Analysis GA&P | July 2016 1 Disclaimer: This paper is provided for general information purposes only and nothing expressed herein should be construed as legal advice or recommendation. 1. Preamble 1.1. The result of the 23 June 2016 referendum in the United Kingdom in favour of withdrawing from the European Union entails the triggering of the procedure provided in article 50 of the Lisbon Treaty. The conclusion of such procedure and the UK’s effective exit from the EU will have significant legal consequences, affecting too the field of industrial property rights. 1.2. Any analysis of Brexit’s consequences for industrial property rights must start from a distinction between national rights conferred by the UK authorities in accordance with their national legislation and industrial property rights subject to EU legislation and directly applicable in the Member States. Indeed, we should not forget that the EU’s work in the field of industrial property rights has been intense, both in the harmonisation of national legislation and in the creation of new European-wide industrial property rights. In terms of legislative harmonisation by way of Directives, we should note the following: Directive (EU) 2015/2436 to approximate the laws of the Member States relating to trade marks, Directive 98/71/EC on the legal protection of designs, Directive 2004/48/EC on the enforcement of intellectual property rights, Directive 87/54/EEC on the legal protection of topographies of semiconductor products or Directive 98/44/EC on the legal protection of biotechnological inventions. And in terms of the creation of new EU industrial property rights, to name but a few: EU trade marks [Regulation (EC) no 207/2009], industrial design [Reg. (EC) no 6/2002] or Community plant variety rights [Reg. (EC) no 2100/94], which are direc tly gran ted by EU institutions (the European Union Intellectual Property Office and the Community Plant Variety Office, respectively). 1.3. In any case, it must be made clear prior to carrying out such a differentiated analysis that, until the UK effectively withdraws from the EU, the UK’s national industrial property rights will remain subject to EU law and EU industrial property rights will remain effective in the UK. Brexit’s consequences for industrial property rights Ángel García Vidal Professor of Commercial & Company Law. Universidad de Santiago de Compostela Academic Counsel, Gómez-Acebo & Pombo One of the policy areas most affected by EU law is industrial property, which is why Brexit will have the significant consequences laid out in this document. Analysis GA&P | July 2016 2 2. Effects on UK industrial property rights After Brexit, industrial property rights granted by the UK authorities will continue to have effect and will not be modified in any way. Nor will governing legislation undergo any changes, as they are national laws. However, after Brexit, the UK will no longer be bound by directives aimed at harmonising industrial property rights and could, if deemed appropriate, modify its national legislation without being subject to EU law. Along the same lines, case law of the Court of Justice of the European Union (CJEU) in response to requests for preliminary rulings related to such directives will no longer be binding. Nevertheless, if the UK remains in the European Economic Area after Brexit, many directives would continue to be relevant, insofar as they also apply to EEA members. 3. Effects on industrial property rights subject to EU legislation directly applicable in the Member States 3.1. EU trade marks, designs and plant varieties One of the defining characteristics of EU trade marks, designs and plant varieties is that they have unitary effect in the entire territory of the Union. Therefore, once the UK has left the EU, these Regulations will no longer be directly applicable in its territory and the relevant rights will no longer have effect in the UK. Obviously, the practical consequences may be devastating, as companies from all over the world which currently hold industrial property rights with effect in the entire EU would no longer be protected in a market as important as the UK. Therefore, UK authorities will foreseeably (and ideally automatically) recognise an industrial property right to any party that holds such an EU industrial property right at the time the UK effectively withdraws from the EU. However, any rights that may be recognised will no longer be regulated by the provisions of EU law but rather by the relevant legislation passed by the UK parliament (which could consist of specific legislation turning the provisions of EU regulations into UK law, with the appropriate amendments). In any case, once Brexit becomes effective, EU trade mark, plant variety and design applications will lead to rights that no longer benefit from protection in the UK. Companies will have to apply for the relevant UK right in order for their industrial property to be protected there. 3.2. Special features of supplementary protection certificates for medicinal products and plant protection products Among the industrial property rights regulated by the EU by way of legislation directly applicable in the Member States, are supplementary protection certificates fo r medi cinal p rodu c t s and plan t protection products, currently regulated by Regulation (EC) no 469/2009 and Regulation (EC) no 1610/96, respectively. According to said legislation, any product protected by a patent in the territory of a Member State and subject, prior to being placed on the market as a medicinal product, to an administrative authorisation procedure as laid down in EU law, may be the subject of a certificate. The application for a certificate must be lodged with the competent industrial property office of the Member State which granted the basic patent and where the marketing authorisation was obtained. Therefore, if the basic patent has effect in various Member States and a certificate is also desired in various Member States, an application must be lodged in each State where the product is protected and where it has obtained a marketing authorisation. And the na tional au thori ties ( the competent authority of the Member State concerned, unless a specific authority has been designated for such purpose) are responsible for issuing the certificate. These are therefore national industrial property rights, given that the supplementary protection certificates are national rights, fully subject to the Analysis GA&P | July 2016 3 principle of territoriality, in spite of being regulated by EU legislation directly applicable in the Member States. As a result, if the UK leaves the EU, the future of those national rights directly governed by EU Regulations will have to be determined. These rights will of course continue to exist, as they were granted by the UK, but the legislation governing them will no longer be applicable and the UK will therefore have to pass its own legislation governing such rights (the EU regulations could be reproduced in a new UK law). 3.3. Special features of protected designations of origin and geographical indications Protected designations of origin and geographical indications are currently granted under EU law, which is sectorspecific in the sense that there are different regulations depending on the type of product protected by the designation of origin or geographical indication. For example: a) agricultural products and foodstuffs [Regulation (EU) no 1151/2012 on quality schemes for agricultural products and foodstuffs]; b ) spi ri t d rink s [Regula tion (EC ) no 110/2008 on the definition, description, presentation, labelling and the protection of geographical indications of spirit drinks]; c) wine products [Regulation 1308/2013 establishing a common organisation of the markets in agricultural products; and d) aromatised wine products [Regulation (EU) no 251/2014, on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products]. These regulations establish a system of protection of designations of origin and geographical indications based on the requirement to register them with an EU Register and a registration procedure that begins with the filing of an application with the national authority of the Member State in whose territory the geographical area is situated or directly with the European Commission where an application for registration concerns an area situated in various Member States or an area in a third country. Once the registration has been approved by the EU, protected designations of origin and geographical indications are subject to the protection provided in the above-mentioned EU regulations. Given the above, Brexit will mean that protected designations of origin and geographical indications that refer to geographical areas in the UK are no longer protected in the EU as Member State designations or indications. And as the UK will no longer be bound by such regulations, EU designations and indications in the UK will also cease to be protected. Reciprocal protection will therefore have to be implemented by way of international trea ties be tween bo th par ties . In fact, the above-mentioned regulations provide for the protection of third country designations and indications, which are subject to registration with the EU register when they satisfy the relevant criteria and are protected in their country of origin (in the case of agricultural and wine products, an international treaty allowing such registration is expressly required). 4. European patents and unitary patent The problem of patents deserves a special mention. In this respect we should make a distinction between national and European patents and, within European patents, between classical European patents and European patents with unitary effect. 4.1. With respect to UK patents, given that they are governed by domestic UK legislation, the consequences will be the same as for other UK industrial property rights (possibility of amending national legislation in a move away from EU Directives, unless the UK remains in the EEA, and the CJEU’s case law will no longer be binding). 4.2. Classical European patents will undergo no ma jor changes given that they Analysis GA&P | July 2016 4 are regulated by the European Patent Convention 1973 (EPC). This convention makes a clear distinction between the European patent and the European Union, which is why Switzerland participated in its preparation and ratification (and the reason why the EPC currently has several Contracting States that do not belong to the EU). 4.3. Brexit will have a far greater impact on the European patent with unitary effect, which is governed by three pieces of legislation: a) Regulation (EU) no 1257/2012, implementing enhanced cooperation in the area of the creation of unitary patent protection; b) Regulation (EU) 1260/2012, implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements; and c) the Agreement on the Unified Patent Court (UPC Agreement), signed on 19 February 2013 by 24 EU Member States (all those that made up the EU at that time, with the exception of Spain, Poland and Bulgaria) and on 5 March 2013 by Bulgaria.. The unitary patent is a European patent obtained in accordance with the provisions of the European Patent Convention (EPC) and is therefore applied for at the European Patent Office. The special feature of the unitary patent is that, once granted, it will have effect (equal effect, according to Regulation 1257/2012) in all the participating Member States (currently all the EU members except Spain, given its total opposition to the language requirements, and Croatia, which entered the Union in July 2013). The Unified Patent Court (UPC) will have exclusive jurisdiction over litigation relating to the unitary patent and will also be competent to decide on cases concerning classical European patents and supplementary protection certificates issued for one of these patents. The UPC is governed by the UPC Agreement, which is not an EU legal instrument but rather an international treaty. The complex structure of this system explains the complex situation generated by Brexit. Obviously, EU regulations regarding the unitary patent cannot be applied in the UK (as they are EU texts with no effect in third countries). However, the UK, in spite of leaving the EU, could conceivably ratify the UPC Agreement given that, as stated above, it is not an EU legal instrument. And insofar as the UPC has jurisdiction over classical European patents, the UK may have an interest in not dissociating itself from the UPC. If so, this would facilitate the entry into force of the system. Keep in mind that Regulation (EU) no 1257/2012 came into force twenty days after its publication in the Official Journal of the EU (art. 18(1)) but is not yet applicable. Art. 18(2) provides that it shall apply from 1 January 2014 or the date of entry into force of the UPC Agreement, whichever is the later. As the UPC Agreement had not yet entered into force on 1 January 2014, the Regulation shall not apply until said Agreement comes into force. And according to art. 89 of the UPC Agreement, this will happen on the first day of the fourth month after the deposit of the thirteenth instrument of ratification, “including the three Member States in which the highest number of European patents had effect in the year preceding the year in which the signature of the Agreement takes place” (that is, Germany, France and the UK). In any case, any possible aspiration of the UK to remain a party to the UPC Agreement may encounter obstacles within the text of the Agreement, given the close ties between the Court and EU law, which will make it practically impossible for the UPC’s central division to be located in London. Possible alternatives are Milan and The Hague. In turn, if the UK decides not to ratify the UPC Agreement, the main consequence would be that, until it effectively leaves Analysis GA&P | July 2016 5 For further information please visit our website at www.gomezacebo-pombo.com or send us an e-mail to: email@example.com Barcelona | Bilbao | Madrid | Valencia | Vigo | Brussels | Lisbon | London | New York For any questions please contact: Miguel Troncoso Resident Partner, Brussels Tel.: 32 (0) 2 231 12 20 firstname.lastname@example.org Miguel Lamo de Espinosa Madrid / London Tel.: (34) 91 582 91 00 email@example.com Mónica Weimann Resident Partner, London Tel.: 44 (0)20 7329 5407 firstname.lastname@example.org Javier Vinuesa Partner, Madrid Tel.: (34) 91 582 91 00 email@example.com Santiago Gómez-Acebo Partner, Madrid Tel.: (34) 91 582 91 00 firstname.lastname@example.org the EU, the UK would be blocking the entry into force of the system (given that, as long as it is a member of the EU, its ratification of the UPC Agreement is necessary in order for the system to begin operating). In conclusion, two important questions must be asked: 1) will a unitary patent be attractive if it does not have effect in two such significant markets as the UK and Spain?; and 2) will Brexit be used by Spain as a pretext to once again attack and attempt to modify the system? 5. Consequences in terms of the exhaustion of industrial property rights Finally, if the UK also withdraws from the EEA, the marketing in its territory of products that include an intangible asset protected by an EU or Member state industrial property right will not entail the exhaustion of such right. Therefore, holders of these rights in the EU (or in any of its Member States) could prevent parallel imports from the UK.