The draft Withdrawal Agreement: the impact on Intellectual Property
On 14 November 2018, the UK Government published a further draft of the EU Withdrawal Agreement, now agreed at negotiator’s level. As expected, the draft provides for an implementation or transition period until 31 December 2020, during which time the status quo will prevail. Of note, Article 132 provides a mechanism for extending the transition period, although the end date has been left undefined in the draft. The draft Withdrawal Agreement still needs the approval of Parliament, which current reports indicate may be tricky to obtain and so the technical notices issued by the Government on 24 September 2018 are worth referring to as they describe how intellectual property rights holders might be affected if the UK) leaves the EU in March 2019 without an agreement.
Below we have highlighted the key provisions affecting IP, noting any differing position should the UK leave the EU without an agreement:
The overarching message is that there will be minimal disruption for rights holders. To this end, the UK Government has indicated that it will grant equivalent UK IP rights at the end of the transition period (the date of exit) and legislate to create equivalent laws, as appropriate. It should be noted that the date of exit may potentially leap forward to the end of March 2019 in the event of no-deal and assuming no extension of the negotiating period is granted by the EU27.
Trademarks and registered designs:
- EU trade marks and registered Community designs, registered at the date of exit, will continue to be protected in the UK through the grant of equivalent UK registered rights to arise automatically at the date of exit and free of charge. In the event of no-deal it is not yet clear whether IP rights holders will need to take any action or bear any costs although the commitment to ‘minimal administrative burden’ on rights holders remains. If separate protection in the UK is not wanted or required, the rights holder will need to actively opt out.
- Applicants for EU trademarks and registered Community designs that are not yet granted at the date of exit from the EU will have nine months to re-file their applications in the UK, retaining the date of the original EU applications for priority purposes.
- Under the Withdrawal Agreement, genuine use of a trade mark in EU27 countries before the end of the transition period will support the validity of the newly created UK trade mark. However, after the transition period, the UK trade mark’s reputation will be based only on use in the UK. The position has not yet been clarified in the event of no deal.
- Cancellation of a EU trade mark, where proceedings were commenced before the end of the transition period, will mean cancellation of the cloned right unless the grounds of cancellation do not apply in the UK. The position has not yet been clarified in the event of no deal.
- The owners of newly created UK rights will not need to have a UK correspondence address until the end of a three year period following the end of the transition period. The position has not yet been clarified in the event of no deal.
- The Withdrawal Agreement enables those representing parties in EU procedures that are ongoing at the end of the transition period will be able to continue through all stages of the procedure. The position has not yet been clarified in the event of no deal.
- The Government will work with the World Intellectual Property Organisation to ensure that where rights holders have obtained EU trade marks or registered Community designs through the Madrid or Hague systems, those rights continue to be protected in the UK.
Unregistered design rights:
- Unregistered Community designs will continue to be protected and enforceable in the UK for the remainder of the period of protection.
- A new equivalent unregistered design right will be created in the UK (“supplementary unregistered design”), so that designs that are disclosed after the UK exits the EU will be protected in the UK on equivalent terms to the protection afforded within the EU.
- Those who hold a geographical indication at the end of the transition period will be able to continue to use it in the UK without the need for re-examination, unless its protection is derived from an international agreement to which the EU is a party. If the geographical indication loses protection in the EU after the end of the transition period, it will also lose it in the UK. If there is no deal the UK will create four new UK schemes to replicate the EU system and all geographical indications registered by UK producers before exit will be given new UK protection automatically.
- Although not addressed in the Withdrawal Agreement, the .eu top level domain will cease to apply to the UK after the date of exit. UK residents or organisations established in the UK, but not in the EU, will no longer be able to register .eu domains or renew those already in existence.
UK patents and supplementary protection certificates (SPCs):
- UK patent law has been minimally impacted by EU law. Insofar as it has – for example with respect to SPCs for pharmaceutical products and agrochemicals, the relevant EU patent legislation (or the implementation of it into the UK) will be retained in UK law. Therefore UK patents and SPCs will continue to have the same protection as before exit from the EU.
- The conditions for patenting biotechnological inventions set out in EU legislation will remain in place in the UK, so that protection and enforcement will continue as before.
Unitary Patent Court and Unitary Patents:
- The UK has ratified the Unified Patent Court Agreement but it has not yet been ratified by Germany. If it is not fully ratified, the UK domestic legislation to bring it into force will not come into effect and there will be no change on exit.
- If the Unified Patent Court Agreement is fully ratified, the UK Government will explore whether it is possible to remain within the unitary regime notwithstanding the UK’s exit from the EU. If the UK decides or needs to withdraw from the regime, existing unitary patents will give rise to equivalent UK patents so that inventions continue to be protected in the UK.
- The UK’s membership of international copyright treaties means that the scope of protection for copyright works in the UK and UK works abroad will remain largely unchanged. Further, EU laws on copyright and related rights will be enacted into UK law so that copyright protection is largely as before exit. In the event of no deal, certain cross-border aspects will be affected and depend on whether the work was created before or after exit.
- The body of EU law which provides for reciprocal protection between EU member states will no longer apply to the UK.
- EU database rights –The Withdrawal Agreement provides that holders of sui generis database rights arising before the end of the transition period will be accorded an equivalent UK right with the same term of protection as the EU right.
- In the event of no deal, UK legislation will be amended so that only UK citizens, residents and business will be eligible for new database rights after exit. UK citizens, residents, and businesses will no longer be eligible to receive or hold sui generis database rights in the EEA.
- Rights exhausted in the UK and EU before the end of the transition period will remain exhausted in both territories. This means that it will be possible to import goods into any EU country if they have already been placed on the market in the UK before the end of the transition period, and vice versa. In the event of no deal, the UK will recognise exhaustion of rights in goods marketed in the EEA but the EU will not recognise exhaustion of rights in goods marketed in the UK. This means no change to the import of goods into the UK but goods from the UK cannot be imported into the EEA without permission from the IP rights holder so as to avoid infringing IP rights.
Clearly the intent of the UK Government is for rights holders to continue to hold equivalent rights and benefits in the UK as before exit, without any, or minimal, burden to the rights holders. The landscape of IP portfolios will change at the date of exit with the automatic creation of new UK rights and the opening of a window of nine months to re-file any pending EU rights in the UK if the original filing date is to be maintained. Maintaining an enlarged portfolio will have cost implications and individuals will need to revisit their IP strategies to take account of Brexit’s impact.
There are some actions that can be taken now to plan for and mitigate the impact:
- Conduct an audit to anticipate a post-Brexit portfolio; check seniority claims are in place against EU trade marks where feasible; note where duplication of protection will arise and where the opt-out might be exercised; check to ensure genuine use of trade marks in key territories; check names and addresses are up to date and renew EU trade marks as soon as the renewal window opens to avoid the cost of also having to additionally update or renew a newly created UK right;
- Review EU pending applications and do everything possible to ensure that registration is achieved before the date of exit;
- Consider ongoing proceedings and the strategy for their future handling. There may be additional costs involved if parallel proceedings need to be launched in the UK because EU proceedings are ongoing at the date of exit;
- Consider whether any new UK or EU applications should be filed now;
- Consider post-Brexit disclosures of unregistered rights and ideally plan for simultaneous disclosure in both the EU and UK;
- Review IP agreements for any references to the EU or EEA which will need to be considered as well as governing law and jurisdiction clauses;
- Review anti-counterfeiting strategies and prepare to file separate EU27 and UK customs notifications after the date of exit; and
- Transfer .eu domains to an agent or subsidiary which qualifies to hold .eu domains.