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This briefing note is only intended as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

Brexit and IP: An Overview
 Briefing 
Date
25 May 2017

Brexit and IP: An Overview

The UK is due to leave the EU in March 2019. The political landscape is uncertain and fast-moving, and the impact of Brexit on certain key intellectual property (IP) rights remains unresolved. We will update this note as more information becomes available as to how IP rights will be dealt with post-Brexit.

EU IP Laws

Much of IP law and practice that applies in the UK derives from the EU, either from EU Regulations - which are directly applicable in the UK - or via implementation of EU Directives. There are also various international agreements governing IP protection which the UK must comply with.

Until the UK leaves the EU, it is 'business as usual' for the protection of IP rights but there are some steps that businesses should consider now in order to protect their position post-Brexit. The impact on IP rights post-Brexit will depend upon the model for the UK's future relationship with the EU. Most IP laws apply to EEA Member States; some have been incorporated into the EEA Agreement but not all of them. Accordingly, if the UK joins the EEA, it will be obliged to implement or maintain those laws as appropriate. However, a 'hard Brexit' scenario currently appears more likely.

The Government proposes that all existing EU laws will be preserved in the UK on exit through the Great Repeal Bill and that, over time, these laws will be reviewed. It is not yet clear how this will work in relation to IP rights and specifically, in relation to unitary EU-wide rights which must be recognised by the EU in order to have effect. If, due to the exit model that is agreed, the UK is not required to implement or maintain EU IP laws, it is possible that existing UK IP law based on EU laws could be reviewed, amended or repealed over time. However, whilst this may present opportunities to make improvements, it seems likely that most IP laws derived from EU harmonisation will ultimately be retained, because of the need to avoid imposing divergent regulation on business across Europe, and due to requirements in international agreements to which the UK is a party.

Currently, the UK courts refer questions of interpretation of EU IP law to the CJEU. If the UK joins the EEA, such questions may be referred to the EFTA Court; decisions of the CJEU will influence the EFTA Court's decisions. Otherwise, we can expect that, following Brexit, over time our Courts may begin to take a different approach to the CJEU on significant issues of interpretation of IP law, albeit it is anticipated that they will continue to take CJEU decisions into account. The Government has indicated that pre-Brexit CJEU case law will have the same binding effect as UK Supreme Court judgments - i.e. subject to being overruled by the Supreme Court, or overturned by new legislation.

EU Trade Marks and Registered Community Designs

Many businesses have taken advantage of the EU-wide cost effective regime for trade mark and designs protection. These unitary EU-wide rights can be enforced in a single action and may lead to pan-EU relief in the form of an injunction (and/or damages) across the EU.

Once the UK leaves the EU, barring an agreement being reached with the EU, EU trade marks and designs will no longer extend to the UK. Accordingly, from the date of exit, it will be necessary for businesses to apply for both UK and EU protection, increasing the costs of obtaining IP protection across Europe.

Whilst we fully anticipate that the Government will put in place a process to preserve the UK element of such rights within the UK, the exact nature of this process is yet to be confirmed. The main models under discussion involve either automatic creation of a UK right, or requiring the owner of the EUTM to file a form at the UKIPO requesting a UK right. UK rights created by this process will retain the same scope of protection, registration date and, where applicable, priority and seniority. Whilst it is not yet necessary to file a separate application in the UK, this should be considered where the UK market is of particular interest, or the intention is to use a mark only in the UK. There are potential legal uncertainties for example in cases where an EUTM has not been used in the UK, or where it has only been used in the UK, and not elsewhere in the EU.

We will monitor this issue and update our guide when information is available as to how these rights will be preserved in the UK post-Brexit and what steps, if any, may need to be taken by rights holders. In the meantime, EUTM holders should review the use of their marks.

A number of industries rely heavily on unregistered designs to protect their designs (e.g., the fashion and furniture industries) and Unregistered Community Design is a particularly valuable right. The UK does have its own unregistered design right regime but the scope of protection it provides is narrower (e.g., it does not extend to surface decoration). Post-Brexit, the UCD will no longer extend to the UK, although UK-based designers will still be able to rely on UCD protection in the EU, provided their designs are first disclosed in the EU. Again, subject to any agreement for reciprocal protection, there is a potential gap in protection for certain designs, which may need to be met with a registration - as UK unregistered design right may not provide adequate protection.

Harmonised IP Laws: Trade Marks, Designs, Copyright, Trade Secrets
  • Trade Marks: the UK is required to implement the new Trade Marks Directive by January 2019. The UK intends to progress plans to implement the Directive.
  • Parallel imports: currently, trade mark rights are exhausted when goods are put on the market in the EEA by the rights owner or with their consent. It is presently not known what approach the UK may take to the question of exhaustion post-Brexit. Whilst the present regime may be retained (at least for a transitional period) it is possible that there will be purely national exhaustion - i.e. rights will only be exhausted when goods are put on the market in the UK - or international exhaustion.
  • Copyright: a major current project within the EU is the Digital Single Market. The Commission is in the process of issuing proposals to improve access to and operation of the Digital Single Market in the form of a number of Regulations and Directives. This programme extends beyond IP rights to, for example, geo-blocking, contracts for digital content and cross-border online sales. If the UK joins the EEA, it will be subject to the proposed laws. If the UK is outside the EU (and does not join the EEA), those doing business throughout Europe are unlikely to want to be subject to different regulatory regimes (subject to any opportunities identified by the UK).
  • Database right: the database right is an EU creation and is of particular interest in a number of industries that produce, collate or use data (e.g., sport data). If the UK joins the EEA, there will be no change in the protection of database right. Otherwise, however, the UK Regulations relating to database right may be subject to review in the future (as part of the Great Repeal Bill process). EU database right legislation is complex and has been the subject of a number of cases before the CJEU. It is likely that UK businesses that invest in databases will lobby for there to be reciprocal protection between the UK and the EU.
  • Trade secrets: the Trade Secrets Directive must be implemented by July 2018. It is possible that the UK will decide that its laws are compliant with the Directive and that, accordingly, there is no need to implement legislation or the implementation required is minimal.
Patents

The existing system for obtaining and enforcing European Patents will not change. This is because European Patents are granted under the European Patent Convention, which is not an EU organisation. The UK is and will remain a member of the European Patent Convention.

A major project underway in the EU is the Unitary Patent and Unified Patent Court (UPC). The proposed regime has two aspects. The Unitary Patent will be a single patent applied for following one central application at the European Patent Office, which will be available alongside the existing regime for standard European Patents and national patents. It will have effect in all EU Member States that ratify the UPC Agreement. Even before the Brexit vote, however, not all Member States had intended to participate in the Unitary Patent, most notably Spain and Poland. The UPC will exclusively govern disputes concerning the Unitary Patent (and related Supplementary Protection Certificates) from day one. However, it will also have jurisdiction over existing and future standard European Patents. Ultimately, this jurisdiction over European Patents will be exclusive, but there is an important transitional period which means that this exclusive jurisdiction may not kick in for some time.

The UK is a mandatory ratifying state for the UPC Agreement to come into effect and is progressing plans for ratification, with the UPC likely to be opening its doors for business in early 2018 (Germany must also ratify). It is presently unclear however whether the UK can participate in the new regime once it is outside of the EU. An Opinion has been obtained from constitutional law barristers Richard Gordon QC and Tom Pascoe which confirms that, on balance, there is a legal mechanism for the UK to participate, namely an international agreement between the UK and the EU. However, this would require the UK to accept supremacy of EU laws to the extent that they impact on issues being litigated in the Unified Patent Court (and to be prepared to refer questions of interpretation to the CJEU). This would extend beyond patent law issues. As for Unitary Patents, again barring an agreement, these will not extend to the UK post-Brexit. However, it seems likely that measures will put in place to preserve the UK aspect of those rights.

Aside from areas of enforcement, patent law is also harmonised in the EU in relation to biotechnological inventions and supplementary protection certificates. In a hard Brexit scenario, there may be opportunities for lobbying for improvements to the existing EU legislation (subject to the Great Repeal Bill process), e.g., the SPC Regulation which has caused considerable uncertainties, not least following several CJEU decisions which have been heavily criticised by the UK courts.

Contract Review

It is also prudent to review existing agreements (such as licences and co-existence agreements) that refer to EU IP rights or to the EU as a territory. Generally, contractual audits should be conducted to consider key commercial terms such as pricing, obligations for tariffs, impact of change of law, termination, for example, as well as 'boilerplate' such as jurisdiction.