In recent months, as preparations for the possibility of a no-deal Brexit have dominated the headlines, attention has focused largely on the immediate implications for intellectual property (IP) owners of a no-deal Brexit. As the pendulum now appears to swing in favour of a deal, we set out the key points to be aware of if a deal is agreed.
Business as usual during the transition period
Under the terms of the draft Withdrawal Agreement negotiated with the EU, EU law will continue to apply in the UK until the end of a transition period on 31 December 2020. This means that EU-wide unitary IP rights such as EU trade marks and designs, Community plant variety rights and database rights, which provide protection across the whole of the EU in one registration or unregistered ‘right’, will continue unchanged. Existing EU harmonising directives and regulations will continue to apply as will new EU IP legislation which comes into force during the transition period. Similarly, both existing and new Court of Justice case law will bind the UK courts during this period.
After the transition period - an orderly exit from the EU IP framework
At the end of the transition period the UK will no longer be able to participate in EU-wide unitary rights such as the EUTM and EU registered and unregistered design rights. The IP provisions in the draft Withdrawal Agreement are primarily concerned with an orderly separation of the UK from the EU IP framework and with ensuring, so far as possible, that existing owners of EU-wide rights are compensated by obtaining equivalent national protection in the UK for the remainder of the relevant terms. The draft Agreement provides that proprietors of existing EU-wide rights will be granted equivalent UK national rights (informally known as ‘clones’) and that the rights of priority of existing applicants for such rights will be preserved when applying for equivalent UK national rights. The UK also commits to granting Supplementary Protection Certificates (SPCs), which extend patent protection for certain authorised medicines, in line with existing EU regulations where valid applications have been made before the end of the transition period and to preserve existing rights to use EU Geographical Indications in the UK.
How does this compare with what would happen on a no-deal Brexit?
It looks very similar. The UK Government has in recent months issued a raft of draft IP legislation which would come into force on a no-deal Brexit. This provides for a broadly similar separation to that envisaged for the end of the transition period in the Withdrawal Agreement, involving the grant of equivalent UK national rights to holders of existing EU-wide IP rights such as EUTMs and EU design rights for the remainder of the relevant terms. Some EU-wide intellectual property rights do not currently have a UK national equivalent. These include the EU unregistered design, database rights and geographical indications. The draft legislation provides for the setting up of equivalent UK national schemes so that equivalent rights would be available in the UK going forward, thereby filling a perceived gap in UK national IP protection. The EU legislation on SPCs would also be retained in UK law and would continue to operate in the UK as before so far as possible.
Both at the end of the transition period and on a no-deal Brexit the UK’s European Union Withdrawal Act (2018) is intended to apply to ensure that, where practicable, EU-derived, harmonised IP law will be retained as part of UK law in the first instance. This would include UK national registered trade mark and designs law, which is almost fully harmonised with the EU at the moment and copyright law, which has been subject to increasing harmonisation in the last few years. The UK will thereafter be free to diverge.
At the time of writing it is impossible to tell what the final deal – or no deal – will be. Any type of Brexit will, however, almost certainly eventually result in the UK falling out of the EU-wide unitary rights such as the EUTM. Even the ‘Norway’ deal countries – Norway, Iceland and Liechtenstein - , which align themselves closely with EU harmonised IP law through the EFTA Court, do not participate in these unitary rights. This is likely to lead to increased costs and administrative burdens for UK right holders in maintaining, dealing in and litigating separate, parallel UK rights in the future. (Note that although initially grant of the ‘clones’ will not incur a fee, after that renewal fees will be payable in the usual way.)
Many would say that national protection is sufficient and that breaking with EU harmonisation rules might allow the UK to introduce differences which it believes are pro-competition an example being in the area of copyright exceptions, which is increasingly subject to harmonisation. On the other hand, unless otherwise agreed, at the end of the transition period the UK would lose the benefit of reciprocal arrangements with EU countries that make life easier at the moment, for example, in the copyright sphere, simpler clearance of rights in cross-border satellite broadcasting and reciprocal arrangements simplifying collective rights management. A transition period may provide an opportunity to agree future cooperation in such matters.
A key outstanding point at present is the question of exhaustion of IP rights. The draft Withdrawal Agreement provides that where IP rights in a particular product have already been exhausted in the EEA at the end of the transition period, they will remain exhausted both in the UK and EEA thereafter. This means, for example, that if branded goods have been sold into an EEA country such as France or Switzerland or the UK before the end of the transition period with the trade mark owner’s consent the trade mark owner cannot use its trade mark rights to stop these goods moving into other EEA countries. The UK Government has also unilaterally indicated that it will continue to allow goods exhausted in the other EEA countries after Brexit/any transition period to flow freely into the UK. However, these are merely transitional arrangements. The question of what the exhaustion regime will look like in the future has yet to be decided and may be affected by future agreements on trade.
The draft Withdrawal Agreement makes no mention of patents as there are no Europe-wide patent rights as such at the moment. Patents with UK national effect will continue to be available through the UK Intellectual Property Office and 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 as a result of a constitutional challenge in Germany, which is scheduled to be heard this year. 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. This remains a ‘space to watch’.
For our 30-second summary of the IP issues on a no-deal Brexit, please see the intellectual property page in our Brexit Survival Guide, available here.
For a more detailed discussion of the intellectual property position on a no deal Brexit, please see our IP Checklist available here.