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Brexit Prompts IP Uncertainty for US Portfolios

It's difficult to turn on the news and not hear something about the historic vote by Britain to leave the European Union. While the Brexit vote already has had an immediate effect on global economic markets, the legal effects in the intellectual property arena will likely take a bit longer to understand given that Britain's EU exit will take place over the next several years.

Given this uncertainty, in anticipation of potential changes to existing trademark registrations, pending trademark applications and patent rights in the European Union, U.S. companies should proactively evaluate their current foreign trademark portfolios and patent rights now to plan for proper protection of their brands in the UK and the EU.

What Will Trademarks Look Like Post-Brexit?

Trademark uncertainty arises because Community Trade Marks were created by Council Regulation, and the regulation in its current form does not say a word about what happens when a Member State leaves the EU. Recall that the main benefit of a CTM registration is that a trademark owner obtains protection in all EU Member States rather than having to file in each separate country. As a consequence of the Brexit vote, EU trademarks will no longer be recognized in the UK after exit, and there is much debate about the effect of current CTM registrations post-exit. 

Currently, the UK remains part of the EU; the Brexit vote was an advisory referendum to say that the country should leave the Union – it is now up to the British Government to give effect to that decision. It is likely to take at least two years for the UK to formally exit the EU, although some commentators believe that it will take far longer than that and some campaigners are pushing for the exit to be more quickly completed. We really cannot say how long the exit negotiations will take, with any certainty, or what the ultimate effect of those negotiations will have on trademark protection or enforcement. We also don't know if the UK may elect to divorce itself entirely from the EU, or remain closely integrated with the EU and would become members of the European Economic Area (EEA) and the European Free Trade Association (EFTA) to retain some benefits of a single market.

In a post-Brexit world, we advise our clients with existing EU trademarks to review their current foreign trademark portfolios, specifically CTM registrations, to evaluate whether to take immediate steps to secure trademark protection in the UK in combination with CTM registrations as a hedge against the uncertainty of Britain leaving the EU. Given that trademark registrations take on average 12 to18 months from filing to registration, it's better to start the process sooner rather than later or rely on the UK-EU negotiations to provide adequate trademark protection for pre-Brexit CTM trademarks either through a nationalization process (converting a CTM registration into a CTM registration plus a UK registration) or by extending coverage in the UK by treaty. We also recommend that our clients commence filing separate UK national trademark applications as well as CTM applications for future marks because the result of the exit negotiations and their effect on trademark registrations or enforcement proceedings will not be known for several years. 

European Patents: What's Next?

Short-term, the exit will have little to no effect on patents. The UK is a signatory to the European Patent Convention of 1973. As such, its patent system is governed by the European Patent Office (EPO). The EPC is a treaty separate from the EU. Indeed, countries such as Albania, Norway and Switzerland are not members of the EU, but are member states of the EPO. Similarly, it is anticipated that the UK will remain a member state of the EPO, and UK patents and process will still be governed by the EPC.

That said, the EU was expected to launch the so-called Unitary European patent system and a Unified Patent Court (UPC) to resolve issues related to the Unitary Patent. Under this new unitary patent system, a single EU patent would issue from the EPO, offering patent protection throughout the entire EU. This contrasts with the current EPO system, under which the EPO performs a centralized examination and then returns the application to the individual national patent offices, which then issue their own national patent, conferring their respective bundles of patent rights. It was anticipated that the EPC would receive sufficient ratification signatures to come into effect sometime in 2017.

However, the terms of the EPC agreement require UK ratification of the agreement in order to come into effect. If the UK is outside of the EU, it is reasonably anticipated that that launch of the Unitary Patent and the UPC may be delayed. We are waiting to hear from the respective EPC negotiators what specific effect the formal withdrawal will have. For example, the agreement may be altered to remove the requirement of the UK accession, and proceed with another country as one of the three required signatories. Alternatively, and depending on how other bi and multilateral negotiations progress, it is also possible that the UK might be permitted to join the unitary patent system without being a member of the EU. Accordingly, due to the uncertain future of the unitary patent system, clients planning to take advantage of that system should reevaluate their future filing strategies.

Enforcement Questions Loom

Currently, European patents are enforced on an individual country basis. In the wake of the Brexit vote, infringement of European patents will continue to be litigated in each relevant national court. Accordingly, the Brexit is not likely to significantly change how patents are enforced at present. Similarly, certain trans-national remedies, such as cross-border injunctive relief, which were not available under the European Patent Convention, will very likely continue to not be available. Conversely, unless and until the UPC comes into effect, concerns which were raised about potential forum shopping within the EU or the possibility of a small country's UPC court invalidating a patent throughout the whole of Europe are now moot.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VI, Number 196

About this Author

Melvin J. Sims, Polsinelli, Device commercialization lawyer, Patent Portfolios Attorney

Melvin Sims understands that intellectual property is often a company's most valuable asset. Melvin is dedicated to providing clients with the quality assistance they need to protect their most valuable asset. During Melvin's graduate education at the University of Missouri, he concentrated his research on the development and commercialization of devices for cancer detection. This education gave him experience with diverse technological disciplines including but not limited to biomedical optics, computer programming, cancer biology, and signal processing. Melvin held...

Matthew J. Smith, Polsinelli, Patent Licensing Lawyer, Portfolio Determinations Attorney

Matthew Smith is passionate about helping clients protect their intellectual property. He concentrates his practice on providing clients counsel across a wide spectrum of issues, including:

•    Licensing

•    Custom software development

•    Hosting

•    Consulting

•    Procurement

•    Intellectual property joint development ventures

•    E-business and intellectual property matters