On 29 March 2017 the UK began the formal process of its withdrawal from the EU by serving notice of withdrawal under Article 50 of the Lisbon Treaty. Withdrawal will conclude with the repeal by the UK of the European Communities Act 1972, with the effect that the EU treaties will cease to apply to the UK. There is a maximum two year timeframe from formal notification for this to take place (unless extended by agreement). The UK is therefore planning to leave the EU by the end of March 2019. The Government presented the EU (Withdrawal) Bill to the UK Parliament in July 2017. The Bill has been debated in the House of Commons and the House of Lords has proposed a series of amendments, which will now be considered by the House of Commons. The Bill will have the effect of converting the majority of existing EU law into UK law and EU law will continue to have effect in the UK until the UK actually leaves the EU.
There have been a series of papers published by the European Commission, the UK Government and the EU Intellectual Property Office regarding the post-Brexit options for IP. National IP rights are unlikely to be affected post-Brexit. Pan-European IP rights will be affected. Trade marks and designs are likely to be the IP rights most affected but it will impact on other IP rights as well. The most recent and informative documents are the EU Commission’s Draft Agreement on the withdrawal of the UK from the EU and the subsequent publication on 19 March 2018 of the amended text issued by the UK Government highlighting the terms which have been agreed.
Crucially, the draft Agreement refers to a “transition or implementation period” during which EU law will continue to apply in the UK. If agreed, this period will commence on 29 March 2019 and continue until 31 December 2020.
Trade Marks & Designs - Significant Impact post Brexit
On leaving the EU, the UK will no longer automatically be covered by EU Trade Marks or Registered Community Designs. The agreed text in the draft Agreement states that, after the end of the transition period, all EUTMs and RCDs will automatically have, “without any re-examination” an equivalent “registered and enforceable intellectual property right in the United Kingdom”, what is being called a “cloned” right.
The automatic transformation of existing EU rights into UK and EU27 rights means that filing, priority and seniority dates will be maintained. There is also agreement that the first renewal dates will be identical.
Additionally, the Withdrawal Agreement confirms that the new UK trade mark registrations cannot be declared invalid or revoked for non-use by virtue of a lack of use in the UK prior to the end of the transitional period. This means that the “cloned” registrations will be given an additional period of time to be put into genuine use in the UK before they can be revoked.
A controversial proposal, which has been agreed by the EU and the UK is that a period of nine months will be allowed for the owner of a pending EU application as at 31 December 2020 to file a corresponding UK trade mark or design application, which will retain the original priority date of the EU filing. This could prejudice brand owners and particularly smaller enterprises who could miss the deadline.
New EUTM and RCD filings post-Brexit will not extend to the UK (they will be limited to the EU 27). Brand owners will need to seek national protection in the UK for their trade marks and designs. Application through the Madrid System will still be available for IRs designating the UK and the UK Government has ratified the Hague Agreement on designs which will come into effect in June 2018.
The UK has confirmed that it will implement the new Trade Marks Directive (in line with the already in force new CTMR) by the deadline of January 2019. However, UK IP mark laws may develop independently over time and diverge from EU trade mark laws. In particular, there is ongoing dispute over the continuing role of the CJEU, although CJEU decisions pre-Brexit will continue to have a binding effect on UK courts.
It is hoped that the UK will implement legislation to mirror the benefits of unregistered community design right (“UCDR”) protection in the UK, following the “Technical Note” issued by the Government in March 2018 which confirmed that the Government would establish new schemes to protect rights where there is no current system in place. This would provide ongoing protection for surface decoration, texture and colour.
The UK court system will no longer have EU trade mark courts. EUTM holders will not be able to enforce them in the UK and obtain pan-EU injunctions under the EUTM Regulation. Brexit may also impact on the general jurisdiction of the UK Courts and enforcement of their judgements in EU 27.
Patents – Potential Significant Impact on Unitary Patent Court and Unitary European Patent Regime post Brexit
Current European Patent Regime:It is important to note that the UK’s exit from the EU will not affect the current European Patent system, which is governed by the European Patent Convention. Businesses can continue to apply to the European Patent Office for patent protection which will include the UK. Existing European Patents covering the UK are also unaffected and European patent attorneys based in the UK will continue to be able to represent applicants before the EPO.
Supplementary Protection Certificates: While the UK remains a member of the EU, businesses can continue to apply for and be granted SPCs using the current system. Once the UK leaves the EU, businesses will still be able to apply for SPCs in the remaining EU Member States under the existing system. The UK Government has stated that it is exploring options for SPC protection in the UK after it leaves the EU.
Unified Patent Court:16 countries (including the UK) have now ratified the UPCA. With the UK’s ratification on 26 April, it is now only a legal challenge to ratification currently before the German Constitutional Court that is adversely impacting on the timetable for the introduction of the new regime. Assuming the challenge fails and Germany ratifies, this would potentially allow the UPC to open in early 2019.
The interesting question is whether the UK can continue to participate in the UPC regime after its exit from the EU. The UK Government has noted that the UPCA is an international treaty and that the international court will have jurisdiction over patent disputes across its contracting states. However, the Government has also noted that the unique nature of the proposed court means that the UK’s future relationship with the UPC will be subject to negotiation with European partners as the UK leaves the EU. The continuing participation of the UK and any participation of other non-EU countries, such as Switzerland, would certainly require amendment of the UPCA. It is thought that this is a possibility, but the question is whether there is enough support to make this happen?
Unitary European Patent:Whilst the UPC is underpinned by an international treaty that could be amended to allow the UK to continue to participate following Brexit, the Unitary European Patent arises from two EU Regulations. If the scope of protection of Unitary European Patents is to extend to the UK following Brexit, a new agreement will be required between the UK and the EU.
Other IP – Lower Impact post Brexit
Copyright - No significant changes post Brexit as copyright law is largely national (although based on several EU directives and regulations). There is likely to be an impact on territorial licensing agreements once the UK is not subject to EU laws and/or following some divergence of UK and EU laws.
Databases - Sui generis database right is implemented in the UK by regulation but qualification for database right is by reference to membership of the EEA. The UK and the EU have agreed that the holder of a database right in respect of the UK which arose before the end of the transition period shall maintain an enforceable right affording the same level of protection and for an equivalent remaining term.
eu domains - Domain name .eu will not be available for UK national businesses to use, but pan EU business can register .eu domains though EU based subsidiary or agent.
Review filing / brand protection strategies now. Consider filing UK national applications in addition to EUTMs and RCDs in 2020 and renew UK TMs rather than allowing them to lapse. If seniority has been claimed for earlier UK marks ensure possession of documents in respect of the underlying mark, especially if it has been allowed to lapse. Consider potential non - use of EUTMs in the UK and the EU27
Plan to file national registered design applications in the UK where rights owners have specific business focus in the UK, at the same time as a RCD. Consider where designs are first made available to obtain maximum benefit from UCDR and UK design rights.
Make a decision as to which European patents and applications should be opted out from the jurisdiction of the UPC. The “sunrise period” will allow opting out 3-4 months before the UPC becomes operational or else European Patents will automatically be subject to UPC jurisdiction.
Consider a revised litigation strategy pre-Brexit to obtain the most effective remedies in the long term. In particular, seek to conclude existing or potential litigation within an expedited time frame. Anti-counterfeiting programmes may also need to be reviewed, particularly the filing of customs notifications in the EU and UK.
Consider the potential impact of Brexit on various clauses such as territory, force majeure, material adverse change, governing law and jurisdiction. Clear jurisdiction clauses are advisable. Any references to EU legislation will need to be considered.
IP and transactions
Consider the impact of Brexit on due diligence, licences, assignments and security over IP.