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Brexit and IP: a primer



James Nurton


Managing IP answers your questions about the impact of Brexit on IP

What has happened?

Brexit-168.The UK has voted to leave the EU in a nationwide referendum, by a margin of 52%-48%.

It is the first time a country has voted to leave the EU. Greenland (then part of Denmark) did leave the EEC (as it was) in 1982. But that was a long time ago, Europe was very different and it was a much smaller territory.

Once the UK leaves, the EU will shrink from 28 member states to 27. Its population will go down from 508 million to about 444 million.

How will this affect IP rights?

As of today, nothing changes. EU-derived laws continue to have effect in the UK. EU trade marks and registered Community designs will still be valid in the UK.

What happens now?

The process of leaving the EU is set out in Article 50 of the Lisbon Treaty and negotiation is likely to take several years (not least because about three-quarters of members of parliament supported Remain).

UK Prime Minister David Cameron today resigned following the referendum vote and his successor is likely to be named by October. It will be down to the successor to trigger the departure process by notifying the European Council. The Treaties cease to apply to the UK when the withdrawal agreement enters into force or two years after the notification, unless both sides agree an extension.

What will happen to EU IP rights?

CIPA calls for calm
CIPA President Tony Rollins made the following comments in an email:  

"The UK will not immediately cease to be a member of the EU … The terms of the UK’s exit will need to be negotiated and some estimates suggest that this could take up to two years, if not longer … For now UK patent attorneys and registered trade mark attorneys will still be able to perform the same work they do now, and UK and overseas IP owners will not lose any IP rights or any access to EU IP registration systems."

EU trade marks and registered Community designs cover all 28 EU member states. Although there is no precedent, it is likely that once the UK leaves the EU there will be some arrangement to extend existing rights to the UK. However, the costs and procedures for doing this will have to be worked out between the UK government and Brussels. EUIPO and the UK IPO are likely to provide details in due course.

After the date of withdrawal, new EUTM and RCD applications are not expected to cover the UK. Applicants who want protection in the UK will have to file national applications.

There will need to be transitional arrangements for other rights that are governed by EU regulations, such as geographical indications and supplementary protection certificates.

The latter is likely to be particularly important, given the significance of the life sciences sector in the UK. SPCs are governed at EU level by a Regulation, which will cease to have effect when the UK leaves, even though they are administered by the national patent office.

The country would therefore have to legislate to provide SPCs. "The least disruptive option would be to re-enact the wording of the Regulation," said Liz Cohen of Bristows. "On the other hand, it may be an opportunity to have a debate and cure some of the deficiencies in the Regulation."

ITMA says don’t panic
Extracts from a statement by ITMA President Kate O’Rourke:

"ITMA will advocate for the transition of all EU-based trade mark and design rights to UK-based protection to be simple and cost effective. We will also be calling on the UK Government to ensure that UK practitioners remain entitled to represent clients before the EUIPO."

Will there be any impact on European patents?

No, as the European Patent Organisation is a completely separate system from the EU. Applicants for European patents will continue to be able to designate the UK and UK patent attorneys will still be able to act before the EPO, just as their counterparts in countries such as Switzerland do.

However, many patent attorneys in the UK fear that being outside the EU will make them less appealing to clients than those in countries such as Germany.

What will be the impact on the UK profession?

In the short term, the transitional arrangements and the likely need to (re-)register trade marks and designs in the UK might generate extra work.

But most practitioners fear that in the long term they will lose out as they will no longer be able to handle EU trade mark and design filing, opposition and litigation work.

Some UK-based practitioners have said they will seek to qualify and/or move to other EU countries such as Ireland or France so that they can continue to do EU work.

They can also clutch at the fact that the new EU Trade Mark Regulation provides that representatives in European Economic Area (EEA) member states can act before the EUIPO. No one knows if the UK plans to join the EEA, but if it does that might benefit trade mark attorneys.

Similarly, solicitors and barristers are likely to lose EU-related transactional and litigation work, including handling cases at the General Court and CJEU in Luxembourg.

Speaking of Luxembourg, the UK will lose its judges who sit in the EU courts. It remains to be seen what will happen to UK staff in other EU institutions, such as EUIPO in Alicante. Some of them have worked there since the CTM was launched in 1996.

What about the Unitary Patent and UPC?

Statement by EPO President Battistelli
"The Office underlines that the outcome of the referendum has no consequence on the membership of the UK to the European Patent Organisation, nor on the effect of the European Patents in the UK. Concerning the Unitary Patent and the Unified Patent Court, the Office expects that the UK and the participating Member States will find a solution as soon as possible which will allow a full implementation of these so-long awaited achievements."

Good question. The intertwined Unitary Patent and UPC are in the process of being implemented, and were expected to come into force next year, but they will now at least be delayed and may well be dead.

The system requires 13 ratifications by EU member states to come into effect, including the three largest markets – these are France, Germany and the UK. Germany and the UK were expected to ratify this year (France has already done so). However, it is highly unlikely the UK could remain part of the system: the Unitary Patent is established by an EU Regulation, so could not apply to a non-EU state. The UPC is created by an international agreement, but within the framework of EU law.

Some have suggested that, in the short term, the UK could ratify the UPC to get the system up and running, with a view to withdrawing once the UK leaves the EU in a few years’ time. But there would surely be political and practical difficulties to this.

In the UK’s absence, Italy takes its place as the third required ratifying state. Some of the legal arguments, including the possibility of the UK joining the UPC post-Brexit, are discussed in an article by Wouter Pors of Bird & Bird, published before the vote.

So it should only be a short delay then?

There is another problem: the UPC Agreement names London as one of the locations of the central division, alongside Paris and Munich. Though some have argued that London could still fulfil this role even if the UK were not part of the UPC, this seems unlikely. Instead, it is probable that the UPC will have to be amended to replace London with another location such as Milan or The Hague.

The problem is that if you open up the UPC Agreement, you risk inviting further changes, which could substantially delay or even kill the system.

Moreover, there is a practical question: would the Unitary Patent and UPC system still be commercially attractive without the UK? Many patent applicants say they only value protection in a few countries, such as the UK, France and Germany. If they have to file a Unitary Patent and separately a UK patent, they might think the former is not worth it.

Would UK IP practitioners still be able to take part in the Unitary Patent/UPC?

As mentioned above, European patent attorneys in the UK could continue to prosecute patents at the EPO.

However if the UK is out, UK-qualified solicitors and barristers would not be eligible to act in the UPC. Likewise UK judges could not sit in the court.

Paradoxically, UK patent attorneys who have the necessary litigation qualification would in principle be able to appear before the court.

What about other IP laws?

There are many other EU directives that affect IP issues, including copyright, biotechnology and enforcement. Legislative discussions are also underway on trade secrets and the Digital Single Market.

The existing directives are implemented in UK law, so it would be up to Parliament to decide whether to change the law post-Brexit. With many other priorities, it is unlikely there would be major changes quickly.

A more interesting point is that UK judges would no longer have to follow EU case law, which might allow them to make new law on issues such as parallel imports, trade marks and biotechnology patenting.

Are there any other implications of Brexit?

Yes.

Unlike England, the majority of voters in Scotland and Northern Ireland were in favour of remaining in the EU. The vote increases the likelihood of Scotland holding another independence vote, and some have speculated there may be a two- or three-way referendum in Northern Ireland and/or the Republic of Ireland.

London also voted overwhelmingly in favour of remaining, leading some people to suggest the city could also break away. But that is probably fanciful.

Finally, there is speculation that the Brexit vote has emboldened anti-EU campaigners in other countries, which could lead to referendums in other EU member states. Both France and Germany have elections next year.

When will we know more?

Don’t hold your breath. The leaving process will take a long time and there will be many things to discuss – some say as many as 10,000 pieces of legislation. IP is unlikely to be top of the list. 

Read all our coverage at managingip.com/Brexit

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