Contributed by: Lucas Tjia
On 29 March 2017, the UK invoked Article 50 of the Treaty on European Union after a majority of Britons voted to leave the EU in a national referendum. This caused much uncertainty as to the protection of prevalent IP rights such as EU trade marks within the UK post-Brexit, which is presently governed by EU regulations.
Recent political developments have further exacerbated these concerns due to the likelihood of a “no deal” Brexit. This would occur if the UK and the Europe Commission are unable to agree on the terms of a Withdrawal Agreement by 29 March 2019 (the “date of exit”). UK lawmakers have been sharply divided on the Irish ‘backstop’ issue, which forced Theresa May to postpone Parliament’s vote on the Brexit deal. May now also faces difficulties negotiating a new deal with the EU. Despite the European Court of Justice’s decision that the UK could unilaterally revoke Article 50 and cancel Brexit altogether, May’s hard stance against a second Brexit referendum threatens to prolong the present impasse.
Amidst the political climate and confusing myriad of IP rights, this article aims to summarise recent developments in UK legislation to ensure the continued protection of IP rights within the UK, as well as elucidate the implications of a “no deal” Brexit on the enforceability of IP rights both within the UK and EU.
The EU Withdrawal Act 2018: Towards Ensuring a Smooth Transition
As a starting point, the UK government has made its priorities clear: there must be “certainty, continuity, and control” in leaving the EU, and IP rights must continue to be preserved and protected post-Brexit.
Accordingly, to facilitate the orderly establishment of an independent UK regime on IP rights, the EU Withdrawal Act 2018 (“the Withdrawal Act”) became law on 26 June 2018. The Act will repeal the European Communities Act 1972 and incorporate presently applicable EU legislation into UK’s domestic law automatically. This will take place regardless of whether a Withdrawal Agreement is reached: on the date of exit if no agreement is reached, or after the transition period if an agreement is reached. In the latter situation, the provisions of the Withdrawal Agreement will subsequently be incorporated into domestic law by virtue of the EU (Withdrawal Agreement) Bill.
The incorporated EU laws under the Withdrawal Act will operate independently from the rest of the EU and remain effective in the UK, whether or not a withdrawal agreement is reached. Technical revisions to ensure newly-incorporated EU laws remain operative may be made under the Withdrawal Act.
Thus, any existing EU IP rights (e.g. EU trade marks) which are governed by EU legislation would remain enforceable within the UK. This prevents the creation of a “regulatory vacuum” that some commenters envisioned might have arisen in a “no deal” scenario. It also buys some much-needed time for the UK government to revise, amend and enact legislation to fit the newly-withdrawn nation’s needs.
However, the Withdrawal Act alone cannot address all issues of enforcement of existing and future IP rights. First, it is unable to protect IP rights within the EU as it only affects UK domestic law. Most notably, existing cross-border enforcement mechanisms for copyrights will cease to apply in a “no deal” scenario and cannot be remedied by the Withdrawal Act. Second, even though the Withdrawal Act introduces certainty by incorporating EU-regulated IP rights into UK law, it does not provide how the protection of these rights will be implemented. It is also subject to legislative changes and will not necessarily remain the same.
Protection of IP Rights in a “No Deal” Scenario
Trade Marks and Registered Community Designs (RCDs)
As noted above, there was initially much uncertainty as to the protection of over 1.7 million EU trade marks and RCDs, since the relevant EU legislation would not have applied in the UK after Brexit. However, the enactment of the Withdrawal Act has resolved this issue. The government has stated in its technical notice published 24 September 2018 on trade marks that it “will ensure that [these property rights] will continue to be protected and to be enforceable in the UK by providing an equivalent trade mark or design registered in the UK”. The details of this new UK equivalent right and its protection are unclear. However, it would likely be administered by the UK Intellectual Property Office (“UKIPO”) and be enforceable across the UK.
The government has also stated that these newly granted equivalent rights “will come into force at the point of the UK’s exit from the EU”. It has also recently affirmed that this would be done “automatically and free-of-charge”. This model of automatic protection is known as the ‘Montenegro’ model. However, applicants with pending EU trade mark applications will still need to re-file their application within 9 months from the date of exit.
Interestingly, the UK government has not always favoured the ‘Montenegro’ model (as seen by its previous non-agreement to Article 51 of the Draft Withdrawal Agreement dated 19 March 2018). Indeed, it has been noted that the ‘Montenegro’ model “could place a serious administrative and financial burden on the UKIPO and a post-Brexit UK economy”. A policy paper released on 22 February 2017 by the IP Federation also conceded that the ‘Montenegro’ model could “result in unnecessary cluttering and duplication” in the register. It is likely that the UK government’s change in position was a concession to the EU in order to further negotiations in other areas.
The abovementioned changes to EU trade marks are also applicable to pending applications for RCDs, which must be re-filed within 9 months from the date of exit. Further, the UK government will create a new ‘supplementary unregistered design right’, which mirrors the EU-regulated unregistered community design (“UCD”). This means that any new design disclosed after the UK leaves the EU will be afforded the same protection as that of the UCD. Existing UCDs will also be protected under this regime. It should also be noted that this new supplementary right will remain distinct from the existing UK unregistered design right.
Patents and supplementary protocol certificates (“SPC”)
UK law with respect to patents will remain largely unchanged as the present regime governing patents is domestic in nature.
SPCs were created by EU regulations to confer an additional period of protection to patented pharmaceutical products and agrochemicals after a patent has elapsed. This will remain protected under an independent UK regime with a similar application process due to the Withdrawal Act. This is corroborated by Article 60 of the Draft Withdrawal Agreement dated 14 November 2018.
Brexit also has implications on the enforceability of unitary patents dealing with inventions within the UK or UK patents in the proposed Unified Patents Court (“UPC”). The unitary patent is a new type of patent that will cover member states of the EU, and is administered by the non-EU European Patent Office (“EPO”). The UPC would act as a common court hearing issues on unitary patents for all member states.
However, this issue is largely dependent on whether Germany will ratify the UPC Agreement, which has been hampered by a constitutional challenge. Considering the tight timeline, it appears unlikely that the UPC will come to being before the date of exit. Even if it does, it is unclear what measures the UK government will take to “explore” remaining in the unitary patent system despite Brexit.
In any case, it appears unlikely that unitary patents protecting inventions within the UK or UK patents would be enforceable in the UPC following Brexit. However, the UK government has assured that existing unitary patents will be given equivalent protection within the UK (albeit not elaborating how exactly this will be done).
Similarly, UK copyright law will remain largely unchanged since it consists mostly of international treaties, which is independent of the UK’s membership in the EU.
Presently, EU copyright directives and regulations provide several cross-border copyright mechanisms between EU member states. However, in a “no deal” situation, these mechanisms would cease to apply to UK copyrights within the EU. As such, a “no deal” scenario could result in the following consequences:
- UK database rights owned by UK nationals, residents and businesses may become unenforceable in the European Economic Area (“EEA”). It is pertinent to note that this would be avoided under Article 58 of the Draft Withdrawal Agreement dated 14 November 2018 if said agreement can be formed.
- Online content services would lose portability, which may cause UK nationals to face restrictions on accessing such services (e.g. Netflix, Spotify, Amazon Prime) while in the EU.
- UK-based satellite broadcasters may need to obtain clearance for copyright in each member state of the EEA to which they broadcast. This may cause an exodus of broadcasters from the UK who would seek licensing elsewhere to continue broadcasting to the rest of Europe.
- UK-based Cultural Heritage Institutions that make works without documented owners available online in the EEA may infringe copyright as the mutual recognition regime under the Orphan Works Directive would become ineffective.
- EEA Collective Management Organisations are no longer obliged to provide multi-territorial licensing of online rights in musical works managed by their UK counterparts as the UK will no longer be protected under the Collective Rights Management directive.
- Between the date of exit and the point of ratification of the Marrakesh Treaty (which aims to improve access to copyright-protected material for people who are blind, visually impaired or print disabled), businesses, organisations or individuals may not be able to transfer such accessible format copies between the EU and UK.
The Withdrawal Act would operate to incorporate these cross-border mechanisms into UK law in a “no deal” scenario and would therefore protect EU copyrights in the UK. However, unless this protection is reciprocated by the EU for UK copyrights – be it via the Brexit deal or a separate agreement – these mechanisms will be repealed from UK law.
The UK government’s commitment to protecting IP rights and seeking certainty by introducing the above measures should be a cause for relief for rights holders. However, the government’s published position that a “no deal” scenario remains “unlikely” due to the mutual interests of the UK and the EU should be viewed with tempered realism and cynicism.
The possibility of a “no deal” Brexit remains real – even likely – and until a Withdrawal Agreement is ratified by the UK and EU, IP rights holders should remain vigilant and attentive to developments and consider filing distinct UK rights to protect their interests within the UK. This is particularly important in the context of copyrights, where the lack of reciprocal protection of existing cross-border mechanisms covered above would produce major practical consequences.