2016/07 > Brexit: Thinking forward to some potential consequences while we wait for decisions to be made

In the referendum of June 23rd 2016, a majority of British voters expressed their desire to leave the European Union. As a result, the United Kingdom is preparing to say goodbyes and trigger the withdrawal procedure provided for by Article 50 of the Treaty on European Union (TEU). It is only after this notification is delivered to the European Council, that negotiations will officially start in relation to the manner and conditions of this withdrawal.

It is important to note in this respect that according to Article 50 TEU, the various treaties of the European Union cease to apply to the relevant state 2 years after this notification has been delivered.

Today, the United Kingdom has not yet given such notice to the European Council, neither has it begun to act upon the referendum result, unless you count the formation of the new government. It must be recalled that on a legal level this referendum has only a consultative status and that an act of parliament is necessary to trigger an effective exit. This question is also currently being considered by the English courts.

Whatever happens, intellectual property rights are amongst the important intangible assets concerned by this unprecedented situation and the owners of these rights will inevitably want to know what the consequences will be of what has been dubbed by the media, “Brexit”.

Within the domain of patent law, the British withdrawal will have no effect in relation to the European patent, which remains and will continue to remain effective in the same conditions as today, even after the Article 50 withdrawal process has been triggered. The UK will also remain a member of the PCT. The European Patent Convention, like the PCT, is a treaty separate from the EU; thus its legal status in the UK as a member state, will not be changed.

The future of the Agreement on the European Unitary Patent (PDF) and its ratification by the United Kingdom are however among the more delicate subjects in IP. This agreement cannot enter into force without the ratification of this particular country. It is possible that this ratification could theoretically be carried out before the UK gives notice of its withdrawal. That is to say anytime from now. Could this agreement really enter into force if this ratification was carried out? No one knows. If the UK does not end up ratifying the agreement and leaves the EU, a new state such as Italy could possibly take its place and allow the new system to enter into force.

Whatever happens, once the UK has left the EU, it will no longer be able to be a part of the Unitary Patent System according to the current rules, because one of its conditions of participation is membership of the EU. Significant negotiations would be required in order to create a modified Agreement, if it were envisaged that the UK could be allowed to participate in this system despite having exited the Union.

It remains to be seen whether the future of the Agreement of the European Unitary Patent might be resolved within the withdrawal agreement and it may be decided that one of the institutions designed to host unitary patent litigation will be placed in London. It is possible however that certain member states may oppose such a move, with a view to having such an institution placed on their own territory.

The current forecast must be that the launch of this new system, which was scheduled for 2017, is highly likely to be delayed.

The system of European trademarks and designs was created by European regulations with direct effect, which are in force today – Regulation (EU) 2015/2424 of The European Parliament and of The Council of 16th December 2015 amending Council Regulation (EC) No 207/2009 on the Community trade mark and Commission Regulation (EC) No 2868/95 implementing Council Regulation (EC) No 40/94 on the Community trade mark, and repealing Commission Regulation (EC) No 2869/95 on the fees payable to the Office for Harmonization in the Internal Market (Trade Marks and Designs) ; Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark

The withdrawal of the United Kingdom from the European Union will mean that these regulations will no longer be applicable to it. It is here that we will really be able to measure the consequences of the Brexit.

Thus, European trademarks and designs will no longer cover the United Kingdom. It remains to be seen what will be decided for trademarks and designs filed before the exit. Will they remain effective in the United Kingdom? Will measures such as those which currently allow for the conversion of European trademarks to national trademarks be provided for? One imagines that they will be, in any case.

The provisions of the harmonisation Directives that have already been integrated into national law are however already well placed to outlast the exit; though one must remember that Britain will be free to modify them from then on, as it sees fit.

Will the currently harmonised rules relating to the acquisition of rights through filings, the validity requirements, the opposition procedure, the assessment of trademark counterfeiting or even the provisions relevant to designs such as the notions of complex product and informed and pre-warned users be kept? We can only wait and see.

Finally, the question of what will happen regarding the transposition of the new Directive (EU) 2015/2436 of the European Parliament and of the Council of 16th December 2015 which draws together the legislation of member states relating to trademarks, will have to be dealt with.

It is already a good idea, for all new filings, to be considering filing British trademarks and designs in parallel to those carried out at a European level (directly or via the Madrid or the Hague systems, which remain unchanged) if the United Kingdom is an essential territory for the envisaged usage and in view of the impossibility of knowing today what measures will be later adopted.

Furthermore, if a trademark or design must be subject to a licensing agreement, it may be useful for the relevant contracts to be already drafted in advance of the Brexit, with a clear definition of the territories concerned, the competent tribunal as well as the applicable law in case of dispute.

From this point of view, it would seem that rapid negotiations on this subject are not only necessary for the safeguarding of released or soon to be released assets, but equally for all related legal acts.

The question is to know how rights holders will be able to impose their rights under European registrations for trademarks or designs seeing as the European trademark and design courts based in the UK, are likely to disappear, taking with them the possibility for a British company to obtain legal decisions which will be valid throughout European Union territory. Similarly, it seems that a rights holder’s ability to impose a design which hasn’t been registered according to the provisions of the European regulation will be compromised.

It should be noted that British IP agents will no longer be able to represent their clients before foreign intellectual property offices, something which was rendered possible by the principle of freedom to provide services, nor before the EUIPO.

Plant breeder’s rights, for which a European protection valid in all member states was provided in the Regulation (EC) n° 2100/94 of the Counsel, of 27th July 1994, are equally concerned. The same uncertainties exist for medications. Marketing authorisations carried out by the European Medication Agency, whose headquarters is in London (!) will equally require transitioning provisions in order to keep them in force on English territory. Similarly the UK will no longer be subject to the European regulation on supplementary protection certificates.

Solutions in relation to the protection of appellations and indications of origin relating to wine and food products will also have to be found, as this subject is to great extent governed by EU regulation.

Copyright has not yet been subject to community harmonisation in contrast to the aforementioned topics, therefore its situation shall not be fundamentally modified.

According to CIPA, the professional organisation that represents British patent attorneys, the British government could pass a law to maintain the entire block of European legislation currently in force in the UK relating to intellectual property, particularly in view of the amount of time that would be required to modify each legal provision and the impending nature of the Brexit. The British are expecting that the provisions relating to un-registered designs and supplementary protection certificates for patents will be maintained. Though this may be their wish, the effectiveness of non-registered unitary designs on European territory cannot in any case be maintained on a purely unilateral basis by the UK.

The British exit from the European Union will have serious consequences on other aspects of intellectual property law and in particular the principle of the free movement of goods, the expiry of IP rights in the UK, as well as the latest customs Regulation (EU) No 608/2013 of the European Parliament and of the Council of 12 June 2013. The same goes for all the other regulations which have an effect in these areas, such as those relevant to technology transfers, competition law or others.

One can see, that the impact of the Brexit on industrial property is potentially enormous and will require a great deal of work to resolve.

Of course, in the context of Europe and a globalised economy, it seems difficult to think that the UK could exclude itself from a system of rules whose development it has been collaborating on for a long time. It nevertheless remains to be seen what atmosphere negotiations will take place in, given that it is not likely to be in the interest of the other member states for the UK to retain benefits such as the placement of agencies or supranational institutions on its territory when it has made a clear decision to leave and bear the negative consequences, notably in terms of the free of movement of people, goods and services.