Written by Jim Dennis, Matthew Hiscox
The initial shockwave of the UK electorate’s vote in a referendum held on 23 June to terminate its membership of the European Union (Brexit) has given way to a tide of uncertainty as to whether, when and how the UK will indeed exit the EU. No independent member state has ever left the EU and the nature and scale of this development is unprecedented.
The referendum result is “advisory”, meaning that it does not commit the UK to leaving the EU.
The UK Government has long adopted the position that the UK should remain in the EU, which explains Prime Minister David Cameron’s decision to resign on 24 June. However, his replacement from the Conservative Party, Theresa May, a unity candidate from the “Remain” camp, is unlikely to propel the UK through the exit door any time soon. Mrs May might wish to, or may be forced to, seek a mandate for Brexit via a general election which could heap further uncertainty onto the situation. It is considered likely that the terms of Brexit will require the consent of Parliament – which currently consists overwhelmingly of “Remainers” and probably would still after any general election. The wishes of the devolved governments of Scotland and Northern Ireland – the majority of whose electorates voted Remain – must also be taken into account in order to avoid the possibility of the break-up of the UK. Finally, legal challenges to Brexit are already in the making. There is a long way to go.
The legal trigger for Brexit is the UK Government giving notice to the EU under Article 50 of the Treaty of Lisbon 2009. Only the UK Government can give notice. Mrs May has already stated that Article 50 will not be triggered until the end of 2016 at the earliest, whilst her new Government formulates its negotiating position. Once Article 50 is invoked, there is a minimum two year negotiation period before the UK formally leaves the EU. This period can be extended by agreement. Therefore, even once the UK Government has overcome the obstacles that are currently in its way, there will probably be at least two years before Brexit finally happens.
For owners of EU-wide IP rights, therefore, there is certainly no need to panic, but it is worth starting to think about where we may go from here.
The Impact of Brexit on IP Rights
Trade Marks & Designs
Bearing in mind the Article 50 requirement and the Government’s current position, in our opinion all registered European Union Trade Marks and Registered Community Designs will still provide protection in the UK until at the very earliest January 2019.
After the date of Brexit, EU registrations may no longer offer protection in the UK. If businesses are trading in both the UK and EU, it will be necessary to consider how they maintain existing registrations and obtain new protection moving forward.
For existing rights owners we expect there to be a transition period, whereby the EU Intellectual Property Office will agree to provide businesses with a time period within which they must convert their EU rights to the UK. There is indeed already such a system catered for by Article 112 of the EUTM Regulation, so it’s not hard to see this approach being extended to the Brexit scenario. The UK Government is consulting with IP stakeholders in the UK and we would expect such a transition period to be requested and agreed.
At present there is no need to file a UK trade mark application where there is existing and sufficient EU protection in place.
For new rights holders, however, it is worth considering filing UK trade mark applications in addition to any EU application, to cater for any eventuality and also to negate the requirement to convert.
The effect on patents is slightly more complex as patents can still be processed via the European Patent Office, which is a separate body from the EU. However, the groundwork for the new Unitary Patent (UP) and Unified Patent Courts (UPC), due to be introduced in 2017, will likely be delayed and there is much uncertainty about this system following Brexit.
Under English law, where a licence of IP rights has specified a territorial limitation as to its application (such as the EU), the territory will be the territory as it was constituted on the date of the agreement, because that was the intention of the parties at the time, unless there is some provision to the contrary.
In the event that the UK is no longer part the EU, such a licence will still be construed with the UK as part of the licenced territory, because at the time of entry into the agreement it was intended by the parties that it should apply to the territory which included the UK.
EEA (European Economic Area)
The UK has voted to remove itself from the European Union. The UK may wish to remain in the EEA, but we await confirmation that this will be the case. Should the UK remain in the EEA, UK professional representatives will be able to continue to represent clients at the EU Intellectual Property Office. If it does not, we will make arrangements to ensure continuity of representation for EUTMs.
The UK Courts are currently bound by decisions of the Court of Justice of the European Union (CJEU), and new UK laws generally mirror EU law. After years of convergence between UK and EU law, it is likely that UK IP law will start to diverge from EU law and in addition, the UK Courts will ultimately decide IP matters in the UK. We would expect the UK Courts to revisit some areas of trade mark law developed by the EU, particularly concerning the functions of a trade mark. We expect this to be a key area of change for years to come.
Strategy: Don’t Panic
Given the number of uncertainties following the referendum, we consider that it is far too early to predict with accuracy the impact of Brexit on existing Trade Mark and Design rights, but businesses may want to consider formulating new trade mark filing strategies moving forward as regards protection in the UK.
A safety-first approach would be to review existing UK-only trade mark protection to ensure that marks are protected in the UK regardless of whether, when and how the UK eventually leaves the EU.
However, there is no need to panic because there is ample time for businesses to understand and devise strategies to ensure that their IP is suitably protected in both the UK and the EU. We shall closely monitor the Brexit situation so far as it affects IP rights of all our clients and shall advise each of you on material developments as they become clearer.
If you have any concerns with regard to your existing or new IP protection, management of IP protection and more general advice surrounding IP strategy, please feel free to contact a member of our Trade Marks Team for more information. Gordon Dadds LLP will of course continue to provide support to our clients in the UK and EU throughout this period.
Jim Dennis is a partner and Matthew Hiscox is a trade mark manager in the IP, Media & Technology team.
This article should be read in conjunction with our company disclaimer which can be found here.
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