The departure of an EU member state is unprecedented, and the potential impact of a Brexit on protection and enforcement of intellectual property rights in the UK remains uncertain. The effects will be largely dependent on any terms regarding the UK's departure, and any transitional measures which are enacted by the UK Government. The UK is likely to take up to two years (and possibly longer) to negotiate the terms of its departure and leave the EU, so no immediate changes are expected after a referendum result in favour of Brexit. Whilst rights owners will not therefore have to take any pre-emptive steps in advance of the referendum, they should be alive to the potential consequences, albeit some are speculative at this stage, in relation to protection, exploitation and enforcement of their IP portfolios in the event of a vote to leave.
Trade marks and designs
Much of intellectual property law and practice is harmonised among EU member states, and parallel systems operate for national and EU-wide registration of trade marks and designs. The majority of registered trade marks and designs which take effect in the UK are in fact EU registrations. If Brexit becomes a reality, there will be no impact on national rights, but EU-wide rights (the EU Trade Mark and Community Design) will no longer extend to the UK. This is likely to cause inconvenience and expense to EU rights holders.
In particular, for new applications, rights holders would need to file at both the EU level and in the UK in order to maintain the existing coverage provided by a EU trade mark (EUTM). Whilst existing EUTMs and designs will cease to be effective in the UK, a procedure for re-registration or conversion is likely, so that holders of such registrations - and applications - can maintain their rights in the UK. However, there will no doubt be a fee to convert/re-register (in addition to associated legal costs), resulting in additional costs for EU rights holders. Any converted applications could be challenged by the owners of earlier UK rights who were unaware of the parallel EU rights, but may be notified when an application for conversion/re-registration in the UK is made. There may also be issues in establishing genuine use, for example, where existing EUTMs have only been used in the UK, or where an EUTM is converted/re-registered to a UK registration, with no UK use - although in the latter scenario, the owner may not take the step of converting/re-registering. Life for UK trade mark and design holders is likely to be "business as usual" following in the event of Brexit, although they may receive an increasing volume of notifications regarding possible conflicting applications as part of the process of re-registering/converting EU trade mark rights into separate UK rights.
In terms of enforcement, the UK courts would no longer be able to adjudicate on disputes relating to EU trade marks and designs, and any pan-EU remedies granted by other courts would not extend to the UK. Existing pan-EU injunctions may no longer be effective in the UK also, unless transitional measures are enacted to ensure continuity. Depending upon the terms of a Brexit, i.e. whether the UK participates or not in the European Economic Area, there may be an impact on rules relating to free movement of goods and exhaustion of rights relating to parallel imports. Ongoing enforcement actions and litigation in the UK based on EU trade mark and design registrations, including applications for action by UK customs authorities, could be suspended pending the conversion/re-registration of those EU rights as separate UK rights, and their substitution into the proceedings in place of EU rights.
In relation to both existing and future licences and other agreements, particular attention should be paid to clauses referring to EU rights, or which refer to the territory as the EU, as well as provisions relating to jurisdiction and choice of law. It may be necessary to agree variations of existing agreements.
The UK is a member of the European Patent Convention, and the assumption is that it will remain a signatory post any Brexit, so there will be no impact on the system of obtaining European Patents via the European Patent Office. However, Brexit would have a significant impact on a major EU project, the Unitary Patent and Unified Patent Court (UPC), which is nearing the end game after many years of negotiation and discussion. The Unitary Patent will provide patent protection in a single application in up to 25 Member States, and the UPC will allow both Unitary Patents and standard European Patents to be enforced or challenged in one single action which will have effect across the EU.
In order for the new regime to come into effect, 13 Member States must ratify the UPC Agreement, including France, Germany and the UK. France has already ratified and the UK and Germany have been progressing their plans for ratification so that they are ready to ratify in early 2017 when all of the necessary preparations for the new system are expected to have been completed. Assuming no Brexit, current forecasts are that the Unitary Patent and the UPC will be open for business from May 2017.
However, in the event of a Brexit, the new system will be subject to delay and uncertainty, even possible derailment. Whilst the UK would no longer be able to participate, its position as a mandatory ratifying state would be taken by another Member State (Italy or The Netherlands). This would allow the regime still to come into effect, but will no doubt delay the project. There would also have to be consideration as to the position of London as the division of the UPC Central Division dealing with pharmaceutical patents. Most importantly, however, the success of the entire project would be at risk. The Unitary Patent will no longer be as attractive to business if it does not extend to the UK, and decisions of the UPC in relation to standard European Patents would also have no effect in the UK.
Impact on harmonised IP laws and practices
In the longer term, the UK would no longer be bound by EU rules harmonising IP laws and practices -such as in relation to copyright, database rights, supplementary protection certificates and enforcement etc. Current UK legislation based on those EU rules could be amended; for rights governed by EU Regulations, such as Supplementary Protection Certificates, there will need to be new legislation in place in relation to those rights. While the UK Government is not expected to amend existing provisions to diverge substantially from the current position, any future legislation designed to cover new developments and technologies which are likely to affect intellectual property, such as 3D printing, could be introduced on a different basis to the rest of the EU. Significantly, the UK courts would no longer be bound by decisions of the European Court of Justice and so, over time, the UK courts are likely to take the opportunity to adopt different positions on questions of interpretation. At the very least, this will lead to a period of uncertainty for both rights holders and challengers.
If you have any questions arising from this, please contact Nina O'Sullivan, 020 3321 6328.