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Brexit: Intellectual Property The Legal Implications for Business
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Brexit | Intellectual Property The Legal Implications for Business In the UK, we currently have national IP rights (such as UK trade marks and patents) and pan-EU IP rights (such as EU Trade Marks, Registered and Unregistered Designs and Unified Patents). Following Brexit, we expect that national IP rights will see little change. European Patents, which derive from the European Patent Convention (which is independent of the EU), would also not be materially affected. However, there will inevitably be some changes to EU IP rights.
Esther Gunaratnam Partner IP & Technology esther.gunaratnam@laytons.com
Russell Beard Partner Disputes russell.beard@laytons.com
Brext: Intellectual Property | The Implications for Business | May 2017
Trade marks UK trade marks derive from national laws. European Trade Marks (EUTMs – formerly Community Trade Marks or CTMs) will, however, no longer cover the UK after Brexit. Those requiring EUTMs will therefore also need to obtain separate UK trade marks to cover the UK. Recent case law suggests that where a business trades primarily in the UK and not elsewhere in the EU, an EUTM may be hard to sustain validly in any case, and so it is already advisable for such businesses to register a separate national UK trade mark.
It is expected that existing EUTMs could be converted, re-
The text of the UK Trade Marks Act 1994 closely follows the
registered or in some way recognised in the UK, avoiding the
corresponding European directive, and there is little talk of
need for new UK registration. We will have to wait to discover
changing it. UK and EU interpretation of trade mark laws are
the actual mechanism for this. Businesses should review their
broadly harmonised; in time divergence will likely increase, but
existing EU trade mark portfolios, and consider applying now
this is expected to develop organically, primarily through case
for a UK trade mark registration to ensure protection in light
law. Some commentators are predicting that the divergences
of the uncertainties. However, beware that for those EUTMs
will result in the UK system becoming more defendant-friendly
that are only used in the UK but not elsewhere in the EU -
compared to the EU system. There will also be some changes
they are likely to be vulnerable to cancellation for non-use
in relation enforcement of trade marks. Currently, defendants
after Brexit, subject to any other arrangements that the EU
of EU trade mark infringement claims who hold an earlier UK
may agree to in the Brexit negotiations.
trade mark can use that as a basis of a counterclaim for the invalidity of the claimant’s EU trade mark. Post Brexit, the UK trade mark may no longer be an “earlier mark” by definition, thus depriving the defendant of this option.
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Brext: Intellectual Property | The Implications for Business | May 2017
Patents
Designs
National and European Patents will not be affected by Brexit, although there will need to be some transitional arrangements for associated rights governed by EU regulations. The EU regulations could be transposed as UK legislation, which would be one of the least disruptive options. Reciprocal protection in the EU, however, would need to be negotiated.
UK national design registrations and unregistered design rights are unaffected by Brexit. EU Design Registrations would no longer cover the UK after exit. However, as with trade marks, a system of conversion, reregistration or extension may be introduced for existing EU Design Registrations.
Brexit is likely to delay commencement of the Unified Patent
In relation EU unregistered design rights, this system currently
(“UP”), which will be a single pan-EU patent valid in all EU
runs in parallel with the UK unregistered design rights. The EU
member states. This is because the UK was to be a key part
unregistered design right offers a 3-year automatic protection.
of the Unified Patent Court (“UPC”). There is considerable
The scope of protection for EU unregistered design right
uncertainty surrounding the UP. The UKIPO has confirmed
is slightly different from (wider in some ways than) the UK
that it expects the necessary steps to be completed according
unregistered design right. Post Brexit, if the UK Government
to the timetable such that the UPC will become operational
fulfils its objective of preserving the rights enjoyed under the
in December 2017. However, there are a number of practical
EU system, then it will have to enact new legislations to add
steps and ratifications required by other EU members before
protection for the slightly different unregistered design rights
this can realistically happen. Some commentators have cast
currently covered under the EU system.
doubt on the practicalities of this timetable even if the UK has itself implemented the relevant steps. Another point to note
The good news is that post Brexit, UK businesses can still
is that, given the Prime Minister’s indications that future UK
enjoy EU unregistered design protection, since there is no
Courts may not accept the supremacy of the Court of Justice
nationality requirement for ownership, only that the design
of the European Union, there is still a lot of uncertainty about
has to be disclosed in the EU.
the UP in the UK, Businesses can still rely on the well-established GB and European Patent systems to protect them in the UK. In relation to European Patents, businesses should consider opting out of the UP system, which is to apply automatically to European Patents unless opted out.
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Brext: Intellectual Property | The Implications for Business | May 2017
Copyright
IP licences and contracts
Copyrights are national rights and currently benefit from international copyright treaties independent of the EU. Brexit should therefore have no material effect on copyright protection in the UK. However, much of the current UK copyright laws are a result of the efforts to harmonise copyright protection across the EU. Post Brexit, as with other IP rights, we would expect an increasing divergence of interpretation of the UK national legislation from that in the EU.
Contracts or licences that are limited by geographical territory, or based on EU IP rights, will need to be reviewed and possibly renegotiated. Particular attention should be paid to the nature and territorial scope of the IP covered, and the territory covered by the contract. The parties will want to ensure that the rights granted are still relevant to the product, services and territory covered by the contract after Brexit. This will require a review by the IP owner of its IP portfolio and probably a change in registrations to ensure that all relevant IP is registered in both the UK and the EU. In some cases, this will provide an opportunity for renegotiation, which may work for or against a party, depending on the circumstances.
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Data protection
Enforcement
Although data protection is another area of uncertainty, it seems at least likely that the UK, post-Brexit, would continue to apply EU data protection laws. The reason for uncertainty is that currently EU data protection law is in the process of being harmonised, with the General Data Protection Regulation set to come into force in 2018, potentially around the time of the UK’s exit.
If the UK does not remain in the EEA after Brexit then another significant issue will be exhaustion of IP rights. Currently, once goods are sold anywhere in the UK, the IP owner of those goods cannot object to the same goods being resold anywhere within the EEA – those IP rights are said to be “exhausted” once the goods have been legitimately put on the EEA market. If the UK is no longer in the EEA, then IP owners could potentially be able to restrict the trading of goods between the UK and the EEA. Those traders who import goods from the EU into the UK may find themselves infringing UK IP rights, when currently they would not. This will likely increase the cost of business or stifle the choice of goods for UK customers.
While the format and outcome of exit negotiations remain to be seen, it is safe to say that, on the one hand, the UK has a history of protecting data and is unlikely to relax its stance greatly, and on the other hand, that parliament will be aware that UK businesses would find it hard to thrive in Europe unless it adopts measures of data protection that satisfy the member states in which they trade.
In relation to IP litigation, the UK may become a less popular venue if it is unable to offer pan-EU solutions or if its judgments carry less weight in European courts. There will also be increased border jurisdiction and enforcement issues unless these issues are successfully negotiated with the EU, since the UK will no longer have the benefit of the Brussels Regulations dealing with jurisdiction, and reciprocity of enforcement of judgments across EU. UK could seek to rely on other international treaties but we will have to wait and see as to how the Brexit negotiations with the EU pan out and what the best options are for the UK.
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Brext: Intellectual Property | The Implications for Business | May 2017
Conclusion On the whole, although there will inevitably be changes in a number of areas in IP, we expect the infrastructure of the UK IP laws to largely remain similar post Brexit. There will likely be increasing divergence of with the EU IP practices. There are still many uncertainties pending the outcome of the UK/EU Brexit negotiations, we are helping many businesses to start preparing and managing their risks by reviewing their current IP portfolios, registration strategies and their contracts to try and “Brexit proof� them as far as they reasonably can.
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IP & Technology Our Intellectual Property & Technology (IPT) team offers the full range of IP services within this specialist area of law. We have particular experience with IP-rich businesses and high-tech clients: whether they be tech start-ups or multi-million pound international businesses, IP and IT are an integral part of their businesses. In addition to working seamlessly with other practice groups
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contracts to supply software programs
to support our clients, our IPT team advises on the full range
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SaaS agreements
of contentious and non-contentious IP/IT matters. Our work
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website-related agreements
includes exploitation, protection and enforcement of brand
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management/assignment of IP rights in software
and technology, research and development contracts, inward
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reseller agreements
and outward IP licensing, IP restructuring and as IT and web-
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advice on infringement
related contracts and commercial issues. We act for a company whose business comprises the In addition to legal qualifications, some of our lawyers have a
development and sale of advanced software programs for
science and engineering background and have experience of
management of drug production by its pharmaceutical clients.
working in industry. This combination of knowledge and skills
We drafted a standard development, installation, licensing and
provides a synergy that enables us to work more effectively
support contract and negotiated it, dealing with issues such
on legal matters where technical understanding is important.
as project definition, change control, acceptance, precise user rights, service levels, warranties and limitations, intellectual
Our expertise
property, support service levels, and price reviews. The purchasers varied from commercially astute but reasonable companies to large corporations with difficult, commercially-
We advise clients on a wide range of requirements in respect of software, whether as service or product providers or as users, including: •
software development and maintenance contracts (including bespoke/Agile software)
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unrealistic procurement teams. We always achieved a result.
Brext: Intellectual Property | The Implications for Business | May 2017
Disputes | Intellectual Property We understand that your intellectual property rights, whether in your brand, technology, designs or content, may be your biggest assets.
We also understand the temptation for others to take unfair
Our expertise
advantage of your investment in your intellectual property and that, in a competitive market, competitors may look to
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exploit and profit from gaps in a rival’s intellectual property protection. The more you have invested in developing the
brand protection (trade mark infringement, passing off, domain name disputes and counterfeiting)
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success of your brand, products or services, the more you
breach of confidence, and misappropriation of trade secrets
stand to lose if competitors are allowed to devalue it through
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copyright and database-right infringement
infringement.
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design-rights infringement
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patent infringement
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legal issues involved in advertising, promotion and
We have extensive experience of protecting some of the world’s best-known brands from attack. Whether reactively when you become aware of infringement, or proactively by
sponsorship •
assisting you to identify infringing behaviour, we can help you preserve your market position by taking swift and definitive action to protect your intellectual property from infringement.
disputes arising from agreements to exploit intellectual property rights
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appeals in trade mark prosecution/cancellation cases, including to the European Courts
We are also used to managing the threat of infringement
We can advise you on implementing an effective enforcement
actions made by overzealous rights holders seeking to restrain
strategy. We can assist you to obtain information and
legitimate competition. We apply equal rigour to challenging
evidence of unlawful conduct. We can then deploy the tools
speculative threats of infringement made against our clients.
available to protect your intellectual property rights in a manner which accords with your objectives. In appropriate cases, we can obtain injunctions or undertakings to the court, requiring the infringer to modify their behaviour on pain of criminal sanctions such as fines, asset seizures or imprisonment. We can secure awards of damages and costs.
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