Effect of a “No-Deal” Brexit on IP in the UK
The UK government’s technical notices provide some certainty for holders of cross-border copyrights, trade marks, patents and other IP rights.
On 24 September 2018, the UK government published a series of technical notices explaining how a “no-deal” Brexit would impact intellectual property rights in the United Kingdom, including: copyrights, trade marks and designs, patents, and the exhaustion of intellectual property rights. It seems timely to revisit the content of these technical notices, given that on 15 January 2019 the UK Parliament will vote on (and, as has been widely reported by various media outlets, seems likely to reject) the proposed deal as agreed between Prime Minister Theresa May’s cabinet and the EU.
The UK Government has outlined how each of these intellectual property rights protections would or would not change following the UK’s exit from the European Union, which is currently anticipated to be 29 March 2019. This blog post summarises the areas identified in the technical notices of particular interest and concern to companies with cross-border operations.
The UK government has also published technical notices relating to medicines, medical devices, and clinical trials, which are relevant to intellectual property rights, but fall outside the scope of this blog post, as do design rights under a no-deal scenario.
Currently, EU legislation governs trade marks, and the EU Intellectual Property Office has the authority to grant them. The international Madrid system also allows applicants to file a single trade mark application through the World Intellectual Property Organisation (WIPO) for protection in up to 113 territories, including the EU, and at the national level through application to the relevant national intellectual property office (including in the UK).
EU trade mark offers brand protection across all EU member states and a centralised system of application, maintenance, and dispute resolution through the EU Intellectual Property Office, so many companies have opted to obtain and maintain the more expensive EU trade mark rather than a patchwork of national filings. However, following Brexit, the UK will no longer constitute an EU member state and consequently EU trade mark protection will not extend to brands in the UK.
The technical notice on trade marks assures rights holders that the UK will continue to protect EU trade marks that are in force on the day of exit through a new, equivalent UK trade mark. The UK will grant these equivalent trade marks automatically with “minimal administrative burden” (the technical notice does not provide any further detail) and will thereafter treat them as if they had been granted under the UK national system, i.e. the trade marks shall be subject to renewal in the UK, can be litigated before UK courts, and can be assigned and licensed separately from the original EU trade mark. Unfortunately for rights holders, they will need to pay the UK’s national renewal fee to maintain the mark in the UK — a substantial sum for marks that are registered in several classes. In addition, how the UK will deal with seniority under any such “new” UK marks is unclear. Presumably, the date of seniority will carry over from the original filing date of the EU trade mark, but the technical notice does not address this specifically.
The UK government will continue to work with WIPO to provide protection to trade marks through the Madrid system post-Brexit. Existing EU trade marks will remain valid in the remaining EU member states, and UK applicants can continue to apply for EU trade mark protection.
Applications for EU trade marks that are outstanding on the day of exit will receive a nine-month period to apply to the UK Intellectual Property Office for trade mark protection in the UK and will retain the EU application date for priority purposes. However, applicants will need to pay the cost of re-filing the application in the UK.
As sovereign states, the UK and other EU member states are party to various international treaties on copyright. These treaties do not depend on the UK’s membership in the EU, so the protection of copyright works (both in the UK and abroad) will remain largely unchanged after Brexit.
In addition to these treaties, the UK is currently subject to various EU-specific copyright laws. According to the UK’s European Union (Withdrawal) Act 2018, following Brexit, the UK will preserve these laws as-is in national law. However, the laws will no longer be reciprocal between the UK, EU, and European Economic Area (EEA) countries. The table below sets out the relevant rules, and the anticipated effect of the loss of reciprocity, as described in the UK government’s technical notice on copyright.
|Current EU Right||Effect of No-Deal Brexit||Actions for UK Persons|
|Sui Generis Database Rights (Database Directive (96/9/EC))All EEA persons are eligible for database rights in EEA states.||No obligation for EEA states to recognise database rights of UK persons. Current UK databases may not have enforceable rights in the EEA post-Brexit in a no-deal scenario.||UK persons should consider relying on other forms of protection (e.g.licencing arrangements or copyright).|
|Portability of Online Content Services (Portability Regulation (EU) 2017/1128)EU consumers have the right to access online content services provided in their home state when they are temporarily in a different EU member state.||Online content suppliers will not be required to offer cross-border access to UK consumers when consumers travel to the EU. As a result, UK travellers may find their content restricted when they visit the EU.||UK-based rights holders may wish to enter into new arrangements with online content suppliers to make content available to UK consumers in the EU.|
|Country-of-Origin Copyright Clearance in Satellite Broadcasting (Satellite and Cable Directive (93/83/EEC))Satellite broadcasters can broadcast a work protected by copyright into any EEA state after clearing copyright requirements in the broadcaster’s host (EEA) state.||UK-based satellite broadcasters will not be able to rely on this clearance rule.||UK-based satellite broadcasters will need to clear copyright in each EEA member state into which they broadcast.|
|Orphan Works Copyright Exception (Orphan Works Directive (2012/28/EU))Cultural heritage institutions in the EEA may digitise works without documented owners (i.e. orphan works) and make those works available across the EEA on their websites.||UK organisation relying on this exception may be in breach of copyright post-Brexit.||Organisations should consider whether they need to remove certain works from their websites or limit access to the content based on user location.|
|Collective Management of Copyright (Collective Rights Management Directive (2014/26/EU))EEA collective management organisations offering multi-territorial licensing of online rights to musical works may, on request, represent the catalogues of similar EEA organisations that do not offer such licenses.||UK collective management organisations will not be able to mandate similar EEA organisations to provide multi-territorial licensing of online rights in their musical works.||UK organisations should consider entering into contractual arrangements in order to continue their existing relationships with EEA organisations.|
|Cross-border Transfers of Accessible Format Copies of Copyright Works (Marrakesh Directive (EU) 2017/1564)This directive implements the Marrakesh Treaty (rights in accessible-format copies of copyright works), which would allow for cross-border transfers of copies of such works between the EU and other countries who have ratified the Treaty.||The UK intends to implement the Marrakesh Treaty after Brexit. Therefore, between the point of exit and ratification, a lacuna exists in which UK persons cannot rely upon the rules for transfers of accessible copies between the UK and EU.||UK persons should consider whether they need permission from the rights holders or cease cross-border transfers of the relevant work|
At present, only a few areas of UK patent law derive from EU law. The most important of these are:
- The supplementary protection certificate (SPC) regime, under which rights holders can obtain an additional period of protection beyond the expiry of patents for pharmaceutical products or agrochemicals
- Certain exceptions for studies, trials, and tests carried out using patented pharmaceutical products without infringing a patent
Currently, the UK Intellectual Property Office accepts applications for and grants SPCs as national rights. Because the UK will preserve current EU laws, including those listed above, as national law under the EU Withdrawal Act 2018 the technical notice relating to patents anticipates that all existing rights and licences will remain in force. As such, the UK will continue to run the SPC application and grant process as a parallel regime. The government anticipates:
- The application process for patents or SPCs will not change significantly.
- Pending applications for patents and SPCs will be assessed on the same basis as they are now.
- Persons will be able to file new applications as necessary.
- Legal proceedings will continue unaffected.
Notably, however, the European Commission announced in May 2018 that it may amend its SPC legislation; as a result, the UK national regime and the EU regime may diverge in future.
Unitary Patent and Unified Patent Court
On 19 February 2013, 25 of the 28 EU member states (excluding Croatia, Poland, and Spain) accepted the European Commission’s proposal for “enhancing the patent system in Europe” and signed the Agreement on a Unified Patent Court (UPC). To date, 16 EU member states, including the UK, have ratified the UPC, which now only requires Germany’s ratification to take effect. When the UPC becomes effective, it will hear cases relating to European patents and a new type of patent: the unitary patent. The European Patent Office, which is not an EU institution, will administer both types of patents.
The technical notice on patents sets out two possible outcomes regarding the UPC in the context of Brexit:
- The UPC does not come into force before exit day: If Germany fails to ratify the UPC, by operation of the European Union (Withdrawal) Act 2018 the UK will not enshrine in national law the underlying EU legislation and it will never take effect in the UK.
- The UPC comes into force before exit day: The UK government’s technical notice on patents implies a degree of uncertainty in this scenario, stating simply that the UK will explore whether it is possible to remain in the UPC and unitary patent system following Brexit. In the event that the UK needs to withdraw from the framework, the technical notice advises that businesses would not be able to use the UPC and the unitary patent system to protect their inventions within the UK. The UK will grant an equivalent patent to any existing unitary patents to ensure their continued protection in the UK. Businesses could still use the UPC and unitary patent to protect their inventions within the contracting EU countries, but would need to maintain equivalent UK patents (and enforce these in UK courts) to protect their inventions in the UK.
Exhaustion of Intellectual Property Rights
The technical notice on exhaustion of intellectual property rights deals with the loss of the right to control distribution and resale of a product after it has been placed on the market for sale within a specific territory, by or with the permission of the right holder. At present, the UK is part of the EEA exhaustion scheme. As a result, the intellectual property rights of a UK person are exhausted once a product has been put on the market anywhere in the EEA with the right holder’s permission.
In a no-deal post-Brexit scenario, the UK will continue to recognise the EEA exhaustion regime to provide businesses with continuity in the short term, i.e. the UK will continue to consider intellectual property rights of EU rights holders exhausted in the UK. Therefore, the rules affecting the import of goods into the UK will not change, so that parallel imports (i.e. non-counterfeit imports where the intellectual property rights in that product have been exhausted) of pharmaceutical goods from the EEA can continue.
However, goods placed on the UK market after exit, by or with the permission of the right holder, will not be considered exhausted in the EEA. Therefore, UK businesses conducting parallel imports may need to obtain the right holder’s permission to export goods into the EEA.
The technical notice also states that, due to the complex nature of the exhaustion regime, the UK government is undertaking a research programme to inform its decision regarding the parallel import regime beyond the short-term period mentioned above.
If there is a no-deal Brexit on 29 March 2019, UK companies can take some short-term comfort from the continued protection of existing copyright, trade marks, and patents under international and UK laws. However, in the longer term, the effects of Brexit on intellectual property may be costly for UK businesses, e.g. parallel filing, renewal and fee systems for EU and UK trade marks, respectively, and the need to implement alternative arrangements due to the loss of EU-specific copyright. The drive to preserve current EU laws within UK national legislation may lose value over time as the EU and the UK separately amend their laws to adapt to changes in the intellectual property sphere, which may lead to diverging regimes (particularly with respect to SPCs and exhaustion of rights). Businesses should continue to monitor the legal landscape closely as exit day approaches in order to prepare effectively for the outcome of the UK government’s negotiations with the EU.
With thanks to Grace Erskine for her contribution.