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Brexit: Implications for Intellectual Property

The practical impact of Brexit is unknown but will depend on the model the UK agrees for its exit.

On 29 March 2017 the UK began the formal process of its withdrawal from the EU by serving notice of withdrawal under Article 50 of the Lisbon Treaty. Withdrawal will conclude with the repeal by the UK of the European Communities Act 1972, with the effect that the EU treaties will cease to apply to the UK. There is a maximum two year timeframe from formal notification for this to take place (unless extended by agreement). The UK is therefore likely to leave the EU in the Spring of 2019.

The practical impact of Brexit is unknown but will depend on the model the UK agrees for its exit. A Government White Paper published at the beginning of February 2017 ("Legislating for the UK's withdrawal from the EU") indicates that a customs-only arrangement with the EU is the preferred option but it provides little detail. In a further White Paper published on 30 March 2017 ("The UK's exit from and new partnership with the EU") the Government reconfirmed its proposal for a "Great Repeal Bill" which, amongst other things, would convert the body of existing EU law into UK domestic law, "meaning that, wherever practical and appropriate, the same rules and laws will apply on the day we leave the EU as they did before." There is therefore likely to be no major change to the majority of existing law in the short term. EU law will continue to have effect in the UK until the UK actually leaves the EU.

Discussions are taking place regarding the post – Brexit options for IP. National IP rights are unlikely to be affected post-Brexit. Pan-European IP rights will be affected. Trade marks and designs are likely to be the IP rights most affected but it will impact on other IP rights as well.

Trade Marks - Significant Impact post Brexit

On leaving the EU, the UK will no longer automatically be covered by EU trade marks. An orderly transitional period is expected with the potential to split existing EUTMs into UK national and EUTMs post-Brexit (subject to negotiation and relevant supporting legislation). Trade mark owners will need to reinstate lapsed UK marks which have been subsumed into EUTMs by seniority but it is not yet clear how that will work.

New EUTM filings post-Brexit will not extend to the UK (they will be limited to the EU). Trade mark owners will need to seek national protection in the UK for their trade marks. Application through the Madrid Protocol will still be available for IRs designating the UK.

The UK court system will no longer have EU trade mark courts post-Brexit. EUTM holders will not be able to enforce them in the UK and obtain pan-EU injunctions under the EUTM Regulation. The effect on pan-EU injunctions already granted is unknown. Brexit will also impact on the general jurisdiction of the UK Courts and enforcement of their judgments. Infringement proceedings may need to be brought separately in the UK and EU.

UK trade mark laws may develop independently over time and diverge from EU trade mark laws. CJEU decisions will not be binding but are likely to be persuasive. There will be no obligation to implement the new Trade Marks Directive (in line with the already in force new CTMR) if Brexit takes place before January 2019.

Designs – Significant Impact post Brexit

Existing Registered Community Designs ("RCD") will not apply in the UK unless the UK provides for transitional protection post withdrawal from the EU. Dividing existing RCDs into UK and EU registered rights may be difficult due to novelty issues but this could be resolved through new clearing legislation. New RCD filings will not extend to the UK. Designers will need to seek national protection in the UK for designs in addition to RCD protection in the EU (application fees for UK national registrations have recently been reduced).

The Government intends to ratify the Hague Agreement which provides a centralised process for international design registration – possibly within the next year.

Designers will lose the benefit of unregistered community design right (UCDR) protection in the UK unless the UK provides for transitional protection post withdrawal from the EU. This is significant for short life designs, e.g. fashion, where the informal three year protection without registration provides valuable temporary protection from copying.

Current UK unregistered design right does not provide the same protection as UCDR e.g. surface decoration, texture and colour are not covered. As a result the UK Government may be under pressure to legislate. UK unregistered design right is available for EU residents and corporations but UK designers will not benefit from UCDRs unless first marketing is in the EU.

Patents – Potential Significant Impact on UPCA post Brexit

Brexit will not affect the current European patent system as governed by the European Patent Convention. There will be no impact on businesses' ability to apply to the European Patent Office for patent protection covering the UK. Existing European patents covering the UK will also be unaffected.

The UK remains a Contracting Member State of the Unified Patent Court Agreement at present and must ratify it for it to come into effect. The Government has confirmed that it is proceeding with preparations to ratify. It has also confirmed that it will be working with the Preparatory Committee to bring the Unified Patent Court into operation as soon as possible. The Committee has indicated that this will be December 2017. However, at present, the Agreement is only open to EU Member States. The UK will have to leave on Brexit unless the terms are renegotiated.

Other IP – Lower Impact post Brexit

Copyright - No immediate changes post Brexit as copyright law is largely national (although based on several EU directives and regulations). There is likely to be an impact on territorial licensing agreements once the UK is not subject to EU laws and/or following some divergence of UK and EU laws.

Databases - Sui generis database right is implemented in the UK by regulation but qualification for database right is by reference to membership of the EEA.

eu domains - Domain name .eu will not be available for UK national businesses to use, but pan EU business can register .eu domains though EU based subsidiary or agent.

Action Points

Portfolio management

Review filing / brand protection strategies now.  File UK TM applications in addition to EUTMs and renew UK TMs rather than allowing them to lapse because seniority has been claimed. If seniority has been claimed for earlier UK marks ensure possession of documents in respect of the underlying mark, especially if it has been allowed to lapse. Consider potential non - use of EUTMs. If the only use is in the UK, the EUTM may become vulnerable to cancellation. 

File national registered design applications in the UK where rights owners have specific business focus in the UK, at the same time as a RCD, or claim priority from the RCD. Consider where designs are first made available to obtain maximum benefit from UCDR and UK design rights.

Make a decision as to which European patents and applications should be opted out from the jurisdiction of the UPC. The “sunrise period” will allow opting out before the UPC becomes operational and is planned to start in early September 2017.

Enforcement

Consider a revised litigation strategy pre-Brexit to obtain the most effective remedies in the long term. In particular seek to conclude existing or potential litigation within an expedited time frame. Anti-counterfeiting programmes may also need to be reviewed, particularly the filing of customs notifications in the EU and UK.

Commercial agreements

Consider the potential impact of Brexit on various clauses such as territory, force majeure, material adverse change, governing law and jurisdiction.  Clear jurisdiction clauses are advisable. Any references to EU legislation will need to be considered.

IP and transactions

Consider impact of Brexit on due diligence, licences, assignments and security over IP.

To download the guide as a PDF please click here.

The IP team collaborated to create the above guide, for more information please contact Ian Wood at ian.wood@crsblaw.com or (0)20 7203 5124, Mary Bagnall at mary.bagnall@crsblaw.com or (0)20 7203 5081, Kate O'Rourke at kate.o'rourke@crsblaw.com or (0)20 7203 5011, or David Fyfield at david.fyfield@crsblaw.com or (0)20 7203 5200.

 

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