John Coldham, an experienced litigator of all types of intellectual property (IP) at Gowling WLG, considers the consequences of EEA membership versus no EEA membership for intellectual property rights and protection in the UK, identifying where key legislation will be needed in each scenario. Obviously, the timing of the consequences is very much open to debate.

Consequences of the UK going alone

If the UK leaves the EU and is not a part of the EEA, UK businesses operating in the EU/EEA would still need to comply with EU/EEA law. However, the UK courts would no longer be bound by EU/EEA legislation or the rulings of the Court of Justice, which will have the following consequences:

Trade marks

The UK will no longer be part of the unitary trade mark system under the EU Trade Mark Regulation 207/2009 (EUTM); the regime will have to be undone somehow which raises some questions:

Should a unitary right be split into two parts, covering the UK and the remaining EU?

or should an existing EU right give its holder a right of seniority in an application for a UK right?

The ‘unitary’ nature of the right would likely be limited to the remaining EU, with questions of validity and infringement regarding its UK ‘part’ falling within the exclusive remit of the English courts. Transitional legislation will be needed in the UK to manage this in a way that reduces uncertainty for business.

UK businesses/right holders will still be able to seek EUTMs, and enforce them in the remaining EU, but will be unable to rely on existing rights under UK law in order to find seniority for an application. Similarly, UK rights will no longer enable the owner to oppose a third party’s registration of a mark as an EUTM or to seek its revocation. These changes are significant, and will impact UK business’ ability to broaden the geographical scope of protection for their brand.

In addition, the Trade Marks Directive will no longer apply to the UK. The Trade Marks Directive has shaped the UK’s Trade Marks Act (1994), which provides the legislative structure for the UK grant and enforcement of registered trade mark rights.

Designs

The UK will no longer be part of the unitary designs systems (Community Designs Regulation 6/2002), which provide for both registered and unregistered unitary EU-wide design rights. As with trade marks, strategy and legislation, will be needed to extricate the UK from the European designs structure.

The UK right protects the shape or configuration (whether internal or external) of the whole or part of an article. It lasts for 10 years after it was first sold or 15 years after it was created – whichever is earliest.

The Community right, like the registered UK and registered Community rights, protects the appearance of the whole or part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation. It lasts for three years from the point the design is first disclosed or made available to the public in some manner.

For some industries, such as product design, the UK unregistered right is preferable, as shape-only designs are broader. However, for others, such as the fashion industry, Community unregistered designs are preferable as they cover the surface decoration, materials, colours etc. In a recent review of UK unregistered design, the UK Government decided to retain the UK right, on the basis that it complemented the EU design right well.

Another factor is that UK businesses may no longer qualify for Community design protection as of right. Therefore if businesses have been relying on unregistered Community protection, they may need to consider obtaining registered rights where they may previously not have done so. This is something that should be considered straight away – if you have been relying on unregistered protection and have disclosed the design, the clock is ticking to get a registration on the books before you are prevented from doing so. Businesses that rely on unregistered rights should consider this as a matter of priority.

Patents

Brexit does not impact the existing system for the grant and enforcement of European patents covering the UK, which will continue, because it is established by agreements made outside the remit of the EU and EEA. However, outside the EEA, the UK will not be involved in the new UPC and UP system.

The Unified Patents Court Agreement (UPCA) mandates that the UPC and UP will enter into force four months following the deposit of instruments of ratification by thirteen signatory states, one of which must be the UK. To date, ten signatory states have ratified, not yet the UK. If the UK were to ratify the UPCA, the UPC could be up and running as early as 2017. The UK could, perhaps, ratify the UPCA before any Brexit takes effect, in order to get the UPC operational. However, ratification entails a notable concession of jurisdiction to the new court, away from the courts of the UK, which of course leads to questions as to whether Parliament would choose to do this.

In any event, the UPCA and associated EU Regulations make clear that the system is only available for member states of the European Union. Yet the location of part of the Court of First Instance is in London. The assumption is that this would be an unsustainable oddity and would need correction by significant amendment to the UPCA. Other participating countries could treat this as an opportunity to re-visit the wider negotiations. If the history in this area is anything to go by, agreement could take some time.

There is, therefore, a risk that Brexit will unravel the whole UPC and UP project.

Supplementary Protection Certificates

The UK will need new national legislation to implement its own patent term extension scheme (probably by amending the UK Patents Act 1977) in order for SPC protection to continue to be available following Brexit.

Copyright

Outside the EEA, European legislation which impacts the interpretation of national legislation in the copyright sphere will cease to have effect in the UK. This includes the InfoSoc Directive 2001/29/EC and Directive 2006/115/EC on rental right and lending right.

The UK legislature has already considered the need for implementing legislation in respect of these directives and made amendments accordingly to incorporate them into UK national law, for example by the inclusion of section 97A of the Copyright Designs and Patents Act 1988. Such UK national law will not be impacted by Brexit.

Trade Secrets

The Trade Secrets Directive 2016/943/EC was published in the Official Journal in June 2016 and will come into force on 5 July 2016. The law in the UK (including the procedural rules of the court) is considered already to be largely compliant with the minimum standards being set by the legislation, and consequently Brexit makes little difference to the law in the UK in this area.

Exhaustion of intellectual property rights

Outside the EEA, the geographical boundaries within which exhaustion of many intellectual property rights occurs will be drastically reduced. Placing products on the market in the UK will not exhaust rights relating to remaining EU and EEA countries. Similarly, placing products on the market in the EU or EEA will not exhaust UK national rights.

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Consequences should the UK emerge as a member of the EEA

If the UK does remain a part of the EEA, post-Brexit UK courts will continue to interpret and apply EU legislation regarding intellectual property to the extent it applies to member countries of the EEA, or in respect of which the UK and EU agree to continued UK involvement in unitary regimes (which is far from certain).

In the field of intellectual property law, some significant legislation is limited to EU member states; so remaining a part of the EEA would therefore still leave a legislative gap. In particular:

Trade marks

The Trade Marks Directive, which shapes the UK Trade Marks Act, applies to EEA countries. UK trade marks law can be expected to continue to develop in line with the law within the EU.

Whether the UK could or would remain within the EU trade mark system is at present unclear. It would be a matter for negotiation and agreement between the UK and EU; EEA countries may have an interest in the outcome also.

Designs

The EU’s designs legislation is not applicable to EEA states, so absent agreement to the contrary, it will cease to apply even if the UK remains a part of the EEA. The consequences of this are discussed above. Whether the UK could or would remain within the EU designs system is at present unclear.

The proposed Unified Patents Court (UPC) and Unitary Patent (UP)

Even if the UK emerges from Brexit as a member of the EEA, the legislative difficulties discussed above, and the consequent need for renegotiation of the UPCA and associated EU legislation, need resolving.

Enforcement of rights

Finally, it is worth noting that the Intellectual Property Rights Enforcement Directive (2004/48/EC) (IPED) is not currently in force in the EEA. However, the UK legislature has already made the legislative amendments considered necessary to give effect to the IPED.

Generally, however, the UK courts consider themselves to have wide jurisdiction and discretion regarding the grant of remedies. Accordingly, although post-Brexit the IPED will no longer be effective in the UK, this is unlikely to restrain the ability of the UK courts to grant the relief considered appropriate in any particular case.

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Conclusion

How the UK needs to legislate in the field of IP in order to manage Brexit in an orderly way depends upon the nature of its post-Brexit relationship with its European neighbours.

If the UK does not remain a part of the EEA, it is clear that it will not remain a part of the unitary structures for protection and enforcement of trade marks and designs, and it will not become a part of the new UPC system for pan-European patent enforcement.

Remaining a part of the EEA may provide scope for negotiation for continuation of existing legislative structures relating to IP, but considerable negotiation is going to be needed and the outcome cannot be predicted at this stage.