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Monday, July 18, 2016

Keep calm and carry on? The effect of Brexit on IP rights

By Natasha Dixon, Law Graduate

The result of the recent British referendum has no doubt been a hot topic around water coolers since, with many questions raised as to the political, legal and economic repercussions of Britain's exit from the EU. While it may not be the first thought that comes to mind, an important implication to consider is what consequences exist in relation to IP rights in the UK and EU following the decision. While current EU legislation continues to apply to the UK until it has formally left the EU, Australian companies who either own or license IP within these regions should consider the long-term impact of Brexit and what, if any, contingencies should be put in place to address the inevitable changes to come.

Patents 


Brexit does not impact the existing system for the grant and enforcement of European patents covering the UK, as it is established by the European Patent Convention, which is outside of the remit of the EU.

However, Brexit may mean that the new Unitary Patent System, which is set to allow the grant of a single European patent, will not cover the UK. Additionally, the EU Unified Patent Court Agreement will create a single Unified Patent Court system (UPC) for litigation in the participating EU states for both traditional European patents and EU unitary patents. Participation in this Court is contingent upon being a member of the EU. Thus, the UK will no longer be eligible to participate. It follows that European patent holders may need to run separate national proceedings in the UK alongside unitary patent litigation in the rest of Europe.

Brexit may also cause significant delay to the start date of the UPC. Particularly problematic is the fact that London is named in the UPC Agreement as the 'Life Sciences' seat of the UPC. In order to amend this, there would need to be an agreement on the new location, an amendment to the UPC and a further round of re-ratifications.

Since the Brexit decision however, there has been discussion around the possibility of the UK remaining part of the Unitary Patent System following its exit from the EU. It has been suggested that if the UK ratifies the EU Patent Court Agreement, only minor amendments would be required to enable the UK to participate. Given the fact that Brexit will take at least two years to be formalised, this is a very real possibility, and one which would address many of the issues outlined above.

Trade marks


Ultimately, EU trade marks will cease to be enforceable in the UK. However, it is unlikely that this will happen without warning and without a transitional regime being implemented by the UK government.

It is possible that EU trade mark owners will need to obtain a national UK trade mark in addition to their EU trade mark if they wish to have protection in both locations. This will lead to increased costs for trade mark owners and the requirement to bring separate sets of infringement proceedings before both the UK courts and the EU tribunal for enforcement. It may also leave EU trade marks, that have only been used solely or primarily in the UK, susceptible to challenge on the basis of non-use.

As such, it would be prudent for the owners of EU trade marks to begin to consider whether Brexit may leave gaps in their trade mark portfolios that will require the registration of national UK trade marks.

Designs 


Similarly with trade marks, owners of Registered Community Designs in the EU will not immediately lose protection of their rights. However, unless there is an agreement to the contrary, the UK will no longer be part of the unitary designs systems, meaning that designers in the UK are at risk of losing a strong (and relatively low cost) IP right to defend their designs.

As stated above, this will be a slow process and will likely consist of a transitional regime and significant warning.

There is also a question mark over what will happen to unregistered design rights in the UK. National UK design legislation offers different protection from that offered by the unregistered Community right, in that the UK right protects the shape or configuration of objects and the Community right protects the appearance of a product resulting from the features of the lines, contours, colours, shape, texture or materials of the product.

The UK government recently conducted a review of the country's unregistered design regime and decided to maintain the UK right on the basis that it supplemented the EU right. As the post-Brexit dust begins to settle, the scope of the UK right will need to be reconsidered, with a view to determining whether the right should be expanded in order protect the features covered by a Community right.

If your company is relying on unregistered design protection in either the EU or the UK, it would be wise to consider obtaining registered rights as a matter of priority, as businesses operating in the UK will ultimately no longer qualify for Community design protection and vice versa.

Copyright 


Copyright law has largely been harmonised at a European level in numerous respects, for example, the term of protection, the acts amounting to infringement, performers rights and the qualifying criteria for protection. Additionally, the liability of ISPs is also provided under EU legislation which will no longer be applicable to the UK following the formalisation of Brexit.

Many of the directives flowing from the EU legislation have been incorporated into UK national law and as such will not be immediately affected by Brexit. The extent to which EU and UK law will diverge over time is unclear however, which has created some uncertainty for copyright owners in Europe.

What next? 


While there will be no significant changes overnight, it is prudent to begin to think about any IP agreements, such as licences or co-existence agreements, that will be in place after the Brexit process is complete, to assess whether any rights or obligations under them are defined by reference to EU rights or the territory of the EU. If drafting new agreements, any reference to such rights or territory should be avoided.

Brexit may also have a significant impact on your IP enforcement strategy in the EU. EU-wide remedies will not be available from UK courts and EU-wide remedies granted by an EU court will not apply to the UK. As such, it may be necessary to implement enforcement proceedings in both European courts and the UK.

In conclusion, Brexit will lead to some changes in the way that IP rights are granted and enforced in the UK and EU. Australian companies who own, use or license rights in these territories should remain alert to the legislative changes as and when they take place. It is likely that any alterations to European IP law will not be implemented for some time however, and not without transitional regimes to ensure that there is as little disruption to IP protection as possible. So for now, at least, it seems it is a matter of keep calm and carry on.

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