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Impact of Brexit on IP rights

The closer the post-Brexit relationship between the EU and UK, the less the impact on IP rights – and vice versa

31 July 2018

Now that the United Kingdom has voted to leave the European Union, we are facing a period of legal uncertainty while the future relationship between the UK and EU is defined. This is also true in respect of intellectual property rights. It is expected that for the next two years at least, the UK will remain a full member of the EU and during this time no changes to any existing IP legislation are expected; it is also expected that the UK will continue to implement new directives as they come into force during this period. As no Member State has withdrawn from the EU previously, the impact on IP rights cannot be precisely predicted. The eventual impact will depend on the outcome of negotiations and agreements made between the UK and the EU. We discuss the potential impact of "Brexit" on the different existing IP Rights.

Patent rights

In terms of patents, Brexit will not influence the status quo. The UK is a member of the European Patent Convention (EPC), which is not linked to EU Member State status. The European Patent, which is a bundle of national patents accessed through a central application process, will still be available through the European Patent Office (EPO).

The supplementary protection certificate (SPC) regime may however be affected by Brexit. For certain limited types of inventions, primarily those from the pharmaceutical sector, the term of patent protection can be extended beyond the usual 20 years. The rationale for this is that products protected by these patents often have a very long approval process, which runs during the term of patent protection and effectively reduces the period of time during which the product is protected by the patent. SPCs are governed by an EU regulation that may not automatically apply after Brexit. If this is the case, to ensure the protection granted by SPCs post-Brexit the UK could implement a national SPC-equivalent right or opt into the European SPC regime if it becomes a member of the European Economic Area (EEA).

The most crucial impact of the UK leaving the EU can be observed in the process of implementing the Unified Patent Court (UPC), which constitutes the biggest reform in the history of European patent law. Under the current agreement, the UK is required to ratify the agreement before the UPC can come into effect. Whether it is possible for the UK to ratify the agreement despite the referendum outcome, and participate in the system even after it ceases to be an EU Member State, is unclear, particularly given the politically charged nature of the negotiation of the UPC agreement. One of the three central division courts was to be based in London, but this is far from certain to be the case now. At this time, the future of the UPC ratification process is unclear, and further delays appear inevitable.

Registered trade marks and registered designs

Registered trade marks and registered designs are the most harmonised forms of IP rights in the EU, which gives scope for significant changes Brexit.

On Brexit, the UK may no longer be party to the relevant EU regulations that govern and implement the European Trade Mark. These unitary rights automatically cover all EU Member States. Without any new implemented agreements between the UK and the EU, existing European Trade Marks and Registered Community Designs will no longer be applicable in the UK. IP holders may, of course, be able to obtain protection for trade marks and designs through the national UK Intellectual Property Office, but the impact on existing registrations will depend on the arrangements the EU and the UK agree on.

There has been much discussion of the various options for extending the protection which EU Trade Mark holders currently have in the UK. Whether this will mean some system of conversion into national rights, or whether the UK may, for example, simply choose to unilaterally recognise and protect EU Trade Marks despite not being a Member State, remains unclear. The likelihood is that, somehow, the UK will protect EU Trade Mark holders' rights post-Brexit, though that likelihood leaves considerable scope for difficulties in the detail.

Again, depending on the impact of Brexit on the European Trade Mark, European Trade Mark holders who make the majority of their use of those trade marks in the UK may find their European Trade Marks at risk of becoming vulnerable to revocation for non-use in the post-Brexit EU. Similarly, it is unclear whether European Trade Marks that undergo any form of conversion into UK rights, but are not currently in use in the UK, will be able to continue to rely on previous use elsewhere in the EU.

There is another issue that could arise if the UK does not maintain access to the single market: Trade mark owners may be able to restrict the trade of goods between the UK and EEA Member States as placing the goods on the market would no longer "exhaust" the trade mark owners' intellectual property rights. At this time, trade mark owners cannot typically prevent the selling of their products if they have previously been lawfully offered on the single market. If the UK did not reach agreement with the EU on access to the single market equivalent to EEA membership (or indeed became an EEA member), placing the products on the market in an EEA Member State would not exhaust the trade mark rights in the UK.

Furthermore, the practical management of IP portfolios could change. IP owners domiciled in the EU or under EEA jurisdiction do not need professional representation in proceedings before the European Intellectual Property Office (EUIPO). In contrast, parties based outside the EU or under EEA jurisdiction must be professionally represented for most proceedings.

Copyright and database rights

Copyright is a national right, but it has been heavily influenced by international treaties and European legislation. The UK’s membership in the EU significantly shaped and influenced the Copyright, Design and Patents Act of 1988 (CDPA). It is unlikely that the UK will make significant changes to its copyright law. Even the aspects influenced by EU legislation are likely to remain, at least in the short to mid term following Brexit.

In terms of database rights, the UK will need specific legislation for UK national database rights if the EU right no longer applies. Database rights are a unique European intellectual property right that is only available to EEA nationals. The status is unlikely to be affected if membership in the EEA is negotiated.

License agreements

Brexit will also have a practical effect on licence agreements. Future licence agreements will have to take into account the political and geographical changes resulting from the UK leaving the EU. Current licence agreements, prior rights agreements and coexistence agreements often make the assumption that the European Union is a single territory and that the licence is granted for all countries in the EU. It is recommended to review the licence agreements that have been concluded and check whether it is sufficiently clear for which IP rights in which territory usage rights have been granted. In addition, clauses regarding payments, the right to handle litigation etc. might need to be adjusted accordingly.

Concluding remarks

The impact of Brexit on intellectual property rights depends on negotiations between the UK and the EU. The closer the eventual relationship is between the EU and the UK post-Brexit, for example if the Norwegian EEA model is adopted, the less scope there will be for impact on intellectual property rights. If the UK decides to choose the path of breaking away from the EU completely, divergence between the EU and UK approach to various intellectual property rights may arise over time.

Rights holders should work hand in hand with their legal advisors to monitor developments over the coming weeks and months to assess the impact on their intellectual property rights. In the meantime, rights holders can start to think about their reliance on unitary rights, and their approach to licensing, so that they will be prepared to act once the nature of the post-Brexit relationship becomes clearer.