How does Brexit impact your intellectual property rights?
As legal analyses and opinions abound on the vast Brexit deal that the EU and the UK concluded end of last year just in time to ward off a ‘hard Brexit’ (see our earlier contributions here and here), the obvious focus is on its immediate impact on the trade of goods and services and the new rules on movement of people. Nevertheless, there are many other aspects of the Trade and Cooperation Agreement that (so far) remain rather underexposed. One of these is the impact of Brexit on intellectual property rights (IPR).
In the extensive Q&A document that was published on December 24, 2020, the European Commission emphasized that the EU-UK Trade and Cooperation Agreement “complements the existing international multilateral legal framework with specific and more detailed standards on the respect of intellectual property rights”. In this contribution, Christ'l Verleyen and Kris Somers weigh in on the impact of the Agreement on patent rights, parallel imports, trademarks, design rights, copyright, domain names and several practical consequences on legal representation in enforcing IPR. The authors would like to thank Caroline Hayward (Trowers & Hamlins LLP) for her invaluable comments and UK perspective.
No (real) effect on patent rights
Patent applications and existing rights
Patents are essentially national rights. European and UK Patents are not governed by EU law. The European Patent Convention (EPC) is not part of the EU “acquis communautaire” but an international treaty in its own right and the European Patent Office (EPO) is a not an EU organisation. As such, Brexit has no impact on the grant of European Patents (EP) and the validation of EPs in the UK. The UK remains party to the EPC. New patent rights in the UK can therefore still be obtained through an EP. UK-based European patent attorneys can continue to act before the EPO, file and prosecute EPs.
You can also continue to apply for, and be granted, a patent by the Intellectual Property Office (IPO). Pending applications for patents will continue to be assessed on the same basis. The requirements and processes for grant will not change, nor will the rights you obtain when a patent is granted. Any existing rights and licenses in force in the UK remain in force also going forward. If legal proceedings involving these rights or licenses are underway, they continue unaffected.
Unitary Patent
In fact, the most significant effect of Brexit in terms of patent law concerns two systems which have not yet been passed into EU law: the Unitary Patent (UP) and Unified Patents Court (UPC).
Although not yet in effect, the Unitary Patent (UP) promises to move closer to a true ‘EU patent'. Currently, EPs cannot be enforced centrally. A country-by-country approach must be taken. The UPC promises to solve this problem- offering a single court to enforce both UPs and ‘traditional’ EPs.
That said, the UK will not be covered by the UP nor will they participate in the UPC, having officially withdrawn from the UPC Project on 20th July 2020. This is due to the UK Government’s stated aim to extract itself from the jurisdiction of the Court of Justice of the European Union (CJEU), something that would not be possible should the UK proceed with its commitment to a UP and the UPC.
If and when the UP and UPC are launched (currently not anticipated before early 2022), the UP will only provide cover in EU countries and not the UK.
Practically, UK businesses will still be able to use the UPC and UP to protect their inventions within the contracting EU countries. However, within the UK, businesses will only have the option of protecting their inventions using national patents and, the UK will remain part of the current EP system (as stated above) so that the EP (designating the UK) will still be available. If necessary, these rights would need to be litigated in UK courts.
Equally, the EU businesses will not be able to use the UPC and UP to protect their inventions within the UK but will be able to apply for domestic UK rights as they can now, via the IPO and the EPO.
Patenting biotechnological inventions
The conditions for patenting biotechnological inventions remain in place. UK, EU and third country businesses as patent holders, third parties and applicants can continue to make decisions on the basis of the current legislation. Patent examiners will continue to apply the same law when scrutinising patent applications in this area. Third parties who wish to challenge the validity of a patent will be able to do so on the same grounds as at present.
Pharmaceutical product testing
UK, EU or third country businesses can continue to rely on the exceptions from patent infringement provided for various studies, trials and tests carried out on a pharmaceutical product.
Legal representation
You will not need to change your legal representative, which can still be located in the UK, Isle of Man, or the EEA. Communications between patent attorneys and their clients will remain privileged, as this is not subject to EU membership.
Judgements of the Court of Justice of the European Union
Following Brexit, it is no longer possible for UK courts to make references to the CJEU for interpretation of the Supplementary Protection Certificates (SPC) legislation and other retained EU law.
Judgements of the CJEU issued before 31 December 2020 continue to apply to the retained EU law. The amendments made by the Patents Regulations 2019 are written to have the same meaning as the original EU legislation, so that existing case law still applies.
UK courts continue to apply this existing CJEU case law in SPC actions. SPC examiners will also take account of this existing CJEU case law when examining SPC applications. In addition, if the UK courts have referred a question to the CJEU before the end of the transition period and this question was still pending on 1 January 2021, then it will remain before the CJEU until its resolution.
Other than these pending referrals, UK courts are not required to follow judgements of the CJEU issued from 1 January 2021 onwards. They may be taken into account, but it will be for the court to determine the extent to which the post-transition period case law applies. This will also apply to hearings before the IPO on SPC-related matters.
In terms of the case law governing SPCs, the UK courts have been the most active in referring questions to the CJEU to clarify SPC law. It will therefore be significant (for both the UK and EU), that such referrals will no longer be made. Even though prior CJEU decisions on SPC law will continue to form part of the retained law in the UK, this may be an area where the UK case law begins to diverge from the EU in the future.
Influence on parallel imports
The departure may have an impact on the parallel import between EU countries and the UK, which is now possible through “exhaustion” of IPRs.
By way of example, this means that once a patented product has been sold within the EU (with the consent of the patent holder), it can be freely traded in the rest of the EU (even if there are patents held in those countries). It essentially supports the EU wide aim of free movement of goods between member states.
The EU and UK have recently signed a post-Brexit Trade and Cooperation Agreement (TCA) which was given effect in principle from 1st January 2021. In essence, the EU's rules on free movement of goods no longer apply in relation to the UK. Instead, in relation to exhaustion of intellectual property rights, The Intellectual Property (Exhaustion of Rights)(EU Exit) Regulations 2019 will apply (SI).
The SI provides that EEA wide exhaustion is retained as far as possible. From 1 January 2021:
· IP rights in goods put on the market in the EEA will be exhausted in the UK so that they may be allowed to continue to be freely imported into the UK (subject to the goods meeting relevant regulatory requirements if any);
· There is no reciprocity; goods put on the market in the UK will not exhaust the IP rights owned in the EEA.
Practically, owners of UK IP rights cannot prevent parallel imports from the EEA as the UK is no longer in the EEA. However, owners of IP rights in the EEA can prevent parallel imports from the UK. Parallel importers must therefore check whether they need the EEA based IP owner's consent to export goods to the EEA. There is no longer free movement of goods in this direction. Whether we can expect large volumes of parallel importation from the EU into the UK would depend on the extent of price differences between the UK and the relevant EU Member State.
The UK government has plans for a formal consultation on the exhaustion regime in early 2021 and we await further updates as to whether the UK government decides on a different exhaustion regime in the future.
Conversion of European trademark and design registrations into national UK rights
An EU Trademark provides protection throughout the whole of the EU by means of a single, unitary registration, offering trademark proprietors a cost effective way of protecting their trade marks in now (post-Brexit), 27 different countries.
There are two types of design protection in the EU, namely, Registered Community Designs (RCDs) which are obtained by filing an application at the EUIPO and Unregistered Community Designs (UCDs) which automatically come into effect as soon as a novel product is made available in the EU.
Existing registrations - For all registered European trademarks and RCDs, comparable UK trademarks and registered design rights were automatically "cloned" by the IPO from 1 January 2021 pursuant to the terms of the Withdrawal Agreement. Each of these rights:
· Have been recorded on the UK register;
· Keep the same legal status as if the owner had applied for and registered them under UK law;
· Keep the original EU filing date;
· Keep the original priority or UK seniority dates; and
· Are a fully independent UK registered right that can be challenged, assigned, licensed and renewed separately from the original EU trademark of RCD.
Pending applications - for design and trademark applications which did not reach registration by 1 January 2021, owners of these applications have a period of nine months (up until 30 September 2021) to apply in the UK for the same protection (the UK equivalent mark). However, in this instance, UK application fees are payable and the application will not automatically be "cloned" without examination. Instead, they will be subject to UK examination and in the case of trademarks, publication requirements.
The following scenarios demonstrate how the system now works:
Scenario 1 - No EUTM or RCD application filed on 31 December 2020
Separate EU and UK applications need to be filed (directly or via the International (Madrid/Hague) systems).
Scenario 2 - A pending EUTM or RCD application on 31 December 2020
Any EUTM or RCD application which was pending on January 1, 2021 in the EU needs to be re-filed in the UK by September 2021. The IPO will, however, recognize all filing dates and claims to earlier priority and UK seniority, which are claimed in connection with the corresponding EU application, but UK filing fees will be payable and the application will be examined and published in line with UK practices.
Scenario 3 - A registered EUTM or RCD on 31 December 2020
At 11pm UK time on 31 December 2020 all existing registered EUTMs and RCDs were granted an equivalent or “cloned” trademark or design registration in the UK. This involves an automatic cloning of the existing registration, at no cost to the proprietor.
However, the new UK national right requires its own separate renewal. The same provisions apply to international trademark and design registrations which are protected in the EU. These cloned registrations have, however, become standalone national UK rights, rather than international registrations designating the EU and UK.
Unregistered Community Designs (UCDs)
Although UCDs are free, and come into effect automatically, they offer a shorter term and more limited form of coverage compared to RCDs. That said, they are useful rights, and provide pan-EU protection instead of, or alongside, RCDs.
It is worth noting that there is also an unregistered UK Design Right, which is similar to the UCD, but has a longer term (up to 15 years compared to 3). Therefore, to the uninitiated, it may seem that loss of the UCD may not pose a problem. This is not the case.
Aside from the term of protection, the unregistered UK Design Right differs from the UCD in so far as the former does not cover ‘surface decoration’. Therefore, the loss of UCD would leave designers of novel surface decoration (who choose not, or are unable, to file a registered design) exposed. This has a particular impact on sectors such as the fashion sector, where designers rely on the UCD to protect their designs.
With regard to unregistered design rights, the UK government has confirmed that all UCDs which existed at the point that EU law ceased to have effect in the UK automatically continue to be protected and enforceable in the UK for the remaining period of protection of the right.
The UK government has also committed to introducing equivalent protection in the UK which has been named the supplementary unregistered design (SUD). The SUD provides similar protection to that conferred by UCDs, but for the UK only. The SUD will be established by first disclosure in the UK or another qualifying country. First disclosure in the EU will not establish a SUD. It could in fact destroy the novelty of the design, if UK unregistered rights are later sought. Therefore, businesses will need to consider carefully where to disclose their products to ensure that they have adequate protection in their most important market (the EU or the UK).
The following scenarios demonstrate how the system now works:
Scenario 1 - A UCD subsists on 31 December 2020
The UK continues to recognise the right, such that it is protected and enforceable in the UK for the remainder of its three year term.
Scenario 2 - A UCD does not yet subsist on 31 December 2020
Newly generated UCDs do not cover the UK after this date. The UK government has instead created the SUD which will mirror the UCD’s coverage of surface decoration but careful consideration will need to be made to the first disclosure of the design as to whether the SUD or UCD arises.
Copyright and database rights
It is generally assumed that Brexit will have little impact on copyright in the UK, as so much of the UK’s copyright law has its roots in international treaties and is not dependent on the UK's membership of the EU. Due to the UK's continued participation in the international treaties on copyright, most UK copyright works (such as books, films and music) will still be protected in the EU and the UK.
For the same reasons, EU copyright works will continue to be protected in the UK (this applies even to works made before and after 1 January 2021).
There are, however, some aspects of UK copyright law which are derived from EU Directives and are unique to EU member states. From 1 January 2021, these no longer apply to the UK. These include cross-border portability of online content services, copyright clearance for satellite broadcasts, reciprocal protection for database rights and the orphan works exception. It is expected that the impact of these changes will vary depending on domestic legislation in each EU member state as well as private contractual relationships. It remains to be seen how things will pan out in this area.
Perhaps of most importance is the impact on Brexit on the sui generis right. Database rights were first introduced by the EU Database Directive. Eligible databases receive protection in all EU member states, which, pre-Brexit, included the UK.
Under the terms of the Withdrawal Agreement, database rights that exist in the UK or EU before 1 January 2021 (whether held by UK or EU persons or businesses) will continue to exist in the UK and EU for the rest of their duration. Anyone in the UK who wishes to use databases protected by these rights will continue to need the permission of the right holder(s) as before.
However, UK citizens, residents, and businesses will not be eligible to receive or hold database rights in the EU for databases created on or after 1 January 2021. As such, owners of databases created on or after 1 January 2021 should consider whether they can rely on alternative means of protection in the EU – for example licensing agreements or copyright, where applicable. Equally, only UK citizens, residents, and businesses are now eligible for database rights in the UK for databases created on or after 1 January 2021.
Copyright in databases
Copyright protection for databases in the UK and EEA is unchanged as it continues to be governed by the terms of international treaties and protection and rights do not depend on the UK’s relationship with the EU or EEA.
Domain names
Non-EU businesses are no longer entitled to be a registrant of an .eu domain
The .eu Top Level Domain no longer applies to the UK. Thus, undertakings and organisations that are established in the UK but not in the EU and natural persons who reside in the UK and are not an EU citizen are no longer eligible to register .eu domain names or, if they are already .eu registrants, to renew .eu domain names registered previously. Domain names belonging to a proprietor who is not eligible may now be revoked.
Agreements between the Registrar and the registrant of a .eu domain name cannot designate UK law as applicable law nor can they designate a dispute-resolution body (unless selected by the .eu Top Level Domain Registry pursuant to Article 23 of Commission Regulation (EC) 874/2004), an arbitration court or a court located outside the EU.
UK rights cannot now be invoked in revocation procedures for speculative and abusive registrations.
Rights in Trade Secrets and Confidential Information
No change is anticipated in the area of trade secrets/confidential information. The UK historically had a robust common law of confidentiality which will remain in force. Furthermore, the EU Trade Secrets Directive (Directive (EU) 2016/943) was implemented in the UK per the Trade Secrets (Enforcement, etc.) Regulations 2018 (SI 2018/597) (and largely mirrors the common law), which will remain in effect.
Conclusion
In the field of IPRs, untangling UK and EU rules post-Brexit is proving to be anything but a walk in the park. New laws and regulations will follow in the months and years to come on both sides of the Channel.
As stated above, fortunately, not everything will change abruptly. Immediate Brexit impact includes the fact that UK businesses are no longer entitled to claim EU database rights in respect of databases created post-Brexit, nor can they register for an .eu domain name. Perhaps more importantly, as new legislation is adopted and given that the UK courts will no longer look to Luxembourg for interpretation questions, it is a given that over time UK and EU IPR laws will start to diverge. The anticipated UPC system will also not include the UK.
Given the long forward shadow of legal uncertainty that Brexit inevitably casts, IPR owners should take some time to identify which of their rights are likely to be affected and may need further application/registration in order to achieve maximum protection. This, for example includes, the need after Brexit, to make two separate trade mark applications for EU and UK trade marks as EU trade mark applications after 1 January 2021 no longer include the UK.
Liber.ius will be happy to assist you in this exercise with pragmatic guidance and practical advice.