, and EU-wide unitary IP rights will continue unchanged until then. This includes EU trade marks (EUTMs), Community registered designs (CDRs) and Community plant variety rights (CPVRs). At the end of the transition period holders of these rights will be entitled to comparable, national UK IP rights – e.g. a UK trade mark. These national rights will not be subject to re-examination. Outstanding points in the negotiations include whether they will be automatic or subject to application by the right holder and who should bear the cost of the national registration. We believe, however, that the UK Intellectual Property Office will not let a situation arise in which the EUTM owner bears the cost.
Outstanding applications, invalidity and revocation actions
If an application for such an EU right is outstanding at the end of the transition period, the applicant will have the opportunity to apply for a UK national right preserving the filing and priority dates of the EU application. Where EU invalidity, revocation or similar proceedings are underway before the end of the transition period, a subsequent ruling will normally apply to the UK right also.
Non-use in the UK
A positive point for EU trade mark owners is that UK trade marks granted to replace EUTMs will not be at risk of revocation due to non-use in the UK prior to expiration of the transition period. This appears to give the trade mark owner a five year period in which to establish the mark in the UK.
Unregistered EU IP rights
Those holding unregistered Community design rights and database rights at the end of the transition period will be entitled to equivalent UK protection.
Supplementary protection certificates (SPCs)
The UK will grant SPCs in line with existing EU regulations where valid applications are made before the end of the transition period and the administrative procedure is ongoing.
Free movement of goods
Where intellectual property rights in a product have already been exhausted in the EEA they will remain exhausted in both territories after the transition period. This means, for example, that if branded goods have been sold into an EEA country such as France or Switzerland before the end of the transition period with the trade mark owner’s consent, the trade mark owner cannot use its UK trade mark to stop the goods moving into the UK. This is a sensible provision to provide certainty, but it does not of course address the position in the future, which may depend on the terms of any trade agreement. This will be an important area to watch in relation to the terms of future licence agreements.
What are the main gaps?
A major outstanding point on the Withdrawal Agreement is the position of geographical indications, designations of origin and similar rights after the transition period. Examples of products currently protected by these EU rights are Champagne, Scotch Whisky, Parma ham and Feta cheese. The EU provides a very high level of protection for such rights including a registration system, and its position is that the UK should provide equivalent UK protection for existing EU rights after the end of the transition period. However, the UK does not currently have an equivalent domestic registration system, and it is also possible that, as part of its trade deals with non-EU countries where protection for European GIs is less popular, it would wish to negotiate in this area.
The Withdrawal Agreement makes no mention of patents as there are no Europe-wide patent rights as such at the moment. National patents will continue to be available through the European Patent Office (EPO), which is independent of the EU. As many readers will be aware, plans for a unitary, Europe-wide patent and Unified Patent Court have been put on hold for the time being awaiting ratification by Germany. It remains unclear whether a legal mechanism will eventually be found to allow the UK to participate in any unified EU patents court post Brexit or whether the political will to do so exists.
Civil justice cooperation
Intellectual property rights holders often hold equivalent rights in many different jurisdictions so that typically both large scale agreements and litigation cross national borders. This makes it particularly important to have clear rules about which court has jurisdiction and how judgments can be enforced in other countries and this will be even more important for the UK once it falls out of the enforcement regimes around the EU unitary rights. Currently the EU Brussels Regulation (recast) (1215/2012) provides reasonable clarity, but the UK will fall out of this on exit. The UK’s position is that it would like a broad agreement going beyond the Lugano Convention and addressing intellectual property among other things. It also appears that the EU Council of Ministers sees judicial cooperation in the intellectual property sphere as important. So there seem to be grounds to hope for productive negotiations on this point. A possible stumbling block is, however, the extent of any involvement of the CJEU.
As referred to above owners of EU-wide unitary rights such as the EUTM will be given the opportunity to obtain equivalent UK national protection. Many would say that national protection is sufficient. After all, unitary cross-border rights such as the EUTM are the exception in the intellectual property world, national rights are the norm. However, what many would say is in danger of being lost here are the element or reciprocity and harmonisation associated with the EU intellectual property framework which simply makes it easier for global business to operating across Europe. In this context all eyes should be on the progress of the negotiations in relation to civil justice cooperation (see above).