The UK will be holding a referendum on the 23rd June on leaving the European Union ("Brexit"). A vote to leave will have a significant effect on the IP market, since this system of law is governed by so many EU Regulations and Directives that the UK is at present intricately bound to the EU.

A vote for a Brexit would signal entry into a negotiation period during which laws will be amended and enacted and international agreements will be negotiated. Due to the required notice period, the actual exit date will not be before 2018. There are many post-Brexit options, including retaining membership of the EEA only, or joining EFTA, or having a customs-only arrangement with the EU. The implications of a Brexit are currently very uncertain and will to a large extent be determined by the model that is adopted and the terms of the international agreement negotiated.

Relationship with EU law

IP laws are harmonised to a large extent across Europe, and much of the UK legislative framework in this field is composed of directly effective EU Regulations and transposed EU Directives. In order to avoid a regulatory vacuum post-Brexit, many of those EU Regulations relevant to IP and life sciences (especially pharmaceuticals) will have to be transposed into English or Scottish law, and those national laws which are based on EU Directives may also need to be reviewed to ensure they can still operate properly.

Implications of a Brexit

Some implications of a Brexit will apply to organisations in the same way whether they are based in the UK, in the EU or elsewhere in the world. For example, the changes to unitary patents are pertinent to any company seeking pan-European patent coverage. However, the likely exclusion of the UK from the European Digital Single Market will be more acutely felt in the UK. Below is a summary of some of the main implications.

The unitary patent system

One example of where the immediate impact of a Brexit may be seen is that the lengthy negotiations regarding the Unified Patent and the Unified Patent Court (UPC), which have taken decades, may be undermined. With an "in" vote in June, the system may be implemented in early 2017 but an "out" vote would certainly delay implementation.

If the UK is not part of the EU, whilst it will still be a signatory to the European Patent Convention and a UK patent could still be obtained via the EPC system, it could not participate in the new UPC system, which only applies to participating EU member states. In a post-Brexit future the UK may, therefore, be seen as an irritant for companies which will need to go through another hoop to seek pan-European patent protection.

Community rights

It is likely that community rights, such as registered and unregistered community designs and EU trade marks (previously community trade marks), would no longer have effect in the UK. It is likely that the scope of any rights applied for after Brexit will not include the UK, and there will be questions about what will happen to the "UK portion" of such rights obtained before Brexit. If the right in question was automatically reduced in geographical scope, its value would diminish, especially given the economic significance of the UK, which would result in the right-holder losing out commercially. Any organisations which rely on community rights will need to be ready to respond to changes in this area.

Life Science regulation

The UK’s various Life Sciences regulatory regimes are intimately connected with the EU; the European Medicines Agency is based in London and a sophisticated and comprehensive pharmacovigilance system has been established around this regime. Whilst change will, no doubt, be managed to enable a smooth transition, organisations working in this sector will need to be ready to adapt if this regulatory framework is reshaped.

European Digital Single Market

There is a real risk that the UK would be shut off from operating in the European Digital Single Market. The drive behind the single digital market was to promote common data protection laws, provide better access to products and services at reduced costs, and generally increase adoption and acceptance of digital services. There are already significant differences in the attitudes of different European countries towards the use of social and digital media marketing and, in the absence of the UK within the EU, these differences are likely to widen and the influence of the UK will be minimal.

Conclusion

Brexit would not be a simple divorce, but would involve an unpicking of UK legislation which is currently dependent on EU legislation. Beyond this, the key implications in the IP field would be the exclusion of the UK from pan-European rights' systems. Separation presents the opportunity for the UK's laws to diverge from those of Europe which may be embraced in some areas. However, in IP, this is unlikely to happen to any significant extent given interconnection of trade and the universal recognition that harmonisation is beneficial. Going forwards, the UK is unlikely to be able to assert influence on EU policy following a Brexit, which may undermine the position of UK-based IP and IT companies both within Europe and on the world stage (especially vis-à-vis the USA as the UK may be seen as second class without a voice in Europe) and make it a little more difficult to compete.

Given the two year period (minimum) before which Brexit will be implemented, and given the uncertainty about what the post-Brexit environment will comprise, there is little preparatory work to be done before the referendum takes place. Thereafter, IP owners should identify which of their rights is likely to be affected and may need further application/registration in order to achieve maximum protection over that right.

This article is part of our Brexit series