Brexit: English Intellectual Property law implications

By Sally Shorthose

01-2020

The UK exited the EU on 31st January 2020.  By virtue of the transition period in the Withdrawal Agreement, EU law will continue to apply in and in relation to the UK only until the 31st December 2020.  The EU Treaties, EU free movement rights and the general principles of EU law will then cease to apply in relation to the UK, and prior EU regulations will only continue to apply in domestic law (by virtue of the European Union (Withdrawal) Act 2018 ("the EU Withdrawal Act")) insofar as they are not modified or revoked by regulations under that 2018 Act

This article is part of our Brexit series it advises readers on the immediate considerations and anticipates how Brexit will impact on the IP/IT market as from the end of the transition period.  For an explanation of the finalised Withdrawal Agreement, please see this link.

Relationship with EU law

IP laws are harmonised to a large extent across Europe, and much of the UK legislative framework in this field has been composed of directly effective EU Regulations and transposed EU Directives. Unless those EU Regulations relevant to IP transposed into English or Scottish law, a regulatory vacuum may be created.

The European Union Withdrawal Act 2018 will repeal the European Communities Act 1972 ("ECA 1972") as from the end of the transition period and includes provisions to convert the existing body of currently directly applicable EU law into domestic UK law, by means of statutory instruments. This will mainly apply to EU Regulations which would otherwise cease to apply on Brexit, and also to statutory instruments implementing EU Directives, where the statutory instruments were adopted pursuant to the ECA 1972 and would otherwise fall away on repeal of that Act.

MPs will then go through each law on a piecemeal basis and amend or repeal them as necessary based upon national interests. This is intended to facilitate a smooth transition with all EU laws, including the relevant IP Regulations and Directives remaining in force. However, the UK will no longer be a member of the EU, and this will affect the unitary character afforded to IP rights.

Some of implications of Brexit are still very uncertain and will, to a large extent, be determined by the terms of any international agreements negotiated and by the amendments and repeals of EU laws following the EU Withdrawal Act.

Implications of the Brexit

Some implications of Brexit will apply to organisations in the same way whether they are based in the UK, in the EU or elsewhere in the world. For example, the changes to unitary patents are pertinent to any company seeking pan-European patent coverage, whereas the now likely exclusion of the UK from the European Digital Single Market, will be more acutely felt in the UK. Below is a summary of some of the main implications.

Patents

Patents will to a great extent continue as before - patents covering the UK will continue to be granted both by the UK Intellectual Property Office (UKIPO) and the European Patent Office (EPO). Applications for patents can be filed directly with the UKIPO or EPO, or can be made pursuant to an international patent application filed under the Patent Cooperation Treaty. Neither UKIPO, nor the EPO, is an EU institution and their operation will be unaffected by Brexit.

The UK will continue to be one of the 38 contracting state to the European Patent Convention, which is the international treaty that established the EPO. Applicants will continue to be able to file their applications with the EPO and, on grant, request validation in the UK and other countries of interest.

The standing of granted patents will also be unaffected by Brexit. Following grant and validation in the UK, European patents have – and will continue to have – exactly the same legal effect in the UK as national patents granted by the UKIPO.

Furthermore, the UK will remain a member of the Paris Convention, which supports IP protection around the world. Applicants who have filed for patent protection in the UK will still be able to subsequently claim the priority of that application for a patent registration in other countries and vice versa.

SPC's

The additional protection afforded to patentees by Supplementary Protection Certificates (SPCs) is part of UK law by virtue of two EU Regulations. These extensions to patent protection of up to 5 years are very valuable and similar extensions are available in many countries around the world (e.g. the US and Japan). It is possible that the EU Withdrawal Act will act to preserve any SPCs that have been previously applied for under the regulations by incorporating those regulations into UK law. Following this it is likely that equivalent regulations will be enacted by the UK Government but it is unclear what the nature of these will be and how far SPC rights will extend in the UK in the future.

The unitary patent system

The new EU patent regime is intended to provide patentees with the option to apply for a single pan-EU Unitary Patent (UP) covering most of the EU. It would also create the Unified Patent Court (UPC) to hear and determine patent disputes on an EU-wide basis.

The introduction of the new regime, whose future was already uncertain after the Brexit vote in June 2016, is now further delayed and complicated by the challenges to the regime going through the German courts. The UK ratified the UPC Agreement in April 2018 but this ratification is of questionable relevance given the effluxion of time and the continued uncertainty regarding the UK's inclusion in the regime (following an amendment to allow for a non-EU state to be so involved). Further analysis on this is found
here.

Community rights including Trade Marks

After the transition period, EU Trade Marks (EUTMs) and Registered and Unregistered Community Designs will no longer have effect in the UK. The UK Government has provided that at the end of the transition period, the UK will automatically create a comparable UK trade mark for every registered EUTM, at no charge. The same will apply for Registered Community Designs (RCDs). However, this will not apply to pending EUTM applications, so tech companies with pending applications should apply to register a comparable UK trade mark in the 9 months after exit day to benefit from the same filing date as the related EUTM application.

Therefore there is technically no need for companies with existing EUTM and RCD registrations to refile for equivalent registrations in the UK, as comparable UK registrations will arise automatically. However, for new filings, companies are advised to dual-file in the EU and UK, particularly as we get closer to the end of the transition period. This is because EUTM applications pending at the end of the transition period will need to be re-filed in the UK anyway. Rights owners should also review the following:

  • Whether they have any pending oppositions/cancellation actions at the EUIPO: actions which are only based on UK rights will fall away; parallel actions against the new comparable UK trade mark will need to be brought.
  • Whether their existing EUTM legal representatives will remain entitled to represent them before the EU IPO after Brexit. Bird & Bird will be able to represent clients before both the UK and the EU IPOs.
  • Their broader enforcement strategy: after the end of the transition period a new pan-EU injunction will not cover the UK and will not be available in the UK, meaning both EU and UK proceedings will need to be brought to cover all of Europe.
  • Whether they have an EU customs notice ("Application for Action") in place which was filed via UK Customs: these will fall away and need to be renewed/re-filed via one of the remaining EU countries. A UK filing will also be needed.
  • Whether they have hardware businesses affected by parallel imports between the UK and continental Europe: the ability for trade mark owners to prevent imports from one territory to the other will differ depending which way the goods are going.
  • References to the EU in brand licence agreements will need to be considered.
Life Sciences regulation

The UK’s various Life Sciences regulatory regimes have been intimately connected with the EU; the European Medicines Agency was based in London and has now moved to Amsterdam. A sophisticated and comprehensive pharmacovigilance system has been established around this regime. Organisations working in this sector need to be ready to adapt now that the regulatory framework will need to be reshaped; a “soft Brexit” involving continued affiliation with the current system was rejected by the government so this area is particularly uncertain.

Exhaustion of rights

Interestingly, as regards exhaustion of intellectual property rights, the UK government has in The Intellectual Property (Exhaustion of Rights)(EU Exit) Regulations 2019 (the 'SI') an asymmetric regional exhaustion. 

In summary, the SI provides that the present system of EEA-wide exhaustion will be retained to the extent possible.  Following the end of the transition period, rights in goods put on the market in the EEA will be exhausted in the UK but, absent any agreement with the EU, there will be no such reciprocity for goods put on the market in the UK; putting the goods on the market in the UK will not exhaust the IP rights in the EEA.

Therefore, although owners of UK IP rights will not be able to prevent parallel imports from the EEA, as the UK will no longer be a Member State, owners of rights in the EEA will be able to prevent parallel imports from the UK. The Intellectual Property Office's guidelines on exhaustion and parallel trade post Brexit, therefore stress the need for parallel importers to review whether they will need the EEA-based IP rights holder's permission to export goods to the EEA.

More detail can be found here.

European Digital Single Market

There is a real risk that the UK will be shut off from operating in the European Digital Single Market (DSM).  The drive behind the single digital market was to promote common data protection laws, provide better access to products and services at reduced costs, and generally increase adoption and acceptance of digital services. There are significant differences in the attitudes of different European countries towards the use of social and digital media marketing and, in the absence of the UK within the EU, these differences are now likely to widen and the influence of the UK will be minimal.

The DSM has been a particularly important for the UK. Currently, the UK’s largest export market for digital services is Europe and the DSM enables access to European markets. Brexit is therefore expected to affect the UK substantially in the areas of broadcasting, creative content production, data protection and privacy, copyright and e-commerce as UK service providers may lose their passports to EU markets, because companies need an EU headquarters to access service markets under Directives and Regulations which contain the country of origin) principle, such as under the AVMSD, SatCab, E-commerce and Copyright Directives.

If the UK does join aspects of the Digital Single Market (DSM) under a future bilateral agreement, companies could continue to broadcast to Europe from the UK, but many companies have already voted with their feet and left.

After the transition period, the UK would lose voting rights for DSM legislation within the Council of Ministers and European Parliament.

Conclusion

Brexit is not going to be a simple divorce. Now any UK legislation, which has hitherto been dependent on EU legislation, will have to be unpicked (see above for reference to the Withdrawal Bill). Beyond this, the key development in the IP field is the likely exclusion of the UK from pan-European rights systems (notwithstanding the UK's ratification of the UPC). Separation presents the opportunity for the UK's laws to diverge from those of Europe, and such separation may be embraced in some areas. However, in IP, this is unlikely to happen to any significant extent given the interconnection of trade and the universal recognition that harmonisation is beneficial. Going forwards, the UK is no longer going to be able to assert the same influence on EU policy, which may undermine the position of UK-based IP and IT companies both within Europe and on the world stage (especially vis-à-vis the USA as the UK may be seen as second class without a voice in Europe) and make it a little more difficult to compete.

Given the uncertainty about what the exact Brexit environment will comprise, the long term future is still unclear. Thereafter, IP owners should identify which of their rights are now likely to be affected and may need further application/registration in order to achieve maximum protection over that right.
For any queries about any matters raised in this note, or other questions about how Brexit may affect your business, please contact Sally Shorthose.

This article is part of our Brexit series

 
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