17 October 2017

Brexit: Impact on intellectual property rights

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

The current proposed approach of the European Union (Withdrawal) Bill is to repeal the European Communities Act 1972 (ECA) and then incorporate all EU laws into UK domestic law ‘where practical’ to ensure no unintentional gaps are left by the repeal of the ECA. 

The aim being that 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.

Given the British Government’s lack of a parliamentary majority, passing the EU Withdrawal Bill is now looking like a very difficult part of the Brexit process in itself.  It is likely to face significant challenges and amendments before achieving Royal Assent by March 2019.  Likewise, legislative changes required in any of the other 27 Member States as a result of the negotiations are also going to need their domestic parliamentary approval.

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?

Whilst it is, of course, somewhat of an exercise in crystal ball gazing at this stage, the above context of the different forms and interaction of domestic and European legislation in the field of intellectual property rights means we can make some reasonable predictions about likely areas of challenge and possible areas where the status quo is likely to remain intact during this legislative transformation.

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 Court 

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.

A period for provisional applications to be started had been due to commence at the end of May 2017, but several other countries as well as the UK have yet to ratify the Unified Patent Court Agreement or agree to the protocol needed for those provisional applications.  As a result the aim to commence the operation of the UPC by December 2017 has now been confirmed as not possible.

Given the exclusive competence granted to the UPC over these specific Unitary Patents and it’s referral up to the Court of Justice of the European Union (EJC), this is likely to remain an issue that will require transitional provisions even if the UK continues to support its previous commitment to ratifying the UPC Agreement.

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.

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.  As a result it is a protection which will definitely be impacted by Brexit and require a transitional arrangement to be put in place to ensure holders retain an equivalent UK protection. 

As a result, a sensible approach for any business holding an EUTM now, but no UK registration, would be, not to wait to see what transition may hold but instead, to apply for a UK registered trade mark now.

Challenges to registrations as a result of failure to use the mark in question are likely to become another knotty issue.  For example, if use of an EUTM has been established and relied upon from within the UK it may jeopardise its retained protection in the other Member States after Brexit takes effect and vice versa.

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, this type of protection will require some consideration as Brexit will definitely impact if no UK registration is also held by a rights owner.  However, the approach suggested on EUTMs above, to apply for UK protection now, would only work in a limited window of the first 12 months of a Community Registered Design.
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.

This leaves a potentially very confusing picture upon Brexit as designers find themselves only being able to rely on the UK unregistered right which would leave a gap in protection for those currently relying on the broader protection offered by the EU right.

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 becoming apparent.  Clearly these are also the spaces to watch during the negotiation phases to see how quickly any of the detail gets thrashed out.

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.