We already knew that Brexit would have a significant impact on IP rights, particularly brands. What does the new agreement add to the issues?
The EU-UK Trade and Cooperation Agreement (TCA) setting out the terms of the future relationship between the EU and UK came into effect on 1 January 2021. Here, we discuss the impact of the TCA on IP rights and the implications for IP owners.
Title V of Part Two of the TCA covers IP. The key points are:
- The TCA largely sets out minimum standards that the parties must adhere to, nearly all of which are already enshrined in EU and UK laws.
- We already knew that Brexit would have a significant impact on brands and the TCA does not change that (see our checklist for more).
- The TCA gives the UK greater scope to determine its exhaustion of rights regime (compared to the EU's proposed draft of the TCA).
- As expected, there is nothing in the TCA on the territorial disclosure requirements for Unregistered Community Design and UK Supplementary Unregistered Design rights to arise (see more here).
- No agreement was reached on the mutual protection and enforcement of future geographical indications.
- Personal data can continue to be transferred from the EU to the UK, as if the UK were still a Member State, for at least four months from 1 January 2021 and potentially for a further two months, provided neither party objects.
- The TCA affords the UK greater flexibility in its future copyright regime (compared to the EU's proposed draft of the TCA) although no changes are immediately expected.
- We already knew that Brexit would have a significant impact on digital content services and the TCA does not change that. EU and UK laws will start to diverge within the next 18 months since the UK will not be implementing several key EU Directives.
- There is scope for divergence of laws in important areas such as supplementary protection certificates and regulatory rights.
- The UK will retain Enforcement Directive style damages (including for "knowing infringement") as the EU had wanted.
- UK law has been automatically modified, without specific implementing measures, where necessary to implement the TCA.
A more detailed overview of the impact of the TCA on each IP right is available below.
IP rights in detail
Exhaustion of rights
- The UK has obtained the ability to set its own permanent regime for exhaustion of rights, on which the UKIPO will be consulting in early 2021. In its proposed draft of the TCA, the EU had appeared to want to restrict the UK's future regime to national or regional exhaustion (excluding international exhaustion) and to tie the UK to the recent Tom Kabinet CJEU decision on digital exhaustion (which said that exhaustion does not apply to eBooks and, by extension, other digital content). These restrictions are not in the TCA, giving the UK freedom to establish its own future exhaustion regime.
- We already knew that Brexit would have a significant impact on brands and the TCA does not change that. Our checklist sets out the actions brand owners should consider taking as a result of Brexit. There is little of additional significance on trade marks in the TCA.
- Both parties have committed to retaining certain minimum standards (all of which are already enshrined in EU and UK law) such as on the types of signs that can constitute a trade mark and the grounds for revocation.
- There is no mention in the TCA of protection for marks with a reputation (other than well-known marks) but this is consistent with other international Treaties covering IP and it is submitted that nothing should be read into this omission.
- The TCA does not contain commitments on every element of trade mark law but it is unlikely that significant changes will occur in relation to areas not covered. More likely, there will be gradual divergence in practice and the way provisions are interpreted.
- As with the parties' proposed drafts of the TCA, the provisions on designs are minimal and largely reflect the TRIPS Agreement. The parties must provide a system for the protection of "independently created designs that are new and original" (reflecting the wording of TRIPS) including by way of registration. Protection shall be for 25 years for registered designs and at least three years for unregistered designs.
- Since very few commitments have been given, there is scope for divergence on designs law. The EU is currently considering some revisions to its law on designs (although they do not include fundamental changes). This could see EU and UK law diverge within the next year. Again, gradual divergence in practice and interpretation is also possible.
- As expected, there is nothing in the TCA on the territorial disclosure requirements for Unregistered Community Design and UK Supplementary Unregistered Design rights to arise. This leaves considerable uncertainty for designers who rely on such rights.
- There is a commitment to ensure that designs are also eligible for protection under the law of copyright, with freedom for the parties to determine the conditions and extent of protection. This reflects the EU's recent approach of seeing IP rights as cumulative.
- As expected, no agreement was reached on the protection and enforcement of geographical indications (GIs) which come into existence after the end of the transition period. (The UK had already agreed in the Withdrawal Agreement to protect and enforce GIs in existence in the EU as at the end of the transition period.) This means the UK government retains what it sees as a potential bargaining chip with the EU.
- The EU has recently consulted on extending the GI system to non-agricultural products. Again, this could see differences between EU and UK laws on GIs going forwards.
- Personal data can continue to be transferred from the EU to the UK, as if the UK were still a Member State, for at least four months from 1 January 2021 and potentially for a further two months, provided neither party objects. This gives a limited period of time for an "adequacy decision" to be adopted by the European Commission facilitating cross-border data transfers. This assumes that the UK does not amend its current data protection regime during that period. The UK has already recognised the adequacy of EU data protection, facilitating data transfers from the UK to the EU.
- The provisions on copyright are a relatively orthodox restatement of the international copyright treaties, with a few adjustments for the current state of EU law (which is almost entirely already implemented in the UK). Very little will change in practice as a result of the TCA but it gives some clear indications on what policy initiatives the UK might want to explore (the UK government having highlighted copyright as an area for future possible divergence).
- The parties have committed to a term for authors of life plus 70 years. However, the UK has succeeded in retaining flexibility for how term can be calculated for musical compositions with words, works of joint authorship, cinematographic works, audiovisual works, and anonymous and pseudoanonymous works.
- On exceptions to copyright infringement, the only restriction is the three-step test, as expected. This could allow the UK to introduce a fair use approach to exceptions not confined to the closed list of specific exceptions included in the Information Society Directive (as previously mooted by David Cameron in 2010) including exceptions to deal with new technological, cultural or educational uses.
- As in the parties' proposed drafts of the TCA, there is no limit on the types of work that can qualify for copyright protection, giving both parties freedom to develop their laws especially as regards works by non-traditional authors.
- The EU has succeeded in requiring both parties to retain the commercial lending right for authors and the artist's resale right.
- The TCA gives the parties relative freedom as regards the collective management of rights, containing only high-level requirements on the types of standards they should expect from CMOs. The "free movement" elements of EU collecting society regulation (eg obligations to allow EU right holders to join and multi-territory online music licensing) are not preserved.
- While the UK is afforded some flexibility in its future copyright regime as it wanted, no changes are immediately expected.
Digital content and services
- As expected, audio-visual services are out of scope (specifically excluded from key parts of the TCA). The TCA makes no provision to continue the country of origin copyright licensing regime for satellite broadcasting so local law in the EU Member State of reception will need to be checked to determine if free reception of UK broadcasts can continue. Likewise, as expected, the TCA does not preserve UK customers' rights under the EU's portability regulation when travelling in the EU and EU customers' when travelling in the UK.
- For digital services, the TCA does not continue the cross-border elements of the eCommerce Directive. As a result, UK established services will have to comply with the laws on topics like online information, advertising, shopping and contracting, in each EU country in which their services are received, rather than simply relying on their compliance with UK law to give them "passported" access into the EU. Conversely, the UK has, for now, unilaterally preserved the freedom of EU established services to operate in the UK without needing to comply with additional UK requirements. However, the UK government has said it intends to fully remove the Directive’s country of origin principle from UK legislation to bring EU online service providers in scope of UK laws.
- On intermediary liability, the TCA contains no requirements on either the UK or EU on what protections, immunities or responsibilities their regimes can provide. This provides the UK with flexibility should it decided to provide more or less safe harbour protection for, or impose additional obligations on, hosts and other intermediaries.
- More broadly, we anticipate increasing divergence on regulation of digital content and services, with the UK not adopting key EU legislation such as the Copyright in the Digital Single Market Directive, the Digital Content and Digital Services Directive and the Omnibus Consumer Law Directive, all of which are to be implemented in the EU within the next 18 months.
Patents and life sciences
- The UK has freedom to amend its rules on supplementary protection certificates (SPCs). The TCA provides merely that the EU and UK must have in place further protection for patent-protected products to compensate the holder for any reduction of protection caused by an administrative procedure (such as obtaining a marketing authorisation). The terms and conditions for this, including the length of the SPC, is for the parties to determine.
- The TCA provides that the MHRA (and EMA) must have in place certain regulatory rights – specifically, data exclusivity and market exclusivity rights. The UK already has such periods of protection, and under the terms of the TCA, it is free to change the periods of time and conditions that apply.
- The TCA does not change the application of the Northern Ireland Protocol. This has an important impact on some areas, most notably marketing authorisations and the data/market exclusivity periods that flow from them, as well as SPCs.
- Read more about the impact of the TCA on pharmaceuticals and medical device companies here.
- There are protections for trade secrets and examples of conducts that are (or are not) required to be considered as "contrary to honest commercial practices" (mirroring the Trade Secrets Directive). The EU said in its IP Action Plan that it intends to clarify the use of the Trade Secrets Directive which could result in changes in the way this law is applied across the EU and UK.
Enforcement and customs
- Key provisions of the Enforcement Directive are included. On damages, the EU has succeeded in its desired retention of Enforcement Directive damages for "knowing infringement". We await the results of the UK's recent consultation on the possible introduction of statutory damages for IP infringement (and, if introduced, information on how these will apply for "knowing" infringement).
- As expected, there is nothing in the TCA on jurisdiction and enforcement of judgments. As regards cross-border patent actions and recognition of judgments, until such time as the UK joins the Lugano Convention, these will be governed by UK law (in effect, meaning that they remain largely restricted to declarations of non-infringement, as before).
- As expected, both parties have committed to retaining key elements of customs procedures set out in the Customs Enforcement Regulation (608/2013) and the provisions around goods in transit (both already part of EU and UK law).
UK law modified to implement the TCA
- The UK had already agreed that retained EU law will be interpreted in accordance with retained EU case law unless and until the case law is over-turned or the law amended. We are likely to see parties arguing about whether retained EU case law applies to a particular scenario.
- The TCA immediately introduces a further overlay on this. Section 29 of the UK's Future Relationship Act contains some far-reaching wording which implements the TCA directly in domestic UK law (ie it automatically modifies any domestic law which is non-compliant with the TCA). While this should not have major practical impact for IP (since the IP parts of the TCA should reflect existing UK law), there are some areas where it might be relevant. For example, it may resolve any remaining argument as to whether the three-step test applicable to copyright exceptions (included in the TCA) is now part of UK copyright law – it seems to be.