Brexit: action points for intellectual property rights-holders

Practical Law Article w-003-8761 (Approx. 8 pages)

Brexit: action points for intellectual property rights-holders

by Mark Owen and Jo Joyce, Taylor Wessing

General considerations

The implications of Brexit for intellectual property (IP) owners and practitioners are still largely unknown; in particular there are a number of key issues that will impact both UK businesses used to relying on EU IP rights in the UK and Europe, and businesses domiciled in one of the other 27 EU member states and beyond that use EU rights in the UK.

Some areas of IP law are more harmonised than others and it is these areas that will require the most attention. Trade mark law will see more upheaval than the law of copyright, for example.

The most pressing issues to be determined are likely to be the subject of government consultation. Organisations with a strong interest in the outcome of any aspect of the policy debate should check the UK IPO website regularly for news and announcements relating to government consultations. Comments may be sent to [email protected]. It should, be noted, however, that in the post-vote government, there are a number of bodies which have an interest in what happens to the IP laws and lobbying resources may need to be devoted to each of them. These include the Department for Exiting the EU, the Ministry of Justice and the Department for International Trade. At the time of writing, a parliamentary Select Committee was also about to examine the impact of Brexit on cultural issues, including copyright law.

IP law is complex and inconsistent. The Prime Minister has announced that EU laws will all initially become part of UK law and then be amended or repealed over time. Once repeal is underway important issues to be resolved will include:

What weight will the UK courts be expected to give to case law based on EU statute or jurisprudence post-Brexit? Will this differ for proceedings commenced prior to the triggering of Article 50 or afterwards but during the negotiation period? Will decisions of the Court of Justice of the EU remain binding or even persuasive authority in any circumstances?
Will complete reciprocity be maintained between the UK and the EU with regard to who may apply for a registered right or enjoy an unregistered right? At present national rights available to UK nationals/companies are extended to nationals/companies of other EU member states. This is unlikely to change but in some cases legislative action may be required to ensure that this is the case.
Cross-border customs cooperation is crucial to ensure that infringing goods are seized. The extent to which UK and other EU national customs authorities will co-operate post-Brexit is currently undetermined.
It is not known what approach will be taken to IP rights exhaustion. It is possible that there will be international exhaustion (following the example of the US), no exhaustion of rights at all (the 'Fortress Britain' approach) or something in between.

Taking stock

At this stage the best thing that rights-holders can do is to take stock of their portfolios and consider the potential risks and challenges that may present themselves depending on the form that Brexit finally takes. Now is the ideal time to carry out an IP audit and ensure that the organisation is prepared as far as possible to tackle the unknown. Rights-holders should consider issues such as:

To what extent does the business currently rely (only) on pan-EU IP rights (for example, EU trade marks (EUTMs) and Community designs) for protection in the UK? Rights-holders should draw up a list of the key registrations and other rights relied on, noting those without separate national protection.
To what extent does the business rely on Community unregistered design right to protect surface design on products (see Design rights below)? If this is important to the business a limited filing strategy may be needed to protect the most crucial designs in the future.
Check the terms of IP licences and in particular the territory provisions to address any potential gaps that may require amendment.
Consider setting aside additional legal budget and legal resources for new national filings and contract amendments once the government's intentions with regard to the conversion or otherwise of EUTM rights becomes clear.

Contractual and drafting Issues

Current agreements should be reviewed and amended as necessary to reflect amendments to definitions. In particular those licences that define the "Territory" as including the EU or the EEA may require amendment to reflect the fact that the UK will no longer be part of the EU and may not be part of the EEA.
It is possible that the UK's departure from the EU will be the first of a number of withdrawals by member states. Therefore new agreements referencing the EU or EEA as part of the "Territory" should be explicit about whether the definition is intended to mean those countries that are currently members regardless of whether they subsequently withdraw or whether withdrawal will lead to the exclusion of that country from the definition and therefore the agreement; for more complex agreements where there may be increased cost implications for trading in the UK this may not be straightforward.
Licences should also reflect the fact that UK national rights may be created to mirror the Community rights listed or annexed (for example, EUTMs or registered Community designs). Consideration should be given to whether the licence will automatically extend to cover such rights.
The enforceability or applicability of provisions in licences relating to EU competition law may be contingent on changes to UK law and such provisions should be flagged up.

Litigation issues

The impact of Brexit on issued proceedings is not yet clear and the effect is likely to be different at different stages of the litigation process. Rights-holders should consider any impending or ongoing litigation matters carefully and work out the potential consequences of issuing proceedings based on EU rights that may not be resolved by the time the UK leaves the EU. It is worth noting that:

Remedies in IP cases are subject to the IP Enforcement Directive (Directive 2004/48/EC). In the short term this may mean that remedies in UK cases are dispensed differently (though rights available through the Directive are largely mirrored in domestic common law which tends to be broader and more flexible in scope).
In the long term the lack of UK involvement in the EU may impact on the nature of the remedies available in the litigation of EU rights.
It will no longer be possible to seek an injunction only from a UK court in order to protect IP rights in other EU member states.
It may not be possible to rely on pan-EU injunctions obtained in the past from EU national courts to protect IP rights in the UK.
It is possible that rights-holders litigating in both the EU and the UK will end up with conflicting judgments, particularly where there are parallel cases on validity and infringement running simultaneously.
UK-based defendants will no longer be able to insist on being sued in their country of domicile when accused of infringing Community rights - there is going to be a serious risk of being sued in the claimant's primary country of establishment.

Issues relating to specific types of IP right

Trade marks and domain names

So far the government has not announced what, if any arrangements will be put in place for ensuring that EUTM holders will continue to enjoy UK trade mark protection. It is possible that there will be a conversion option (providing an equivalent UK right to mirror EUTMs) provided by the UK IPO. If so, rights-holders should take advantage of this option as soon as it is available. It remains to be seen if/how priority will be preserved.
There is no need to re-file all EUTMs as UK marks at this stage but for particularly valuable or core marks it may be prudent to file an application to avoid the inevitable rush at the registry once the UK government has decided on its strategy.
If any UK marks (registered or not) are regularly relied on to block third-party EUTM applications these should be applied for as EUTMs as soon as possible since they will no longer be valid rights for opposition proceedings post-Brexit.
If an organisation relies on use within the UK only to support EUTMS, or only uses marks outside the UK which will be converted into UK registrations, it is sensible to consider what can be done to avoid “non-use” risks (revocation actions and potential counterclaims).
It is best to avoid making UK seniority claims at present.
UK rights should not be allowed to lapse where possible.
If a .eu domain name is being used and relied on, a back-up domain should be acquired as the registrant of a .eu domain must have registered office, principal place of business or place of establishment within the EU/EEA. UK holders of such domains may not be permitted to retain them post-Brexit.
UK representatives without an EU place of business will no longer be able to prosecute EUTM applications or handle registry actions for clients unless the UK joins the EEA on withdrawing from the EU.

Copyright

Because significant aspects of the law of copyright are not harmonised across the EU there is no clarity yet on the extent to which UK law may diverge from the rest of the EU post-Brexit. Content owners in particular will have to pay careful attention to new judgments to spot developing areas of difference.
Some commentators think that UK judges will be inclined to revert to the pre-Infopaq I principles (see Legal update, ECJ considers whether reproduction of extracts from newspaper articles infringed copyright) in determining when copyright may subsist (protecting the skill and labour of the author in a substantial part of their work as opposed to the expression of the intellectual creation of the author).
Given the growing movement to cross-border content sharing it seems unlikely that the interpretation of the principles of copyright law in the UK will depart significantly from the jurisprudence of the EU in currently harmonised areas. However, a gradual divergence is likely. New and clearer exemptions, such as a private copying (format-shifting) exemption should be expected now that EU law will not stand in the government's way.
Significant changes to EU copyright law are currently being debated as part of the EU Commission's Digital Single Market programme. It is possible that some of those changes may have become EU law by the time the UK exits the EU, or will be about to become law. Whether such changes will become part of UK law is an open question until we know what form of trading relationship the UK maintains with the EU.

Design rights

It will not be possible to re-file Community registered designs as UK registered designs unless the Community registered design was filed within the preceding 12 months – after 12 months the design will no longer be considered novel.
There is likely to be a conversion option (providing an equivalent UK right to mirror registered Community rights) provided by the UK IPO and rights-holders should take advantage of it as soon as it is available.
UK unregistered design right does not protect surface design in the way that Community unregistered design right does, so unless a mirroring provision is introduced by the UK government, it may be necessary for rights-holders who often rely on their Community unregistered design right to file for UK registered rights to cover surface design. This could come at significant cost to the business (particularly in the fashion and consumer goods sectors) so a limited and well-planned filing strategy will be necessary. Registrations must be filed within 12 months of the design first becoming available to the public (available in the broad sense of being exposed to the design, not necessarily being able to purchase the product in question).

Patents and trade secrets

The future of the unitary patent and the Unified Patent Court are likely to be decided soon. At present it seems unlikely that the UK will be able to stay part of the Unitary Patent Agreement post-Brexit while the unitary patent is subject to EU law, and both are subject to the authority of the EU courts. However, strenuous efforts are being put into arguments that such a position may still be possible.
The current European Patent Convention will continue to apply and the UK's membership of it will be unaffected as it is not an EU institution.
Depending on when Brexit finally takes place the UK may or may not have to implement the Trade Secrets Directive (2016/943/EU). However Parliament has noted that the UK is already compliant with the Directive and UK entities doing business in Europe will continue to be able to rely on and enforce the Directive's terms in EU member states post-Brexit since the Directive applies regardless of where the secret holder is domiciled provided the damage took place in a member state.

Brexit: action points for intellectual property rights-holders | Practical Law