Brexit - The intellectual property questions

Brexit - The intellectual property questions

Intellectual property is one of the areas in which UK and European Union law is most intertwined. So how will Brexit affect intellectual property rights in the UK? We answer the most burning questions.

Will there be any immediate changes?
No. Under Article 50 of the Treaty on the European Union, if a Member State wants to leave the EU it must first give notice to that effect. It then has two years to negotiate an agreement with the EU which will provide for when and how it will leave and what its future relationship with the EU will be. European legislation will cease to apply to the exiting Member State when this agreement comes into force or, failing that, two years after notice was given. However, the period of negotiation can be extended. The UK Supreme Court has confirmed that the approval of the UK Parliament is required to trigger Article 50, and the government has published a bill to obtain this as quickly as possible. It is understood that the government intends to invoke Article 50 by the end of March 2017. It is likely, therefore, that little will change until at least 2019, so it is business as usual for the time being.

What will happen to European Union Trade Marks?
The European Union Trade Mark (EUTM – formerly known as the CTM) is a single registration covering all the 28 Member States of the EU. Current Court of Justice case law suggests that the UK would not be able to continue to participate in the EUTM after it has left the EU, so we expect the UK to drop out of the EUTM system at that point.  The current expectation is that regulations will be put in place by the UK allowing owners of existing EUTMs to obtain UK registered trade marks with equivalent priority, and that EUTMs would continue in force in respect of other Member States. The mechanism for achieving this is currently under discussion, with issues such as whether there will be an opt-in requirement, whether fees will be payable and if the UK IPO will need to re-examine the UK registration yet to be decided. The main downsides in the long run are likely to be cost and the inability to obtain remedies, including injunctions, covering more than one European country in the UK courts. Post-Brexit, a prior UK registration may also not prevent competitors registering conflicting EUTMs. However, a potential advantage on the horizon is that final trade mark judgments will be made by the UK courts, without the involvement of the CJEU, which is likely to result in speedier decisions.

What about Community Designs?
The Community Registered Design (CDR) is the equivalent of the EUTM for registered design rights and the same points apply. It is expected that CDR holders will be able to convert the UK ‘part’ of their CDR into a UK registered design, preserving the priority of the CDR. Again, the precise mechanism for achieving this is under discussion.

In addition to the CDR, a three-year unregistered Community design right is also currently available in all EU Member States. This right differs considerably from the UK ‘home grown’ unregistered design right and is of importance in the areas of consumer goods and fashion in particular.

Whilst non-EU businesses may still benefit from this right, case law suggests that in order to obtain protection, first publication of the design must be in the EU. Accordingly, releasing a design for the first time at the London Fashion Week after Brexit could potentially mean that unregistered Community design protection is unavailable. It would be open to the UK to provide an additional UK unregistered design right which would be equivalent to the unregistered Community design right, if it so wished.

Will the UK still be able to participate in the European Patent Convention (EPC)?
Yes, the European Patent Convention is not an EU treaty. It will still be possible to obtain European Patents (UK) after exit.  In this respect the UK will be in the same position as the other countries which participate in the EPC but are not members of the EU, for example Switzerland, Norway and Turkey

Will the UK be able to participate in the unitary patent and Unified Patent Court system?
The proposed unitary patent is a single patent covering up to 26 EU Member States. The Unified Patent Court (UPC) system is a pan-European court system which will allow both the new unitary patents and ‘classic’ European patents to be litigated across all the participating countries and will provide for cross-border remedies in Europe (e.g. injunctions). If a proprietor fails to ‘opt out’ its European Patents, they will automatically become subject to the jurisdiction of the UPC. The benefit of cross-border relief needs to be balanced against the risk of the patent being centrally revoked in one court action.

It is envisaged that there will be a three-month sunrise opt-out period for existing patent owners, commencing in September 2017.

In the immediate aftermath of the Brexit vote there was a general consensus that the result would spell the end of the UK’s participation in the UPC, and possibly the project as a whole. However, the UK government has subsequently confirmed that it intends to press ahead with ratification of the Unitary Patent Agreement, paving the way for the court to open its doors in December 2017. There remains considerable uncertainty as to how, if at all, the UK will be able to remain part of the UPC after Brexit actually takes place. A number of commentators believe that the UK might still be able to possible, so that European Patents (UK) could still be litigated there, but the UK’s participation will depend on the broader Brexit negotiations.

Importantly, the UK Government’s decision to ratify the UPC means that the system can now still go ahead without the UK’s involvement, but proprietors of European patents (UK) may decide to ‘opt out’ until the position becomes clearer.

In practice the result of Brexit may be that, in the long run, little may change on the patent front in the UK, whereas the remaining EU Member States may move forward into a more streamlined system. Companies will certainly be able to continue to obtain both European patents (UK) and UK national patents as they do at the moment; and these patents will still be litigated before the national courts. Cross-border remedies may not be available from the UK, but UK businesses would of course be free to obtain Unitary Patents and participate in the Unified Patent Court in respect of the remaining Member States. 

Will UK intellectual property laws diverge from those in Europe?
As part of the single market project the EU has provided for extensive European harmonisation in IP fields including trade marks, designs and, to a lesser extent, copyright.  This has been achieved partly through directly applicable European regulation and partly through directives (such as the recent Trade Secrets Directive) which have to be implemented into the national laws of each Member State. Prior to the UPC there had been relatively little harmonisation for patents, with some exceptions, such as the Biotechnology Directive.

Following Brexit, directly applicable European regulations would fall away. The government has said that, on Brexit, it will pass a “Grand Repeal” Bill, which would adopt all EU law that applies in the UK into UK national law. The individual statutes laws could then be retained, altered or abolished by Parliament on a case by case basis. Existing UK laws that implemented an EU Directive would not be affected by Brexit as they are already part of national UK law, but the UK might decide to repeal or amend them. The bottom line is that the UK Government will be able to decide on the extent to which it wishes to continue to follow European laws.

The position will, however, be affected by the nature of UK’s relationship (if any) negotiated with Europe post Brexit. The UK government has announced that it does not intend to stay in the European Single Market, but beyond that the objectives are unclear. Where beneficial, there is likely to be a degree of harmonisation, however the UK may diverge if it thinks a competitive advantage could be obtained by doing so.

The answer to the question of whether UK intellectual property laws will diverge from those in the EU in future therefore depends (like everything else!) on the UK’s negotiations on trade. Upsides of continuing with the EU harmonised regime might include increased certainty and convenience for businesses operating in more than one European country; potential downsides might include the delays involved in referring decisions on intellectual property laws to the Court of Justice of the European Union, which moves rather slowly.

If you have any questions on these or any other issues relating to intellectual property and Brexit, do please contact Tom Lingard, Partner and Head of Intellectual Property or Charlotte Tillett, Partner and Head of Life Sciences, who will be happy to discuss.

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