Brexit: the implications for intellectual property

Many of the UK’s intellectual property (IP) laws are derived from EU law and most businesses will deal with IP on an international basis. As well as EU-wide Design Rights, Trade Marks and Plant Variety Rights, we have a Supplementary Protection Certificate Regulation and Directives harmonising national laws in areas such as Trade Marks, Designs, Databases, Copyright, Software, Trade Secrets and Biotechnology Inventions. Some Directives have been implemented by statute, others by secondary legislation under the European Communities Act 1972 (ECA). Transactions dealing with intellectual property are also often affected by EU law, particularly competition law and the Technology Transfer Block Exemption.

Following Brexit, existing EU-wide rights will be replaced by new UK national rights which will effectively be clones of their EU parents administered by the UK Intellectual Property Office or Plant Varieties Office. Existing IP laws as at the date of exit will be preserved in national law when the ECA is repealed. Going forward, IP right holders and users of the IP system will need to deal with a major market where IP rights are free-standing and where the local law is likely to diverge over time from the law in the EU, as judgments from the EU courts will no longer bind the UK courts. However, the UK has always been a well-respected jurisdiction for resolving IP disputes and UK law a flexible and predictable choice for international contracts and we expect this to continue in a post-Brexit world.

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Trade marks, designs, plant varieties etc
  • Once the UK leaves the European Union, EU Trade Marks, Registered and Unregistered Community Designs and Community Plant Variety Rights will cease to have effect in the UK, and the Regulations under which they were granted and enforceable will no longer have effect in the UK. The UK Government is legislating for equivalent rights so that there should be no (or minimal) loss of rights for right holders. So far, the UK Government has laid before Parliament two draft Statutory Instruments dealing with such new rights, the Trade Marks (Amendment etc.) (EU Exit) Regulations 2018 (The Trade Mark Exit Regs) and the Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations (The Design and IR Exit Regs). We are expecting similar draft regulations for plant variety rights and geographical indications.

    The Government has confirmed that, in the event of a deal or ‘no deal’ Brexit, right holders with existing EU Trade Marks and registered Community Design rights will be protected on exit through the creation of new, equivalent UK rights granted at no cost and with minimal administrative burden (with an opt-out available for those who do not want to receive a new right of this kind). Use in the EU prior to Brexit will support the validity of these new rights.

    Individuals or corporations with pending EU Trade Mark and registered Community Design applications when the UK exits the EU, will have 9 months to apply in the UK for equivalent UK protections. They will also be able to retain the initial EU application date as the priority date and any rights to seniority.

    These new UK trade mark and registered design rights:

    • will be renewable in the UK (separately from the EU rights from which they are derived)
    • can form the basis for proceedings before the UK Courts and the UK Intellectual Property Office (UKIPO), and
    • can be assigned and licensed independently from the corresponding EU right.

    The UKIPO will take over the administration of the registrations which substitute in the UK for the former EU-wide rights.

    Existing Unregistered Community Design Rights (UCDRs) will continue to be enforceable in the UK for the remaining period of their protection under the Design and IR Exit Regs. These designs will be known as “continuing unregistered Community Designs”. In addition, the Government has confirmed that it will create a new ‘supplementary unregistered design right’ in the UK, which will mirror the scope of the UCDR and arise automatically. This will mean that designs disclosed to the public after Brexit will be protected in the UK as supplementary unregistered design rights

    Existing EUTMs, Community Plant Variety Rights, registered Community Designs and UCDRs arising from disclosure in the UK prior to Brexit, will remain valid in the remaining EU27 member states.

    UK registrants of .eu domain names will no longer be able to own such rights post Brexit. They will either need to transfer their rights to an EU27 based registrant or buy an alternative top level domain.

    What will happen to ongoing UK litigation and opposition proceedings concerning EU wide rights is still far from clear. While we would expect the new cloned UK rights to replace their EU parents where appropriate, there is little official guidance so far. The UK Government has stated that ‘provision will be made’ regarding litigation pending before the UK courts where the claim is based on an EUTM or Community design. We expect this will be the subject of future guidance from the Government once the future relationship becomes clearer.

    Unless the UK Government manages to negotiate continuing rights of audience for UK professionals post Brexit as part of the future relationship, UK lawyers, and patent and trade mark attorneys, will lose their rights of audience before EU courts and bodies including the Court of Justice of the European Union (CJEU), the EU Intellectual Property Office (EUIPO formerly OHIM) and Community Plant Varieties Office unless they hold an alternative EU/EEA qualification. The current requirement that professional representatives are EEA nationals and have a place of business in the EEA (or are lawyers with a right to practise in the EEA in the case of the CJEU) means that the IP departments of UK companies, which have hitherto dealt directly with EU institutions, may need to restructure how they operate. They may need to relocate, replace staff or instruct external agents, in order to be represented before these bodies.

    For more guidance from the UK Government on trade marks and designs if there is no Brexit deal, click here.

Patents and Supplementary Protection Certificates
  • Since the European Patent Convention is not an EU instrument, it will not be affected by Brexit and European Patents (with a UK designation) will continue to be granted by the European Patent Office and to take effect in the UK. Amendments to the UK Patents Act 1977 introduced by secondary legislation under the ECA to implement EU Directives (notably the Biotech Directive) will also be preserved when the ECA is repealed.

    Existing UK Supplementary Protection Certificates (SPCs) will continue as SPCs are granted and administered on a national basis. The Government has confirmed that it intends to maintain the current SPC legal framework as the UK leaves the EU. However, we expect that over time UK jurisprudence will diverge from EU jurisprudence, since CJEU and General Court decisions will no longer bind the UK courts.

    For more information on the position of patents and SPCs if there is no Brexit deal, click here.

UPC and Unitary Patent
  • The UK ratified the Unified Patent Court Agreement (UPCA) in April 2018. The UK intends to stay in the Unified Patent Court (UPC) and the unitary patent system after we leave the EU. The fate of the UPC and unitary patent system depends not on Brexit, but a decision of the German constitutional court. If the UPC and unitary patent do go ahead, this will probably be after Brexit and so the UK would need to enter into an agreement with the EU and the Member States in order for the UK to take part in the new system. The UK Government confirmed in its White Paper on ‘The future relationship between the United Kingdom and the European Union’, published on 12 July 2018, that it will “work with other contracting States to make sure the [UPC] Agreement can continue on a firm legal basis” post Brexit.

    If the UK is excluded, there will be implications for both patent protection and enforcement:

    • Protection
      • Businesses will not be able to protect their inventions in the UK using the unified system. However, UK and EU businesses will still have access to European Patents (designating the UK) or UK national patents, in order to protect their inventions in the UK.
      • UK businesses will be able to protect their inventions using the Unitary Patent in the other 24 contracting UPC countries.
    • Enforcement
      • UK businesses will still be subject to the jurisdiction of the UPC for infringing the rights of Unitary Patent holders within the other contracting UPC countries. Similarly, EU businesses will be subject to the jurisdiction of the UK courts for infringing acts carried out in the UK for inventions protected by European Patents (designating the UK) or UK national patents.

    For more information on the position of Unitary Patents and the UPC if there is no Brexit deal, click here.

Customs detention, parallel imports and exhaustion
  • Customs detention of (allegedly) infringing goods at the point of importation is an important weapon in the hands of rights holders, not only against counterfeiters, but also in standards-based industries such as electronics and telecoms. Following the UK’s departure from the EU, there will be a border between the UK and the EU where detention of goods can take place.

    Whether or not a right holder can object to importation of goods depends on the principle of exhaustion of intellectual property rights. At the moment, once a product is put on the market anywhere in the EEA with the right holder’s consent, the IP rights protecting that product are said to be exhausted and the right holder cannot rely on its intellectual property rights to prevent importation of the product.

    The UK Government has confirmed (through its draft SI, the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations) that the UK will continue to recognise the EEA regional exhaustion regime post Brexit, if there is no deal. This means that there will be no changes to the rules affecting UK imports and IP in relation to goods (lawfully) sold in the EEA will still be considered exhausted in the UK. Practically, parallel imports will be able continue from the EEA.

    However, IP protected goods (lawfully) sold in the UK from the EEA may not be considered exhausted in the EEA. As such, exports of goods from the UK to the EEA may need the permission of right holders post Brexit unless the UK Government and the EU reach agreement otherwise.

    For more information on the position in relation to parallel imports and exhaustion if there is no Brexit deal, click here.

IP licensing
  • The impact of a Brexit on IP licensing, particularly by major businesses, will be comparatively small. This is because licences usually cover the whole or substantial parts of Europe and need to comply with EU law (particularly competition law and the Rome choice of law rules) even if they are governed by the law of a non-EU Member State. This will only change if, in the longer term, the UK is treated by licensing businesses as an entity separate from the EU into which IP rights are licensed separately.

    It would be prudent in licensing agreements to provide for the eventuality that licensed rights such as European Union Trade Marks or Registered or Unregistered Community Designs might be converted in part into national rights to which the licence will continue to apply.

IP enforcement
  • The means and remedies provided for enforcing IP rights have been harmonized under the Enforcement Directive. Many of the remedies required by the Enforcement Directive were already available in UK law, and so we expect to see little change at least initially in the procedures and processes governing enforcement of IP rights post Brexit. Over time, there may be a divergence as UK law and practice develops separately from the EU27.

Long term effects
  • In the longer term, IP right holders will need to deal with a major market where IP rights are free-standing and where the local law is likely to diverge over time from the law in the EU, as judgments from the EU courts will no longer bind the UK courts. This will reverse the movement to harmonise IP law in Europe. Once the negotiations over the future relationship have been completed, even if the UK remains part of a single market in the European Economic Area (EEA), manufacturers will have to accommodate a significant market where courts can decide that what can be sold is not the same as elsewhere in Europe. Of course, this is a problem that has existed in the recent past and will affect only a small number of companies, but it does (re)introduce a complication which manufacturers will need to consider if their businesses involve selling the same products throughout Europe.

Rights of audience in the EUIPO and the CJEU
  • Post Brexit, as things stand,UK lawyers and patent and trade mark attorneys who do not have an additional qualification elsewhere in the EU will no longer have rights of audience in the EU Intellectual Property Office or the CJEU as these rights depend on being a national of, and having a place of business in, an EEA state (or, in the case of the CJEU, in being qualified to practise in the EEA). The UK Government is looking to extend rights of audience to UK professionals as part of its negotiations with the EU on the future relationship. The European Patent Office will be unaffected, as it is not an EU institution.

For further information, please refer to Brexit: the legal implications.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.