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Privacy statement - Terms and conditions

your intellectual property following the 'Brexit' referendum

1 July 2016

Following the vote to leave the European Union by the UK populace on 23 June 2016, in the 'Brexit' referendum, businesses will be looking to ensure the security of both the tangible and intangible assets. There are a number of steps which businesses should take to protect their intellectual property. As matters stand, in the immediate aftermath of the vote, there is no immediate impact to UK intellectual property rights - but the medium and long term effects are likely to be significant.

The UK has voted to leave the European Union, but will remain a member until the exit process is complete. There has been no decision taken yet as to how the UK should arrange its relationship with the EU. Whilst total withdrawal was argued for prior to the vote by some members of the 'Vote Leave' campaign, maintaining free movement of goods, services and people has not been ruled out by any means.

Whatever relationship is agreed, during the period of negotiated withdrawal, it is likely that transitional or grandfathering provisions will be implemented in order to provide a certain level of continuity to the UK/EU intellectual property regime. There are, however, likely to be some changes following withdrawal, and the UK’s IP law may in the future develop in a different direction.

We have set out below our understanding of the current situation, our expectation of some changes to IP rights, and some suggestions of actions that businesses may want to take now to protect themselves and their IP.

Current position

Over the course of a number of years, the UK and European intellectual property regimes have gradually harmonised (much of which has been as a result of the EU adopting legal and procedural ideas developed in the UK), with EU regulations, directives and jurisprudence continuing to have a profound effect upon the intellectual property landscape in the UK. Currently, the European Union Intellectual Property Office (EUIPO) manages the European Trade Mark (EUTM) and Registered Community Design (RCD) systems. The European Patent Office (EPO) is slightly different; it provides a single procedure for granting patents, but currently every ‘European’ patent granted is treated in law as a bundle of separate national rights. A domestic system of protection remains in respect of all these rights, but is intended to differ as little as possible from the EU-wide standard.

European Patent system

The vote last week will not affect European patents and applications that have been applied for or granted at the EPO. This is because the EPO is not an EU body. It was created as a result of a separate international agreement known as the European Patent Convention (EPC). There is no suggestion that the UK will leave the EPC and we therefore expect patent applications through the EPO to proceed EPO.

Some aspects of UK patent law and indeed EPO patent law are affected by the Court of Justice of the European Union (CJEU). An example is the Biotech Directive 98/44/EC. This has been incorporated into the Implementing Regulations to the EPC and so will continue to govern applications to the EPO. We also do not expect significant changes to the approach of the UK IPO, which considers national patent applications.

Unitary Patent system

The Unitary Patent and a Unified Patent Court (UPC) were due to begin operation in 2017. The intention of the Unitary Patent system is to reduce the complexity and legal costs associated with registering and maintaining patents across Europe, allowing for a single registration to take effect in all signatory states (including all major EU patent jurisdictions). It is also intended to simplify patent litigation by stamping out 'forum shopping' (both Unitary Patents and those registered under the EPC will be subject to the jurisdiction of the Unitary Patent Court).

One of the three branches of the central division of the UPC was intended to be in London, and would cover chemical and pharmaceutical patents.

For the UPC to progress, ratification is currently required by Germany, France and the UK. The UK has yet to ratify the UPC Agreement. Because the UK currently remains part of the EU, the UK could still ratify prior to Article 50 being invoked, and progress to the UPC commencing in 2017, when the UK would be likely to still be a member of the EU. However, to be ratifying EU law would in inconsistent with the Leave vote. As matters stand, even if the UK started off in the UPC, it would subsequently have to leave the UPC when it leaves the EU, since according to the CJEU, states cannot be members of the UPC if they are not in the EU.

The UPC Agreement will need to be amended as a result of Brexit in any event, and although anything is possible, given the stance of the CJEU, it would seem unlikely that the UPC Agreement would be amended to allow the UK to remain a member of the UPC. The forerunner of the UPC, the European Patent Litigation Agreement, which offered participation from non-EU states, was deemed unlawful by the European Commission. It seems therefore that the UPC is likely to stall for a time. The UK is after all, together with Germany and France, one of the three most significant jurisdictions for patent litigation in Europe.

We can therefore expect that UK patent litigation will continue as it currently does, with UK validations of European patents being separately litigated in the UK. Even with the UPC, of course, patent holders still have the choice of using the national courts rather than the UPC.

Supplementary protection certificates

For certain medicinal products and other products which require marketing authorisation, supplementary protection certificates (SPCs) can be granted to extend the period of patent protection. The reasoning behind the SPC regime is to offset the delay suffered in getting such products to market, following the grant of a patent, as a result of the need to secure prior marketing authorisation. SPCs for medicinal and plant protection products are governed by EU regulations, rather than any domestic law, and would therefore cease to apply in the UK in the event of Brexit.

It is likely that the UK would want to keep some form of supplementary protection for medicinal products to protect its pharma and biotech industry. Quite how the law will work is uncertain; the current systems and some decisions from the CJEU have been extensively criticised. It may therefore be that the UK implements its own system of supplementary protection.

Registered Community Designs and European Union Trade Marks

With the significant level of harmonisation, the implications of a UK exit for RCDs and EUTMs are perhaps the most substantial, and will likely need the most immediate attention and preparation of transitional provisions.

Post-Brexit, RCDs and EUTMs may not extend protection to the UK and, although many UK companies currently register a national trade mark before applying for a EUTM, the cost to brand owners could increase as they may be required to make a separate application to secure protection in the UK, if they do not already have a UK national mark in addition to an EUTM.

It is also likely that, upon exit, the UK will no longer be deemed an appropriate forum for EUTM or RCD disputes to be heard in. As such, UK businesses seeking to enforce or protect their EUTMs or RCDs even against UK based defendants may need to do so in another EU member state. For example, the jurisdiction provisions of the EUTM Regulation provide that infringement actions can be brought in the courts of the member state in which the defendant is domiciled or, if he is not domiciled in any of the member states, in which he has an establishment. Alternatively such actions can be brought in the courts of the member state in which the act of infringement has been committed or threatened. If EUTMs and RCDs no longer extend to the UK, acts in the UK will not infringe them.

Additionally, the possibility for UK EUTM holders to rely on use in the UK alone to prevent a revocation action against a EUTM for five years non-use (already doubtful see the Sofa Workshop decision) is likely to be ruled out. UK businesses will not be able to rely on any domestic use of their EUTMs marks if made after the UK ceased to be an EU member state, if challenged to demonstrate 'genuine use' throughout the EU (a frequent third-party challenge to the validity of EUTMs). How such domestic use while the UK was still an EU member state will be treated in the face of this type of challenge is still unclear.

For those RCDs and EUTMs already registered, transitional provisions are likely to be implemented which will determine the scope of protection going forward. It is unlikely that these registrations will cease to have effect entirely. Instead, it may be that a process of 'conversion' is implemented, similar to that which EUTMs can undergo if successfully challenged, in which a rights holder can 'convert' part of its protection to a UK-only registration retaining the EUTM priority date, with the EUTM remaining in force. It is likely that some new rules will be developed. We cannot know, at this stage, whether the protections afforded by a European Union Intellectual Property Office registration will cease to cover the UK (as expected) and if so, when that will happen and whether some other process will be developed in order for owners of such rights to be able to maintain protection in the UK.

Further, in relation UK national trade marks and UK national registered designs, these have been harmonised by EU Directives and their scope is therefore subject to the guidance of the CJEU. The UK courts have not always welcomed this guidance, particularly in relation to trade marks. Therefore, even if the current UK legislation remains unchanged in respect of such national rights following the conclusion of the Brexit procedure, if the UK is no longer subject to such EU Directives, we can expect the way these formerly harmonised provisions are interpreted to gradually diverge in the UK from how the equivalent provisions are interpreted in the remaining EU member states. This is because the CJEU will no longer be the final arbiter.

Portfolio management 

Businesses should review their existing portfolio of rights, particularly trade marks and registered designs , and establish whether the business has sufficient protection in both the UK and the rest of the EU. When considering if the protection is sufficient, bear in mind any new vulnerability to revocation for non-use attacks, as discussed above. Businesses do not need to re-file patents as a result of Brexit.

In relation to new registrations, consider whether you need to make any changes to filing and opposition strategies. For example, would it be more cost effective to simply protect and oppose marks in the UK? Withdrawing from the EU is likely to mean that European companies will need to file separate trade mark applications in the UK, and these may be easier to oppose than EUTMs if your reputation is not substantial in the UK. 

We expect that provisions will be agreed allowing UK national rights to be split out from EUTMS and RCDs, and initial indications suggest this may be more cost effective than filing a separate application. However, none of this has yet been agreed, and it is worth considering when filing new applications whether or not the trade mark or design is sufficiently important to warrant a separate application or applications for a UK national right now.

Licensing

If you are licensing rights to other companies in Europe, you should consider whether your existing licensing arrangements are satisfactory in the event of a Brexit. If those licences cover EUTMs only, they may need to be amended to reflect the separation of the UK and EU rights. When entering into any new licences, you should consider whether the terms of that licence grant you sufficient protection. For example, if you are licensing a EUTM, are there provisions confirming that, in the event of a Brexit, the licensor will procure equivalent protection in the UK for your benefit?

Summary

In summary, IP rights are not immediately affected by the referendum result, but there will be some significant changes once the UK leaves the EU. The UK departure should therefore be carefully considered as a factor in filing and licensing strategies, we no longer expect the UK to be involved in the UPC, and there is there some doubt that the UPC will even happen.

There may be some challenges and surprises, but we believe that a lot will stay the same, and in particular, we believe that EUTMS and RCDs will be able to be converted into UK national rights. We also expect grandfathering provisions to maintain the majority of IP law.

 

Brexit and beyond: navigating the challenges ahead

Our Brexit hub provides useful information on the key areas that are likely to be affected by Brexit, the priority issues for any business or organisation and practical guidance to help you navigate the challenges ahead.

Visit the Brexit hub >

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

Declan Cushley

Declan Cushley

Partner and Head of IP and Commercial Group

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