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What does Brexit mean for intellectual property rights owners?

07 Jul 2016

As the nation and the World digest the result of the United Kingdom’s Referendum to leave the European Union (EU), many questions arise. One question which will be at the forefront of Intellectual Property Rights holders is what effect Brexit will have on their rights and their ability to enforce them within the United Kingdom?

In the short term the answer is simple. Brexit has not yet happened and, in accordance with the provisions of Article 50 of the Treaty on European Union, it will not happen for at least two years after the UK formally notifies the EU of its intention to leave.

Article 50 has not been invoked by departing Prime Minister, David Cameron, who asserted that this is a matter for his successor.  Incoming Prime Minister, Theresa May, has also indicated that she is in no rush to invoke Article 50. European projects such as the unitary patent system will be at best delayed whilst there will be no immediate effect on the existence or enforcement of EU Trade Marks or Registered Community Designs in the UK. What happens afterwards is a matter for speculation.

Patents

After several years spent working towards the harmonisation of EU patent law and enforcement procedures, EU Member States have been preparing the launch of the Unified Patent Court (UPC) and it was expected that the UK would soon ratify the UPC agreement.

In light of the UK’s decision to leave the EU following the referendum, it is uncertain as to whether the UK will proceed with ratifying the agreement as the system, as it currently stands, is not open to countries outside of the European Union.

The Unified Patent Court had been expected to open next year and was to have a specialist section of its Central Division based in the Aldgate Tower in London dealing with patent cases concerning chemistry, including pharmaceuticals and the life sciences. The UK was a major player in creating the UPC and whether or not the UK can still be part of the unitary patent system will depend on what the UK and EU negotiate as part of the UK’s exit negotiations.

Following Brexit, the current system of patent protection and enforcement in the UK will remain unaffected. Businesses in the UK will still be able to file their patent applications at the UK Intellectual Property Office (UKIPO) for the domestic market as well as at the European Patent Office (EPO) for protection in the UK and/or other European countries they wish to designate for patent protection. The UK’s membership of the EPO is not threatened by leaving the EU as the EPO is not an EU institution. With regard to enforcement, this will continue to be exercised before the UK national courts (the High Court and Intellectual Property Enterprise Court) rather than the UPC.

Trade Marks & Designs

UK trade marks, registered designs and UK unregistered designs are unaffected by Brexit.  EU Trade Marks, Community Registered and Unregistered Designs are, however, likely to be affected and post ‘effective’ Brexit these will cease to have unitary effect in the UK.  At this time the UK Courts will cease to hold the status of being EU Trade Mark courts and, as such, they will cease to have the power to order pan-EU injunctions enforceable in every EU Member State.

There is an expectation that transitional provisions will be introduced in order to provide continuity of protection to EU IP Rights holders in the UK although the approach which may be adopted to do so, such as conversion or a grace period to re-register the EU IP rights as UK IP rights, is unknown at this time.

Owners of EU Trade Marks who predominantly use their trade marks in the UK will also need to consider whether they may fall vulnerable to an attack for revocation on the grounds that their use in the UK will no longer count as genuine use of the mark(s) in the EU.

If the UK were to leave the EU’s internal single market completely and not stay within it by joining the European Economic Area (EEA) then there will be a question facing the treatment of parallel imports.  At present the EU/EEA operates a system of the exhaustion of rights within the EU/EEA rather than international exhaustion of rights.  In practice European exhaustion means that when a rights holder places or authorises the sale of its genuine goods in the EU/EEA it cannot prevent their further sale within the EU/EEA but if a rights holder places or authorises the sale of its genuine goods outside of the EU/EEA but does not authorise their sale in the EU/EEA it can rely on its rights in the EU/EEA to prevent their further sale in the EU/EEA (i.e. to prevent parallel imports). 

Prior to the implementation of EU trade mark protection the UK operated a form of international exhaustion of rights.  It awaits to be seen but, if the UK were to adopt the principle of international exhaustion after Brexit, consumers may benefit from cheap parallel imports of genuine products entering the UK from around the world as rights holders lose their right to prevent their importation.

Copyright & Database Rights

Copyright remains an essentially domestic IP right albeit UK works are protected internationally by virtue of the UK being a signatory to international agreements such as the Berne Convention and foreign works are protected in the UK on the same reciprocal basis.

There are, however, several EU Directives which have harmonised copyright law within EU Member States including the Copyright and Related Rights in the Information Society Directive (InfoSoc Directive) and the Software Directive.  These directives have already been transposed into UK law which will therefore remain on the statute books unless or until Parliament chooses to amend them.  The effect of Brexit on copyright in the UK will mean that outside of the EU, and unless the UK remains part of the EU’s internal single market by joining the EEA, the UK will not be bound by further steps to harmonise copyright law in particular in the area of developing a Digital Single Market within the EU.

Database rights are a European Union IP right introduced by the Database Directive.  This was incorporated into UK law by the Copyright and Rights in Databases Regulations 1997.  A consequence of this means that database rights will continue to subsist in the UK post ‘effective’ Brexit.   In the EU, however, Database rights are only available to EEA nationals and nationals of countries providing reciprocal protection.  If the UK remains in the internal single market through membership of the EEA then no further steps are necessary to ensure continued protection of databases owned by UK nationals in the EU.  If, however, the terms of Brexit result in the UK not becoming a part of the EEA then it may be necessary for the UK and EU to reach an agreement on reciprocal recognition of database rights held by each other’s citizens.

Geographical Indications

Geographical Indications which provide protection for authentic products from Cornish Pasties to Melton Mowbray Pork Pies and Champagne are governed by an EU wide regime.  The EU regime is itself subordinate to several international agreements which provide for a degree of international reciprocity.  Nevertheless, by the time of ‘effective’ Brexit the UK will need to have introduced its own domestically administered regime for the protection of Geographical Indications in the UK.  Transitional provisions and ‘grandfathering’ rights recognising existing EU wide Geographical Indications within the UK is a possible route to achieve this but whether this route is adopted awaits to be seen.

Actions to take

Until new Prime Minister Theresa May’s government has set out its plans for implementing the referendum result the UK’s future relationship with the EU and that of EU related IP rights in the UK remain unclear although, at present, their status remains unchanged.

IP rights holders should nevertheless monitor developments closely and would be advised to conduct an audit of the protection they have which is UK and EU specific in order to identify any potential gaps in coverage which may arise after Brexit.  Agreements with third parties concerning the UK or which cover the EU including the UK should be reviewed in order to identify if the UK’s eventual ‘effective’ Brexit may give rise to consequences which were unforeseen at the time the Agreements were executed.

Preparing and taking such steps now will enable rights holders to put themselves in a position to take informed action when the UK’s future relationship with the EU becomes clearer.

DMH Stallard can advise and assist further on these and other Brexit issues now being faced.  For more information contact:

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