Brexit Next: Implications for IP

United Kingdom

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In many respects, the European patent landscape remains unchanged. The European Patent Convention is not based upon EU membership, and as before patents will continue to be granted on a national basis in European territories, regardless of whether they are via national IPOs or the EPO.

However, the UK’s departure from the EU is a real blow to the proposed Unitary Patent system, legislation for which the UK has yet to ratify. Membership of the Unitary Patent system is limited to EU member states as currently drafted. Although possible, it seems unlikely that the UK would ratify the Unified Patent legislation during the Brexit negotiation period. London was also to be home to a branch of the Unified Patent Court (“UPC”) central division, with a lease reportedly already signed by the UK Intellectual Property Office. Again, that is highly unlikely to proceed once the UK exits the EU. Brexit is likely to delay the UPC and limit its popularity, but it probably will not kill the project. There are various theories as to how the UK might still be able to join the UPC, but all seem remote for the time being.

One area of patent law that will be affected when the UK leaves the EU is Supplementary Protection Certificates (SPCs). SPCs effectively extend the term of patent rights for medicinal (human or veterinary) or plant protection products which have had to undergo a regulatory approval before being made available. Since SPCs are an EU creation, they will no longer be effective or available in the UK without a domestic legislation equivalent.

Trade Marks

Again, for the time being, there is no change. Brand owners should consider national or EU trade mark filings based upon the same cost-benefit commercial considerations of markets and ambition.

The new Trade Mark Directive due to be transposed into UK law before 14 January 2019 may not necessarily be enacted. As a consequence, proposed new protections against counterfeit goods such as the ability to prevent transit of counterfeit goods and prohibit circulation of counterfeit packaging, labels, tags etc may not become available to UK trade mark owners.

Unless an equivalent regime is created, the protection offered by the geographic indicators (PDO, PGI etc) regime will be lost for UK producers. This may be a major issue for traditional foodstuffs in the UK food and drinks sector.

In the longer term, EU trade marks would ultimately cease to apply in the UK once it leaves the EU. The Community Trade Mark Regulation is silent on the effect of a member state leaving the EU. The transition from EU to national trade marks will again be a matter of negotiation, but it would be logical to offer some form of conversion or similar to EU trade mark proprietors. Issues of genuine use of an EU mark in the UK prior to Brexit will be considered on existing principles.

The UK EU trade mark Courts (the High Court and IPEC, Court of Session in Scotland and High Court of Northern Ireland etc) will ultimately have no jurisdiction to hear EU trade mark disputes or to grant cross border relief in respect of their infringement.

UK legal practitioners will no longer have automatic rights of audience at either the EU IPO or the Court of Justice of the European Union, unless a special arrangement is negotiated. Clients of CMS will not be affected as we can continue to offer a range of options in the UK and in other jurisdictions, given our wealth of EU qualified IP team members.

Copyright law is far less harmonised than other areas and is effectively treated as national domestic law in most respects. Some harmonisation may be required for access to EU markets (for example, the Commission’s drive for an EU digital market), but that is unlikely to require much in the short term.

The UK Courts will no longer be bound by European decisions so it is possible that over time the UK Courts will start to take a slightly different approach to remaining members of the EU.

Design Rights

UK design rights will obviously continue uninterrupted and there is no immediate change as regards EU design rights. Once the UK leaves the EU, then ultimately EU registered and unregistered designs under the Community Designs Regulation will no longer protect designs in the UK.

We would anticipate that transitional provisions will be enacted whereby existing EU registered designs rights would become UK registered design rights. Those companies that make use of design rights should continue as normal and wait until any transitional provisions regarding EU registered designs are announced.

Unless replaced with a domestic equivalent, the loss of EU unregistered design protection will be of particular concern to certain industries, such as the fashion industry, as the protection under the EU regime was wider than the equivalent UK protection.

As with EU TMs, the UK EU Community Design Courts will no longer have jurisdiction to hear EU design cases, with the same restrictions on automatic rights of representation for UK legal practitioners. As before, clients of CMS will be unaffected given our unique structure, team and footprint.

Trade Secrets

The decision to leave the EU will have little or no impact on the law in relation to trade secrets. The new Trade Secrets Directive will still come into force in July 2016. This will be binding on the UK until it leaves the EU. In any event, most of the provisions are already part of UK law so there will be little impact even in the long term.

IP Contracts

Companies should be considering the impact of the UK leaving the EU in the drafting of all future licences or assignments and should also review licences or assignments that have already been entered into for any unexpected consequences. Licences or assignments which were drafted before a referendum on EU membership was even contemplated could be particularly at risk of unintended and unexpected consequences of their drafting. For example: 

  • If the territorial scope of the agreement is defined as the "EU" the UK may fall outside of this once the UK has left the EU, particularly if the EU has been defined as “the EU from time to time” in anticipation of new member states joining rather than any of the existing members exiting; and
  • Leaving the EU could constitute a force majeure event or trigger termination provisions.

There is always an opportunity for parties to vary the wording of contracts by consent, even once entered into, so companies should consider contacting the other party to rectify any unanticipated consequences of Brexit.

In the longer term, it may be that exclusive jurisdiction clauses in licence or assignment agreements in favour of the English Courts will no longer prevent an EU Court from hearing a claim as the Brussels Regulation on choice of law will not apply to the UK. Unfortunately this could lead to more complex, international litigation unless the UK chooses to enter into an agreement similar to the Brussels Regulation with the EU.

We will continue to monitor developments and provide regular updates as the position becomes clear.