What would a no-deal Brexit mean for the protection of IP rights?

Written on 25 Sep 2018

Yesterday (24 September 2018), the UK government released its latest batch of no-deal technical notices. This included five notices focussing on IP, covering: trade marks, designs, copyright, patents, geographical indications and exhaustion of rights (parallel imports).

The headline news is that owners of most EU IP rights will not lose protection when the UK leaves the EU, though there are still gaps in the detail of how this will be achieved smoothly. Our view has always been that businesses should file for both UK and EU trade marks for valuable brands, if budget allows, and Brexit may be another reason to take this approach. The notices do not change that view.

The no-deal technical notices can be summarised as follows:

Trade marks and designs

The UK will provide holders of registered EU trade marks and registered Community designs will a new UK equivalent right that will come into force at the point of the UK’s exit from the EU. Disappointingly, the notice stops short of saying that this will happen automatically and for free, simply stating that the new rights will be provided “with minimal administrative burden”. In respect of trade marks and registered designs filed through the Madrid and Hague Systems, the notice simply states that the UK is working with the World Intellectual Property Organisation to provide continued protection in the UK.

The UK will give applicants of pending EU trade marks or Community designs a nine month priority period to apply for an equivalent UK right whilst retaining the same priority date as the EU right. These new applications will need to pay the usual office fees.

The notice confirms that all unregistered Community designs that exist as at Brexit will continue to be protected and enforceable in the UK, whether or not those designs were first disclosed in the UK or the EU. It also confirms that a new supplementary unregistered design right will be created under UK law to mirror the current Community unregistered design right. However, after Brexit it will only be designs that are first disclosed in the UK that will be protected by this new UK supplementary unregistered design right.

In respect of ongoing legal disputes, the notice simply states that provisions will be made and more information will be provided before Brexit.

Exhaustion of rights

As foreshadowed in an earlier technical notice, the UK government confirms that it will initially continue to observe the EEA exhaustion of rights regime for a “temporary period”. This means that goods put on the market in the EEA with the brand owner’s consent can continue to be imported into the UK without breaching trade mark rights (or indeed any other IP right).

This is good news for an organisation such as the NHS which relies on parallel imported pharmaceutical products from the EEA.

However, it is not good news for UK-based distributors, because in a no-deal scenario there is no reciprocity by the EU on exhaustion of rights. As such, goods which have been first put on the market in the UK with the brand owner’s consent cannot necessarily be imported from the UK into the EU without breaching trade mark rights. Indeed, such a ‘UK to EU’ import is likely to amount to trade mark infringement in the EU country of import if done without consent.

Patents

The UK will form its own Supplementary Protection Certificate (SPC) regime on exit day, based on existing EU law.

It is still unknown whether the UK will be able to participate in the Unitary Patent and the Unified Patent Court (UPC) after Brexit.

The notice considers the possibility that the UPC does not come into force at all, in which case, there are no steps to be taken on exit day.

If Germany ratifies the UPC Agreement and the UPC comes into force before exit day (which must be doubted in the event of no withdrawal agreement and no transition period), the UK will explore whether it can stay part of the regime.

If the UK cannot participate in the UPC, the UPC would have no jurisdiction to hear actions for infringement occurring in the UK and those would need to be heard by the UK courts. The notice states that any existing unitary patents that had been granted prior to exit day would continue to be protected in the UK through a new equivalent UK patent right. That equivalent UK right would need to be enforced in the UK courts. Again, the likelihood of unitary patents being granted prior to exit day must be doubted.

Copyright

The UK’s continued membership of the main international treaties on copyright will ensure that the scope of protection granted: (a) in the UK to copyright works created and/or owned by all foreign nationals and companies; and (b) in the EU to copyright works created and/or owned by UK nationals and companies, will remain largely unchanged.

The notice points out that the Portability Regulation and country of origin principle in the SatCab Directive will cease to apply to the UK, so online content service providers will not be required or able to offer cross-border access to UK consumers and satellite broadcaster may need to clear copyright in each member state into which they broadcast. Other mechanisms relating to orphan works, collective management of copyright and transfer of accessible format copies will also cease to apply.

The notice is silent as to whether the UK will continue to provide database right protection to EEA nationals, residents and businesses, but points out that EEA states will no longer be obliged to provide database right protection to UK nationals, residents and businesses.

Geographical Indications

The notice confirms that the UK will set up its own GI scheme in the event of a no-deal Brexit. It also states that the 86 UK GI producers currently protected under the EU scheme will automatically be given new UK GI status and that these will confer protections similar to those currently provided. However, the notice points out that the UK would no longer be required to recognise EU GIs and that EU producers would need to apply under the new scheme.

The notice sets out that it is the UK’s expectation that all current UK GIs will continue to be protected under the EU scheme but provides some advice on how else to protect such GIs if this turns out not to be the case.

Osborne Clarke comment

As we say above, despite the assurances that protection of EU trade marks will be maintained in the event of a no-deal Brexit, brand owners may still wish to consider filing UK trade mark applications now for new brands and some marks that are currently only protected as EU trade marks.

As far as the EEA+UK exhaustion of rights regime suggested by the UK government is concerned, we can see the attractions, but would have preferred to have the UK government confirm that this is compliant with the ‘most favoured nations’ restrictions in TRIPs.

By implication, the notices confirm that Geographical Indications remain an important bargaining chip for the UK in its negotiations with the EU. The EU will of course want its GIs recognised in the UK, whilst the US has indicated that continued recognition of certain EU GIs would be a barrier to an effective UK-US trade deal for food products. The notice leaves that issue ‘up for grabs’.

We also await further clarification of how the UK government intends to deal with ongoing disputes based on EU IP rights in a no-deal scenario. That issue will likely require input from the Ministry of Justice and is part of a wider discussion on civil enforcement generally.