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What does Brexit mean for Intellectual Property?

Published: 22 July 2016
Area of Law: Brexit, Designs, Intellectual Property, Patents, Trade Marks, Brands & Reputation

What does Brexit mean for Intellectual Property?

The UK will remain a member of the European Union for a period of 2 years from when negotiations start, and our new Prime Minister Theresa May has made it clear that Britain is not even ready to begin negotiations. So in the immediate term, there is no impact on IP as the existing systems will remain in place for a few years yet. 

Going forward, it is true that many of the IP rights that are now available to parties derive from European legislation, for example the European Union Trade Mark “EUTM”, formerly known as the Community Trade Mark “CTM”. The position surrounding some of these rights is necessarily uncertain at the moment, but it is inconceivable that the UK Government will adopt a position which means that UK businesses are going to be disadvantaged.  So I expect any changes will make the necessary accommodations to ensure that businesses will continue to enjoy the protection that they have at the moment.

Here we explore some of the more well known IP rights in a little more detail and what companies should be doing to prepare for any changes.

Patents

Parties will continue to enjoy a position whereby they can obtain either national patents, or patents filed via under the European Patent Convention “EPC” via the European Patent Office “EPO” in Munich, designating the UK as one of the states.  The EPC is not part of the EU, and this private treaty, which has largely been successful over the years, will continue to operate in the same way. 

The one area where there will be some change will be in relation to what we thought was going to happen to the Unitary Patent, which looks far more uncertain, as does the related question of whether or not a Unitary Patent court will be located within the UK as had originally been planned.  This project for an essentially EU wide patent has been in varying stages of advancement since the 1970s, and many thought it would finally come into force in the next couple of years.

I have heard Lord Justice Jacob, express his view that he thought that Unitary Patent was always more of a political rather than a business project. Given the cracks that appearing in the EU, the project itself may not survive now. That said, there remains much political will for the project to go ahead in the EU and it may yet go ahead without the UK. However, without the UK it will be less attractive to businesses wishing for EU coverage, as the UK remains one of the strongest markets in the EU, and a centre for patent litigation in the EU. Many would think the absence of highly respected UK patent judges from the Unitary Patent Court will make it a less attractive forum.

Trade  Marks

Along with designs, this is the area where most change is likely. EUTMs/CTMs have been widely used within the UK. EU trade mark law has been largely harmonised. 

National IP rights are still going to be available as they have always been, but there is likely to be an increased cost for businesses who had previously relied just on CTMs to provide cover across Europe, because a national UK filing will now be necessary. 

What most commentators expect is that there will be some form of “grandfathering” provisions whereby existing EUTMs can become national marks and may be maintained with the same priority going forward after a Brexit.

Rights holders need to be aware that use solely in the UK is unlikely to protect them from a non – use attack on their EUTMs, as plainly the EUTM will no longer be of any relevance to the UK.

There is also likely to be some change in the law of exhaustion of rights. Much will depend on the terms on which Brexit happens. But it is possible that UK rights could prevent goods first sold on the continent from entering the UK, and vice versa, such that parallel trade would decline and pricing differentials emerge.

The position is uncertain, and new legislation must be expected. Parties and their advisors should monitor the position closely.

Designs

Designs is also an area where parties have been able to enjoy a EU wide right with a registered community design or the unregistered version - the unregistered community design right.  The position in relation to these will be very similar to that in relation to trade marks as outlined above. 

Seizure of good by UK Customs

The provisions allowing for this are governed by EU law, and are particularly useful in relation to counterfeit goods. The UK may have its own border controls, which on the one hand may make it easier to intercept goods, but on the other hand, may mean increased costs, very much depending on the terms agreed in Brexit negotiations. 

Agreements involving IP

Parties should review agreements they have relating to their IP, particularly licenses.  One of the consequences of the Brexit vote was the drop in value of sterling which could impact royalty levels and other financial provisions. Parties may also want to ensure that the coverage will continue to be maintained as envisaged at the time of executing the licence. For example a party may need to make a new filing of a UK trade mark if the rights currently under licence are only in relation to EUTMs. 

Unravelling the various EU laws will be an enormous task for the government and its advisors, bearing in mind how interwoven EU IP law is into our own. Change is unlikely to happen quickly but that is no reason to be complacent. The government will be well aware that IP is important to our economy, and I fully expect it is most unlikely that they will support a situation whereby UK businesses are disadvantaged by lack of IP protection as a result of Brexit.

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