17 October 2017

Brexit: Impact on intellectual property rights

As negotiations for the UK’s withdrawal from the EU are well underway we look at what this process could mean specifically for the intellectual property rights so many businesses rely upon when trading throughout the world.

The European Union (Withdrawal) Act 2018 repeals the European Communities Act 1972 (ECA) incorporating all EU laws into UK domestic law ‘where practical’ to ensure no unintentional gaps are left by the repeal of the ECA.

This will allow for gradual adjustment of each piece of incorporated EU law on a topic by topic basis following the Brexit date of actual separation rather than the impractical task of requiring every adjustment to be completed by that deadline date. This will also mean a focus can be brought to bear on the issues which need new legislation immediately upon the Brexit date, such as customs or immigration rules to meet the negotiated position.

EU Treaties and Regulations are forms of legislation which are directly applicable, having an automatic status of law applicable in each Member State. Where EU institutions have exclusive competence they tend to use Regulations as a legislative instrument as, generally speaking, these will have direct effect throughout all Member States without requiring any further domestic implementing legislation being put in place.

Directives are the legislative instrument which tends to be used, instead of the Treaties or Regulations, in instances of attempts to harmonise laws across the EU. It puts the onus on each Member State to implement domestic legislation to achieve the desired harmonised approach. This is usually in relation to topics on which the EU institutions do not have exclusive competence.

It’s worth noting that many international conventions and treaties also exist which are administered by the World Intellectual Property Organisation and which harmonise a lot of recognition of the national intellectual property rights. Several of these have a large number of contracting states and these systems and conventions are also supra-European and so would remain in place and unaffected by Brexit. Examples of these are the Madrid system which is an international trade mark system covering 113 countries and the Berne convention recognising copyright across 164 countries.

Another key intellectual property rights concept which will require further consideration is the impact of Brexit on something known as the ‘exhaustion of rights’ principle which we’ll cover in a separate note.

What about the different types of intellectual property rights – how is each of them likely to be affected by Brexit?

On 24 September 2018 the UK government released a number of technical notices explaining what can be expected in a no-deal scenario in respect of IP. Whilst we have previously advised that most EU IP rights will not lose protection come March 2019, we have advised and continue to advise that proactive steps should be taken to file for both EU and UK trade marks. This is especially the case where such marks are a visible and valuable brand for a business.

A key consideration across various IP rights arises in connection with correspondence addresses. The UK’s withdrawal on 29 March 2019 is likely to have consequences on the rights of UK businesses, organisations and representatives to represent themselves or appoint a representative in relation to EU trade marks or registered community designs. Those businesses who are based in the UK and/or have appointed representatives who are based in the UK should seek advice about what arrangements can be put in place during this transitional period. The same should also be considered where businesses have supplied an address for service which is within the EEA but outside the UK. It is expected that European Patent Attorneys based in the UK will continue to be able to represent applicants before the European Patent Office

Patents

UK Patent   A registered form of protection, patents in the UK are derived from the Patents Act 1977.  This is a domestic law not derived from an EU law, so UK patent applications and registrations should remain largely unaffected by Brexit. 
 
European Patent Convention   Likewise registrations held under the European Patent Convention (EPC) will remain unaffected as this system of applying for patent protection across different nominated European countries is, despite the name, distinct from the EU itself and not derived from EU law or governed by an EU institution.
Unitary Patent System 

However, the far more significant area of impact for patents is already being seen in respect of the introduction of the Unitary Patent and its supporting EU court institution, the Unified Patent Court (UPC).  The introduction of this new harmonised protection created by the Unitary Patent Agreement is now seriously stuttering.  The Unitary Patent is not a basket of individual national protections, as under the EPC, but instead is a single unitary right giving protection enforceable across all ratifying Member States. Spain and Poland have yet to sign the Agreement itself.

Germany are yet to ratify the Unified Patent Court Agreement and as a result the aim to commence the operation of the UPC by December 2017 was not possible. The UK has ratified the Unified Patent Court Agreement but if the Unified Patent Court is never fully ratified, the domestic legislation to bring it into force will never take effect. On withdrawal, there would be no change.

Should full ratification occur prior to the withdrawal date, business would no longer be able to use the Unified Patent Court and unitary patent to protect their inventions in the UK. Instead an equivalent UK protection would need to come into effect to ensure continued protection in the UK. UK business would, however, still be able to protect their inventions in the contracting EU countries.

Having ratified the Unitary Patent Agreement it seems clear that the UK government will look to continue to be part of this system after Brexit.

Importantly, UK business would still be subject to litigation in the Unified Patent Court should a rights holder bring a claim for infringement of existing rights.

 

Copyright

Copyright in the UK is an unregistered right which largely derives from the Copyright, Designs and Patents Act 1988 (CDPA).  Although some amendments have been made over the years to the CDPA to harmonise elements with European laws, this is predominantly an independent domestic regime.  Therefore, the UK’s copyright regime is unlikely to change significantly as a result of Brexit.

There are, however, a limited number of cross-border copyright areas that will be affected, one important area being the portability of online content. As of 29 March 2019, the EU Regulation on cross-border portability of online content services will no longer apply to the UK. This means that individuals residing in the UK will no long have the benefit of their digital content subscriptions when travelling to the EU. For businesses, any online content service provider who wishes to offer services to its subscribers in an EU Member State or States will need to comply with the rules of the relevant EU Member State or States. This increased legal and regulatory burden is something that should be addressed well in advance of the withdrawal date.

Trade Marks

UK Trade Mark   The registered rights of trade marks in the UK only are derived from the Trade Marks Act 1994 which is a domestic law not derived from an EU law, so UK only trade mark applications and registrations should remain largely unaffected in any direct way by Brexit.
EU Trade Mark  

European Union Trade Marks (or what used to be known as Community Trade Marks or CTMs) are an EU derived protection which provides coverage across all Member States.  Once Brexit takes effect, this will of course not include the UK. 

The UK government are committed to ensuring that property rights in all existing registered EU trade marks will continue to be protected and enforceable by the UK by providing an equivalent mark registered in the UK.

Any existing EU trade mark holder will have a new UK equivalent right granted that will take effect on the date of withdrawal. What is not clear, is whether this equivalent right will take effect automatically or whether the EU right holder will have to take positive steps and possibly pay a fee.  Any applications for EU trade marks which remain in progress as at the date of withdrawal will be afforded a period of nine months to apply to the UK for the same protection. Importantly, the date of EU application for priority will be retained.

Given the lack of detail on costs just yet we would continue to advise that a sensible approach for any business holding an EUTM now, but no UK registration, would be to apply for a UK registered trade mark.

 

Design Rights

UK Registered Design  This UK only protection derives from domestic legislation, the Registered Designs Act 1949.  Generally speaking it is a right that has been largely overlooked in recent years since the introduction of the Registered Community Designs, but given the issues identified below with that, it may find a resurgence is on the cards as it will remain unaffected by Brexit.  Again, a use of parallel protections for the next couple of years may be a wise approach given the shorter duration of registered designs.
Registered Community Design   As with EUTMs, a new equivalent UK right will be granted with ‘minimal administrative burden.’ What this means for businesses is yet to be seen.
Unregistered Design Right  

There are two types of unregistered design right, the UK specific right and the EU right.  As the name suggests, neither require registration, but have significant differences with the UK right lasting 15 years but being narrower in scope as it does not apply to surface decoration.  Whilst the EU right only lasts for 3 years, giving a protection which derives from EU law and is not implemented via UK law, applying broader protection but only being available if the design is first made available to the public in the EU.

On withdrawal, all unregistered Community designs which exist at the point of withdrawal will continue to be protected and enforceable in the UK for the remaining period of protection of the right. The UK will create a new unregistered design right which will be known as the supplementary unregistered design right. This new right will mirror the characteristics of the unregistered Community design.

 

Summary

So, in summary, the following gives a broad feel for those intellectual property rights more likely to be affected and those less likely to be affected by Brexit:

IP rights unaffected IP rights affected
UK registered patents Unitary Patent Court (UPC) and Agreement
European Patent Convention (EPC) EU trade mark (EUTM) registrations
Copyright Registered Community Designs (RCD)
UK registered trade marks Unregistered Design Rights (UDR)
UK registered designs  

Any business holding rights in the right hand box would do well to take a look at their IP portfolio now and consider the need to apply for some UK only registrations, where criteria and timing allow, to try to take a proactive approach ahead of transitional arrangements getting further clarified.

If you’d like some assistance in considering the steps your business should be taking to review its intellectual property rights and strategy, please contact a member of our Commercial team.

© Shulmans LLP 2017

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. Shulmans LLP is not responsible for any activity undertaken based on this information.