Intellectual property in the UK and “Brexit”

by Manuela Macchi and Mark Richardson[1]

 

Background

When UK voters expressed themselves in favour of leaving the EU in the referendum that took place on 23 June 2016 (generally referred to as “Brexit”), the owners of EU-wide intellectual property (“IP”) rights started contacting us with concerns over what might happen to these rights, which currently include the UK.

The British Prime Minister, Theresa May, announced that the UK will start the formal process of leaving the EU by March 2017, by triggering art. 50 of the Lisbon Treaty.

The power of the UK government to proceed with giving the EU formal notice of its intention to leave the EU under art. 50, without a vote in Parliament, has been challenged in the courts and at the time of writing a hearing is scheduled before the Supreme Court in early December 2016 for a final judgement on this point. This may cause a delay, but, if and when the UK formally starts the exit procedure and triggers art. 50, a two-year negotiation period will start before the exit itself occurs and any changes affecting IP will not be implemented for some time yet.

So, the first point to note is that, for the time being, nothing has changed: EU-wide trade marks (EUTMs) and EU-wide registered designs (CRDs), including EUTM and CRD applications filed after the “Brexit” referendum, will continue to cover the UK.

Assuming that, eventually the UK will leave the EU, any UK national IP rights will be unaffected by “Brexit”. Some EU IP rights that have effect in the UK (such as EUTMs and CRDs) will be affected to different extents. Crucially, we do not expect that any IP rights will be lost as a result of “Brexit”, although some transitional measures will be inevitable.

This article explains what the owners of EU-wide IP rights, which include sports-related ones, IP rights being of such importance in providing legal protection of sports events and sports persons, especially their image rights, should be considering when going forward.

 

Trade marks

After “Brexit”, existing and future EU trade mark registrations (EUTMs) will remain in place, but will no longer cover the UK. Accordingly, separate trade mark protection will be required for the UK.

Although we do not believe this is strictly necessary (see next paragraph), to avoid future expense and administrative inconvenience, many clients have already started seeking trade mark protection in the UK via national filing whilst, at the same time, applying for an EUTM.

For existing EUTMs (and those filed between now and the date that the UK exits the EU), the UK will, in all likelihood, enact laws that provide for the “conversion” of an EUTM into a national UK trade mark right, which maintains the original application date. This conversion process will be determined in more detail over the course of the exit negotiations’ period.

 

Designs

As with EUTMs, existing and future community design registrations (CDRs) will no longer cover the UK after “Brexit”. For designs filed after that point, a separate UK design application will need to be filed to cover the UK.

For existing designs and those filed between now and Brexit, the UK will need to enact a provision that allows the UK part of a CDR to be “converted” into a national UK right. This process will be determined in more detail over the course of the exit negotiations’ period.

The UK Intellectual Property Office (UKIPO) has, in the meantime, cut its design filing and renewal fees drastically. This has made UK design rights very good value and also for design protection, as for trade marks, many clients are filing UK national design applications in addition to EU ones, because they want to avoid future inconvenience.

 

Patents

The current process for obtaining European patents at the European Patent Office (EPO) is governed by the European Patent Convention (EPC). Membership of the EPC is not tied to the EU. In fact, the EPC already covers many countries not in the EU, such as Switzerland, Turkey and Norway. The UK will remain a part of the EPC after “Brexit”, and UK patent protection will be obtainable via a European patent application in the same way as it is now.

The UK’s membership of the PCT (Patent Cooperation Treaty) system is also independent of EU membership, and both UK national-phase filings and European regional-phase filings, based on PCT applications, will remain entirely unaffected. The PCT is an international treaty that enables contracting States to obtain patent protection via a unified process in each of the other contracting States.

The future Unitary Patent (UP) and Unified Patent Court (UPC), on the other hand, are tied to EU membership. The UP is a proposed unitary patent system, open to all Member States of the EU that would create a unitary patent covering the whole of the EU, in the same way in which EUTMs are trade mark rights that, with one unitary registration, cover the whole of the EU. The UPC is the proposed centralised court that would hear claims based on UPs.

The UK’s exit from the EU is likely to mean that, in the long term, it could no longer be a part of the UP or the UPC. London was originally a location of one of the three branches of the Central Division of the UPC, and this was written explicitly into the UPC Regulation, so the UK’s exit will have an impact on the UPC. It is likely that the start of the UP and UPC will be delayed while the remaining EU countries renegotiate and amend the Regulation: potentially by two years or more. Milan and The Hague have expressed an interest in hosting the branch of the UPC that would have been located in London.

Ultimately, if the UP does come into force and the UK exits the EU, the UP will not cover the UK; if you opt for a UP, complementary protection in the UK would be obtained by a separate UK validation of the European patent in exactly the way that it is now. The UK part of the European patent would not fall under the jurisdiction of the UPC, but would fall under the sole jurisdiction of the UK courts.

All this means that patent protection in the UK, via a European patent, will carry on in exactly the same way that it does now. Patent applications filed directly with the UKIPO will, of course, be unaffected.

Patent term extension for medicinal, veterinary and plant protection products in the form of supplementary protection certificates (SPCs) would need to revert to new UK law as they are currently based upon EU regulations.

 

Exhaustion of rights

Under European law, goods already put on the market in the European Economic Area (EEA) by or with permission of an IP rights holder may be dealt with freely within the EEA without infringing those IP rights. However, this exhaustion principle does not currently apply to goods first put on sale outside the EEA.

It is currently undecided whether the UK will remain a part of the EEA: this will be one of the subjects of the exit negotiations. If the UK does not remain a part of the EEA, the UK will no longer be obliged to apply the EEA-based exhaustion of rights provision. It will be up to the UK to decide whether or not to apply any kind of exhaustion of rights beyond the territory of the UK, and what scope that exhaustion will have; it could decide to introduce broader freedoms and introduce an international exhaustion of rights, or it could decide to narrow exhaustion of rights to apply to the UK only.

 

Some practical points

Recent and future trade mark and design applications

For new trade marks and designs, consider filing applications in the UK along with EU applications. For EU trade marks and designs filed within the last six months, consider filing new UK applications claiming priority from the EU applications. We are confident that there should be options down the line to convert any EU trade marks (EUTMs) and designs (CRDs) into UK rights, but the processes are not yet settled and it is likely that there will be costs and administration associated with the conversion process that can be avoided by filing UK rights immediately.

 

Plan and budget for converting trade mark and design filings

Whatever the process for converting EU trade mark (EUTMs) and design rights (CRDs) into UK rights, there will most likely be options to apply for the conversion process before the actual exit of the UK from the EU, so as to ensure there is no break in protection. For older registrations, it is worth considering, sooner rather than later, which EU registrations should be converted into UK registrations, when the time comes. It will also be important to budget for this conversion process, and longer term to budget for additional renewals of UK rights.

 

Agreements

For future IP agreements, when setting out their territorial scope, the UK will now need to be specified separately from the EU. Where agreements previously might have stated “European Union”, care should be taken to clarify whether this means only the EU, or whether the UK and other territories are to be included in the territorial scope.

 

 

[1] Partners, Keltie LLP, London, United Kingdom.