Technical Notices for IP in a no-deal Brexit

On 24 September 2018 the UK Government published four brief technical notices setting out the implications of a no-deal Brexit for intellectual property rights (IP) in the UK and the Government’s response. ‘No deal’ means that the UK would leave the EU at 11pm GMT on 29 March 2019 without a Withdrawal Agreement and without an agreement on the future relationship.  Based on the Government’s notices we set out the key points below:

Free movement of goods

Under current EU rules IP holders cannot use their national IP rights (e.g. a national trade mark) to stop goods moving freely around the European Economic Area (EEA) once they have been put on the market with the right holder’s consent anywhere in the EEA: consent to sale anywhere in the EEA is said to ‘exhaust’ IP rights in the relevant consignment of goods. This affects ‘parallel’ trade in goods – i.e. goods bought in one country and sold in another, either physically or online. On a no-deal Brexit:

• At least for an initial period, the UK will continue to treat goods put on the market in the EEA as exhausted – i.e. so far as imports to the UK are concerned there will be no change.
• EU27 countries may no longer treat goods put on the market in the UK as exhausted, so those exporting from the UK to EU27 countries will need to check with EU27 right holders (e.g. trade mark owners) to see if permission is needed.
• The UK Government is undertaking a research programme to examine how the UK exhaustion regime should operate after the initial period.

European trade marks and designs

European Union trade marks (EUTMs) and Community registered and unregistered designs are unitary EU rights which cover the whole of the EU.  At Brexit these EU rights will no longer be enforceable in the UK. The UK Government’s approach is to provide equivalent UK national rights. On a no-deal Brexit:

• EUTMs and Community registered designs (CRDs) – holders will be granted equivalent UK national rights. They will be notified of this and can opt out if they wish.  These rights will be treated as if they had been applied for and registered under UK law – for example, they will be subject to renewal in the UK, will be able to form the basis of proceedings before the UK Courts and the UK Intellectual Property Office (IPO) and will be able to be assigned and licensed independently of the EU right.
• Outstanding applications for EUTMs and CRDs – applicants will have nine months to refile for an equivalent UK registered trade mark or design during which time filing dates and claims to earlier priority and UK seniority recorded on the EU application will be recognised.  Applicants wishing to refile will have to bear the costs of this application – at the usual UK rates.
• International trade marks and Hague system designs - the Government has committed to work with relevant international organisations to provide continued protection in the UK to trade marks and designs filed through the Madrid and Hague systems which designate the EU, including arrangements in relation to applications.
• Unregistered Community designs (UCDs) – existing unregistered Community designs will be protected and enforceable for the remainder of their term in the UK (total term is 3 years).
• Note that although like EUTMs and Community registered designs, UCDs may be owned by non-EU entities, the first disclosure of the design must be in the EU.  This means that after Brexit, a design which is first disclosed in the UK will not qualify for UCD protection in the EU27 states.
• A new UK ‘supplementary unregistered design right’ which mirrors the unregistered Community design will be created in UK law.  The new right will protect designs disclosed in the UK after Brexit
• Those UK unregistered design rights which exist at the point of exit will continue to be protected and the UK unregistered right will continue to exist for designs first disclosed in the UK.  The UK right primarily protects product shape for a maximum period of 15 years.  Unlike Community designs it does not protect two-dimensional aspects such as surface decoration.

Patents

Currently there are no EU unitary patent rights comparable to those for trade marks and designs. After Brexit, patents with UK national effect will continue to be available both through the UK Intellectual Property Office (UK national patents) and through the European Patent Office (European patents (UK)). On a no-deal Brexit

• The existing systems will remain in place after Brexit, operating independently from the EU regime. This includes elements such as legal provisions on the patenting of biotechnological inventions which are based on EU law.
• Among other things, the EU’s legislation on supplementary protection certificates (SPCs), which extend patent protection in relation to authorised pharmaceutical products and agrochemicals in certain cases, will be retained and will form the UK’s own SPC regime on exit.
• The proposed Unified Patent Court(UPC) and unitary patent – these proposals for a new unitary patent and a new international patent court covering  25 EU countries were far advanced at the time of the Brexit referendum with the Court  about to open.  Since then the UK has ratified, but the whole project has been delayed, primarily by a constitutional challenge in Germany.  The Government’s notice indicates that if the UPC comes into force the UK will explore whether it will be possible to remain within it on a no-deal Brexit but acknowledges that the UK may need to withdraw. We would add that even on a ‘soft’ Brexit many would argue that the UK will have to withdraw.

Copyright

Although UK copyright incorporates many principles which derive from international treaties and from EU law, it is nevertheless a national right which arises and is enforced on a UK national basis so that the immediate impact of Brexit will be small in most cases. The UK will continue  to be a party to the Berne Convention which requires minimum standards of copyright protection internationally.  However, the UK Government’s notice point to a number of areas in which the EU Member States benefit from additional, reciprocal protections and benefits.  Although the UK may provide these protections in the UK, it cannot unilaterally secure reciprocal rights in other member states on a no-deal Brexit.  These include:

• Database rights – whilst the UK remains in the EU, UK nationals, residents and businesses are eligible for database rights in all EEA states.
• Portability of online content – ‘portability’ allows consumers to access their online content services (e.g. Netflix) when they are temporarily in an EU member state other than their home state.
• Country-of-origin principle for copyright clearance in satellite broadcasting – this simplifies the clearance of rights for cross-border satellite broadcasting.

Comment – welcome clarification but still no detail

These notices are particularly useful in ‘officially’ confirming the UK Government’s intention as regards trade marks and designs. Owners of EU trade marks and Community registered designs will welcome confirmation that UK equivalent rights will be provided automatically on a no fee basis as well as the clarity given on the position of ongoing applications.  Similarly, industries in which unregistered design rights are important, such as the fashion industry, will welcome confirmation that plans for the UK supplementary unregistered design right appear to be firming up. These are issues which are relevant even in the event of a deal as the expectation is that the UK would come out of these unitary rights in any event.   However, an inevitable criticism will be that we still do not know enough about the ‘devil in the detail’ of the proposed new rights with the inevitable result that companies which have the means will continue to reach for parallel UK registered trade marks and registered designs where possible. 

Further information

If you would like further information about any of the issues raised in this note, do please contact Tom Lingard or Charlotte Tillett.