IP rights: The closer the post-Brexit relationship between the EU and UK, the less the impact on them – and vice versa
By Dr. Claudia Milbradt, Anja Schwarz and Yannick Frost

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Since the United Kingdom has voted to leave the European Union (Brexit), we now face a period of legal uncertainty that will influence the landscape of European intellectual property rights. For at least the next two years, the UK will remain a full member of the EU, and no changes to any existing IP legislation are expected. As the exit of a Member State of the EU is a unique event so far, the impact on IP rights cannot be precisely predicted. It will depend on negotiations and agreements made by the UK and the EU.

In the following, the potential impact of Brexit on various existing IP rights will be summarized.

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. European patent law and patent litigation will remain unchanged. 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).

What will be affected by Brexit lies in the field of supplementary protection certificates (SPCs). For certain limited types of inventions, primarily those from the pharmaceutical sector, the term of protection can be extended beyond the usual legal provision of 20 years. This derives from the idea that these products’ very long certification process, which runs during the term of protection, unjustifiably restricts protection. The SPC IP right is governed by an EU regulation that will not automatically apply to allow the granting of SPCs after Brexit. To ensure the protection granted by SPCs post-Brexit, the UK could implement a national SPC regulation or opt in the European SPC IP right by joining 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. The UK is one of three remaining states that have yet to ratify the final UPC agreements. It is likely the next largest Member State in terms of granting patents, Italy, will replace the UK as a ratifying party. Additionally, one of the three central division courts was to be based in London, but it seems improbable that it will remain in the UK capital now. At this time, the future of the UPC ratification process is unclear, and further delays are expected.

Registered trademarks and registered designs

Registered trademarks and registered designs are the most harmonized forms of IP rights in the EU, which means there will be a noticeable change in protection following Brexit.

The day the UK leaves the EU, it will no longer be party to the relevant EU regulations that have created the European Trade Mark. These 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 valid. IP holders will, of course, be able to obtain protection for trademarks and designs through the national UK Intellectual Patent Office, but the impact on existing registrations will depend on the arrangements the EU and the UK agree on.

In the long term, European Trade Mark holders who make the majority of their use of those trademarks in the UK may find their European Trade Marks at risk of becoming vulnerable to revocation for nonuse in the post-Brexit EU. Similarly, it is unclear whether European Trade Marks that undergo some 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 join the EEA: European Trade Mark owners would be able to restrict the trade of goods between the UK and EEA Member States as the trade would no longer “exhaust” the intellectual property rights. At this time, European Trade Mark owners cannot prevent the selling of their products if they had previously offered them on the market. If the UK were not a part of the EEA, the trade in products in an EEA Member State would not exhaust the trademark in the UK and the other way around.

Furthermore, the practical management of IP portfolios would change if the UK does not join the EEA. 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. This results in the fact that there won’t be any changes in copyright law during the two-year negotiation period after the UK formally declares its exit from the EU. The UK’s membership in the EU significantly shaped and influenced the Copyright, Design and Patents Act of 1988 (CDPA), but copyright is probably the least harmonized intellectual property right in the EU. 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.

In terms of database rights, the UK will need specific legislation for UK national database rights if the UK does not join the EEA. Database rights are a uniquely 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 not significantly influence usual IP practices regarding license agreements. Future license agreements will have to take into account the political and geographical changes resulting from the UK leaving the EU. When drafting contracts, the necessity of having to protect UK national IP rights has to be a focus, and useful arrangements have to be included. Current license agreements that do not have appropriate severability clauses will have to be renegotiated.

Concluding remarks

The impact of Brexit on intellectual property rights depends on negotiations between the UK and the EU. On the one hand, the UK could follow Norway’s example and remain closely integrated within the EU. The UK would become a member of the EEA and the European Free Trade Association (EFTA). As discussed above, EEA membership would positively affect legal certainty because most of the changes in IP law could be avoided. If the UK decides to choose the improbable path of breaking away from the EU completely, crucial changes in IP law will arise. In general terms, the closer the post-Brexit relationship between the EU and the UK, the less the impact on IP rights.

IP holders should work hand in hand with their legal consultants to carefully monitor developments over the coming weeks and months to assess the impact on their intellectual property rights.

claudia.milbradt@cliffordchance.com

anja.schwarz@cliffordchance.com

yannick.frost@cliffordchance.com

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