Impact of Brexit on IP Rights
From 31 January 2020, the UK is no longer an EU Member State. This article outlines the main impacts of Brexit on international property rights, including patents, trademarks, designs and models, copyrights, and sui generis database rights. It also identifies some uncertainties that will need to be cautiously monitored.
The risk of a “No-Deal-Brexit” has now been definitively removed. The Withdrawal Agreement between the European Union (EU) and the United Kingdom of Great Britain and Northern Ireland (UK) was approved by the European Parliament, and the decision on the conclusion of such agreement was adopted by the European Council on 29 and 30 January 2020, respectively. The Withdrawal Agreement then entered into force on 31 January 2020.
From this date, the UK is no longer an EU Member State and UK citizens are no longer members of EU institutions. The UK has, however, entered a transition period that will run until 31 December 2020. During this period, Union law will continue to be applicable to and in the UK.
In concrete terms, the main impacts of Brexit on intellectual property rights are as follows:
The European Patent Office (EPO) is established under the European Patent Convention (EPC). It is separate from the EU and counts among its contracting states the EU Member States as well as non-EU Member States. European patents will, therefore, continue to cover the UK without the impact of Brexit.
In contrast, the impact of Brexit on the Unitary Patent (which establishes a unitary patent enforceable in all participating Member States) and on the Unitary Patent Court (which provides a unified court system with exclusive jurisdiction for litigation relating to Unitary Patents and European Patents) remains uncertain. Although ratifying the UPCA on 28 April 2018 in the midst of the Brexit process, thereby expressing its willingness to remain within the framework of the Unitary Patent and Unitary Patent Court, the continued involvement of the UK in such system will need to be negotiated.
EU trademarks are not immediately impacted by Brexit. The UK will continue to be part of the EU trademark system until 31 December 2020. EU trademarks will continue to have effect in UK and EU court precedents will still bind UK judges. It is only from 1 January 2021 that EU trademarks will no longer cover the UK. Indicated below are the main effects of the Withdrawal Agreement on EU trademarks:
Registered EU trademarks – Upon expiration of the transition period, owners of EU registered trademarks will automatically receive, at no cost, a corresponding UK trademark. The corresponding UK trademark will have the same filing/priority dates and renewal dates as the original EU trademark. No UK registration certificate will be issued, but details of the UK trademark will be available online at GOV.UK. The corresponding UK trademark will be fully independent of the original EU trademark.
Pending EU trademark applications – EU trademark applications pending upon the expiration of the transition period will not be automatically converted into corresponding UK trademarks. Owners of such EU trademark applications will have 9 months—from 1 January 2021 to 30 September 2021—to apply for a corresponding UK trademark with the same filing/priority dates and renewal dates. Routine UK fees will apply. Applicants will therefore certainly have an interest in filing their EUTM in the first half of 2020 so as to benefit from the automatic extension system to the UK.
Expired EU trademarks – A corresponding UK trademark with an “expired” status will be automatically created for each EU trademark that expired in the 6 months prior to 1 January 2021 and is still within its six-month late renewal period. If the expired EU trademark is not late-renewed at EUIPO, the corresponding UK trademark will be removed from the UK register. Conversely, in case of late renewal of the expired EU trademark, the corresponding UK trademark will be automatically renewed.
International registrations – The UK will take all necessary steps to ensure that international trademark registrations designating the EU and protected in the EU before expiration of the transition period enjoy protection in the UK. The Withdrawal Agreement does not indicate whether this applies to pending international trademark applications.
Revocation for non-use – Under UK law, a trademark can be subject to revocation when it has not been put into genuine use during an uninterrupted period of five years. If the five-year period includes time before 1 January 2021, use outside the UK in any other EU Member States will be considered.
Reputation – Similarly, reputation acquired before 1 January 2021 outside the UK in any other EU Member State will be considered. However, after expiration of the transition period, the continuing reputation of the corresponding UK trademark will be based on the use of the mark in the UK only.
Renewal – Separate renewal fees will need to be paid to the EUIPO for the original EU trademark and to the UK Intellectual Property Office (IPO) for the corresponding UK trademark. The standard renewal reminder sent by the IPO in advance of the expiration date will not be sent for corresponding UK trademarks that will expire within 6 months after 1 January 2021. For these trademarks, a reminder will be sent on the actual expiration date or as soon as possible thereafter, and an additional six-month period will be granted as from the date of the letter to renew the trademark. Such late renewal will not be subject to an additional renewal fee.
Pending proceedings – If an original EU trademark is declared invalid or revoked as the result of an administrative or judicial procedure that was pending on 1 January 2021, the corresponding UK trademark will also be declared invalid or revoked, unless the grounds for invalidity or revocation do not apply in the UK. More generally, EU trademark law will continue to apply to proceedings pending before UK courts on 1 January 2021; but after this date, the IPO indicates that UK courts will no longer be able to issue pan-EU injunctions.
Exhaustion of rights – Exhausted trademark rights both in the European Economic Area (EEA) and in the UK before the end of the transition period will remain exhausted in both territories. However, it is unclear whether exhausted trademark rights in the EEA on 31 December 2020, but not in the UK, will be exhausted in the UK after the expiration of the transition period. And what will happen to goods sold in the EEA or in the UK after 1 January 2021? The IPO seems to be in favour of non-exhaustion of rights for goods sold after 1 January 2021 in the UK and exported to the EEA, meaning that parallel exporters from the UK to the EEA might need to obtain the IP rights holder’s consent to keep their business model as is. The IPO remains silent as to parallel imports from the EEA to the UK. An asymmetrical system is, therefore, not to be excluded.
Licenses and security interests – The Withdrawal Agreement deals neither with licenses nor security interests, but the IPO states that any license of or security interest in an original EU trademark will continue to have legal effect in the UK and will be treated as if it applies to the corresponding UK trademark. However, such transactions will not be automatically registered with the IPO. Recordings will, therefore, have to be made within 12 months from 1 January 2021, after having carefully reviewed the terms of such licenses and security interests—in particular, definitions of “Territory”, “EU”, “Member State”, “Applicable Law” and “EU Law” and any clauses dependent upon these definitions. Tax clauses and jurisdiction provisions will also need to be cautiously reviewed.
Designs and Models
As for EU trademarks, Community designs will still protect designs in the UK until the end of the transition period. All rules applicable to EU trademarks will apply to Community designs.
Brexit will have no immediate impact on UK national copyright law. First, EU law will continue to apply until 31 December 2020. Second, UK law on author’s rights was certainly influenced by EU directives, but also derives from international conventions, such as the Berne Convention and the TRIPS Agreement, which will continue to apply in the UK. Third, even if decisions of the European Court of Justice (ECJ) will not be binding upon UK judges after expiration of the transition period, it is likely that UK judges will not completely disregard ECJ precedent.
But, at some point, EU and UK copyright law might diverge.
One of the first significant points of divergence between EU and UK copyright law might be the non-implementation of the EU Directive on Copyright in the Digital Single Market, which presents a new liability mechanism for online content-sharing service providers. While EU Member States will have until 7 June 2021 to implement the Directive into national law, the implementation period in UK law will end on 31 December 2020, and government minister, Chris Skidmore, has stated that “the United Kingdom will not be required to implement the Directive, and the Government has no plans to do so”.
Sui Generis Database Rights
Currently and until 31 December 2020, databases that involve a substantial investment— whether of financial, human or technical resources—created by an EEA national, resident or business will receive sui generis database protection in all EEA Member States.
Post-Brexit, the Withdrawal Agreement specifies that UK database rights holders before the end of the transition period will still be eligible for database protection in the UK for the remaining period of protection. However, the Withdrawal Agreement remains silent as to the protection in the UK of database rights created by non-UK nationals, residents or businesses, as well as to the protection of databases created after 31 December 2020.
Therefore, one cannot exclude that EEA nationals, residents or businesses will no longer be eligible for database protection in the UK and that only UK nationals, residents or businesses will be eligible for new database rights in the UK after the expiration of the transition period, as indicated by the IPO.
Provided that no extension of the transition period is granted before 1 July 2020, the EU and the UK will use their best endeavors to negotiate a second agreement governing their future relationship by 31 December 2020.