Brexit and its impact on intellectual property rights, IP strategy and licence agreements

On 29.03.2017 the UK formally announced that it was invoking Article 50 and embarked on the two-year process of leaving the EU. During this period the UK and the EU will negotiate the terms and conditions of the UK's withdrawal from the EU. Now, in July 2017, it still remains to be seen whether a (reasonable) agreement can be reached on all the aspects to be negotiated.

But what will be the impact of Brexit on intellectual property rights, IP strategy and licence agreements? Will there even be any relevant implications? This principally depends on whether there is any need for companies to take action and, if so, what action can be taken by companies which do not wish to rely on the results of the Brexit negotiations alone.

No direct impact on copyright, know-how or patents

Copyright and patents are national rights. Brexit will not have any direct impact on these intellectual property rights or as a rule on know-how. However, EU Directive 2016/943 does harmonise the protection of trade secrets. Whether this will be transposed into UK law before the transposition deadline expires on 9 June 2018 is highly questionable.

The European "bundle of patents" is not directly affected by Brexit, either. This is not a uniform EU property right, but only a "bundle" of national property rights in the countries concerned.

What will be interesting with regard to Brexit is the development of the planned EU unitary patent and the Unitary Patent Court (UPC). This of course applies in addition to the recent difficulties the EU unitary patent has been facing in Germany. The question whether the UK, as a soon-to-be non-EU country, will be able to legally participate in the planned unitary patent system at all will remain unanswered for now.

Uncertainty with regard to EU trade marks and registered Community designs

Brexit will not have any direct impact on national trade marks or national registered designs.

However, the EU trade mark and the registered Community design are based on EU regulations. After Brexit, in principle these will no longer apply in the UK. The protected territory of EU trade marks and registered Community designs would no longer include the territory of the UK after Brexit. Consequently, companies would lose their priority date in the UK. However, a priority date which dates as far back as possible is important, to be able to take action against more recent trade mark applications by third parties which are identical or similar (i.e. "interfering" trade marks/trade mark applications). Applying for a new national trade mark in the UK will not remedy the situation.

It can be hoped that a mechanism is agreed during the withdrawal negotiations to ensure EU trade marks or registered Community designs will still be valid in the UK. However, if companies do not wish to leave matters up to chance, they will need to take precautions.

Securing protection of EU trade marks in the UK: two options

Two possible options might be considered when it comes to EU trade marks:

Comprehensive search report before Brexit

A comprehensive search report for the UK could illustrate whether there are any interfering trade marks/trade mark applications in the UK. Well before the UK leaves the EU these would have to be contested on the grounds of an existing Union Trade Mark. At the same time, trade mark protection should be sought in the UK by registering a national trade mark in the UK.

Better: Conversion of the EU trade mark into national marks

The aforementioned comprehensive search report option could be dispensed with, however, if the cancellation procedure for identified interfering trade marks is extended beyond June 2019. On leaving the EU, the UK would no longer be in territory which is protected by the EU Trade Mark and therefore there would be no basis for the UK cancellation procedure.

To be on the safe side, the EU trade mark could be converted into identical national rights in good time before the UK leaves the EU, thus preserving priority. The result would be 26 national trade marks with the same priority date as the EU trade mark (26 and not 28 national trade marks, as the Benelux countries are covered by just one trade mark). The British national trade mark would then continue to exist, even after Brexit. To reduce the cost and administration involved in future for the 25 new national trade marks in the remaining EU Member States, a new identical EU trade mark could be registered based on the priority dates of the aforementioned national trade marks (i.e. the priority date of the original EU Trade Mark).

Conclusion:

In the context of Brexit, companies may need to take action on EU Trade Marks. Whether and, if so, how depends mainly on IP strategy and the importance of the British market in the individual case.

Community Registered Designs: The emergency solution is to register a trade mark

There is no way of converting a registered Community design into national law, unlike the situation for trade marks outlined above.

Filing a new national application in the UK for the registered design in question is likely to fail as it would lack novelty.

Conclusion:

Companies may have to leave matters up to chance for registered Community designs. However, if a registered Community design fulfils the requirements of a national trade mark application in the UK, a new application as a British trade mark may be an emergency solution.

Licence agreements: renegotiating the Brexit regulation?

An eye must also be kept on licence agreements. A review should be carried out, for example, to ascertain whether existing licence agreements stipulate the European Union as the licensed territory. Do existing licence agreements already contain clear provisions (e.g. the territory of the EU in its corresponding permutation)? If this is not the case, are there any amendments which would result in an amendment right or even a termination right?

Conclusion:

It may be advisable to pre-empt these issues by renegotiating existing agreements. When concluding new licence agreements it is advisable to directly use reasonable and appropriate provisions.

Conclusion: Nasty surprises can be avoided if you are well prepared

Brexit could have a considerable impact on EU Trade Marks, registered Community designs and licence agreements. Companies which do not wish to leave matters up to chance may, even at this point in time, have to take substantial action. Whether and if so what action needs to be taken depends on the individual case. Individual cases should even at this point be examined very carefully. Companies may already have worked out a strategy for dealing with Brexit and have taken the necessary precautions.

If no mechanism for the continued validity of EU Trade Marks and registered Community designs has been set up in the UK before July 2018, companies should decide in favour of one of the options outlined in this article when dealing with identified relevant EU Trade Marks and registered Community designs.

Companies which fail to do so and just wait for Brexit to happen may find themselves having to take an undesirable course of action. Having to subsequently rectify the situation could result in considerable additional expense.

So the following applies here as well: nasty surprises can be avoided if you are well prepared.