UK: The Impact Of A Brexit On IP

Last Updated: 14 June 2016
Article by Jennifer Bailey, Sonia Hill and Michael Shaw

Few European readers will have been able to avoid the news of the UK's upcoming referendum on its membership of the European Union. Due to be held on 23 June 2016, the UK public will vote on whether to remain a member of the EU or leave. 

In the event of a vote to leave the EU, it is expected that negotiations to reach a withdrawal agreement with the rest of the EU would take several years, and so there would be no immediate change to the legal framework for IP in the UK. However, in the longer term, there would be changes to certain aspects of the IP framework in the UK as a result of a British exit (commonly referred to as a "Brexit"). 

Membership of the European Patent Convention (EPC) is independent of the EU. Therefore, whatever the result of the referendum, the option will remain to apply for a European patent which has effect in the UK. As is currently the case, such a European Patent will, once granted, exist as a bundle of national rights that must be validated, renewed and enforced in each EPC country selected. UK national patents will also still be available. These are exactly the same options as are available today. Our UK offices will continue to enjoy the ability to represent our clients before the European Patent Office and patent prosecution would therefore be largely unaffected. 

Notwithstanding the above, a Brexit would have significant consequences for the proposed Unitary Patent and the corresponding Unified Patent Court. The Unitary Patent is a single right (yet to come into force) covering every EU country, except Spain and Poland. Benefits of the Unitary Patent include the reduced cost of patenting across many EU countries, and a single forum for litigation – the Unified Patent Court. We recently looked at the progress made to date on this project in another article.

Currently, the Unitary Patent and Unified Patent Court system cannot be implemented until the Agreement on a Unified Patent Court has been ratified by the UK, France and Germany, and at least ten other EU member states. The UK has not yet ratified the Agreement, and it is thought to be unlikely that it would do so in the event of a Brexit. This would prevent the Agreement in its current form from coming into force. This barrier to implementation is likely to be difficult to resolve and would at the very least cause a significant delay before the Unitary Patent and Unified Patent Court system could be implemented.

If the Unitary Patent and Unified Patent Court system is ultimately able to proceed without the UK, then the Unitary Patent would not extend to the UK and the Unified Patent Court would not have jurisdiction over UK patents. However, the option of a Unitary Patent would remain available to UK businesses desiring protection in the remaining contracting member states, and all European Patent Attorneys (including those based in the UK) would still be able to obtain Unitary Patents on behalf of their clients. As such, while the extent of the Unitary Patent would be affected the process of obtaining a Unitary Patent is likely to be unaffected. Meanwhile, patent protection in the UK would remain available in exactly the same way as today. 

Supplementary Protection Certificates (SPCs), which provide an extended protection for medicines following patent expiry to compensate for the lengthy market authorisation process, are governed by an EU Regulation (although the resulting SPCs are national, rather than EU-wide, rights). Outside of the EU, new legislation would be required to preserve existing UK SPC rights and enable new SPCs to be obtained in the UK. 

Unlike patents, it is already possible to obtain EU-wide trade mark and design protection by applying for EU Registered Trade Marks and European Community Registered Designs respectively. In the event of a UK decision to leave the EU, there would be no immediate change to these rights; the UK would remain a member of the EU during its withdrawal negotiations and these rights would continue to extend to the UK during this period. However, at the point of withdrawal, these rights would no longer automatically extend to the UK, although they would still be available to UK businesses if protection is required in the remaining EU member states. Businesses requiring protection for their trade marks and designs in the UK would have to seek national UK protection instead or in addition to EU protection. 

Whilst it is expected that part of the arrangements made in relation to a Brexit would include provision for any existing EU Trade Marks or Registered Designs to be converted to the equivalent national UK registered rights, it is too early to speculate as to how such a conversion process would work. However, whatever the details, it is reasonable to expect that rights holders would be given an appropriate period of time to take any necessary action.

A further consequence of a Brexit is that UK courts would no longer have jurisdiction to grant EU-wide injunctions, such that separate proceedings would need to be taken in the courts of another EU country if such an EU-wide order is required. On the other hand, an EU-wide injunction granted by the court of another EU country would no longer extend to the UK.

While the UK is a member of the EU, UK businesses are entitled to secure international design registrations under the Hague Design system. Unless the UK joins this system in its own right, UK businesses would no longer be able to benefit from Hague designs following a Brexit. The continued validity of any international design registrations secured under the system would also need to be considered.

A further consequence of a Brexit may be that UK businesses may no longer be able to engage in parallel importing (ie purchasing genuine branded goods in another EU country and selling such goods in the UK at a lower price than those sold by the authorised UK distributor). The sale of these goods purchased lawfully in another EU country may amount to trade mark or registered design infringement if then exported to and sold in the UK.

Unregistered rights would also be affected. Following a Brexit, UK businesses would no longer be entitled to rely on unregistered Community design rights, which differ from UK unregistered designs. It is foreseeable that a Brexit would prompt an overhaul of UK unregistered design law, with a view to providing a right that sits somewhere between current UK unregistered design right and unregistered Community design rights.

In the longer term, it is likely that UK trade mark, design and patent law will start to diverge from EU law, since the UK courts will no longer be bound by decisions issued by the Court of Justice of the European Union. At present, UK national laws are relatively consistent with the laws of all other EU countries as part of a process of harmonisation that has taken place over the last 25 years. 

Like many other areas of law, IP rights would be significantly impacted by the UK's exit from the EU. Although difficult to speculate about how IP law would look after exit negotiations have been completed, we expect that industry and the legal profession will carefully scrutinise arrangements to ensure that IP owners are not unnecessarily disadvantaged by a Brexit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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