Brexit-ing intellectual property rights?

June 28, 2016

Intellectual Property Alert

In an historic referendum held on June 23, 2016, the UK electorate voted to leave the European Union. Among numerous legal issues to be contemplated, the departure puts intellectual property rights in a state of flux. This alert examines the future state of IP rights in light of a UK withdrawal from the EU.

In an historic referendum held on June 23, 2016, the UK electorate voted to leave the European Union. Among numerous legal issues to be contemplated, the departure puts intellectual property rights in a state of flux. As the withdrawal of an EU member state is unprecedented, it is unclear as to the implications such exit could have on IP protection and enforcement rights.

The effect of the Brexit vote will be contingent on the negotiations that ensue—assuming the UK proceeds with the will of the people by giving formal notice to leave via Article 50 of the Lisbon treaty setting forth brief rules for exit.[1] Negotiations between the UK and the rest of the EU as to the terms of departure are likely to take at least two years once Article 50 is triggered. During such discussions, the UK will have to deal with, amongst many other legal matters, issues severance could create relative to current rights holders and challengers. 

Patent rights

Regardless of the UK’s exit from the EU, the UK’s participation in the current European Patent system will not be affected, as the European Patent Office is not an EU institution. Specifically, the UK is a member of the European Patent Convention (EPC), an autonomous framework under which European Patents are granted through the European Patent Office. In view of the same, the assumption is that the UK will remain a contracting signatory of the EPC post-departure, and thus, European Patents will remain the same and continue to cover the UK as a designation. Likewise, the UK’s membership (or lack thereof) in the EU will not have any effect on national, UK patents, nor will it have any impact on Patent Cooperation Treaty (PCT) patent applications that provide unified, international protection for an invention simultaneously in each of the designated countries.

However, it remains to be seen the impact Brexit will have on the Unitary Patent and Unified Patent Court (UPC), a major EU initiative scheduled to come into existence in 2017 after years of negotiation. The Unitary Patent would give the European Patent unitary effect, in a single application, with a unified European patent court. As the Unitary Patent is limited to member states of the EU, the Brexit decision could mean that the UK will no longer be a part of the project. There is also likely to be a delay in the opening of the UPC. Nonetheless, patent protection in the UK will continue to be available through European Patents or by obtaining an individual, national patent.

Trademark rights

Much of the conjecture relevant to the status of intellectual property rights has centered on trademark rights. At this stage, we can only speculate.

Under the present practices, the EU Trade mark and Community Design system consists of supranational, harmonized laws among EU member states. For instance, intellectual property owners can obtain registration through the European Union Intellectual Property Office (“EUIPO”)[2], which would take effect in the EU member states to include the UK.[3] Thus, EU registered trademarks and registered designs currently cover the UK as a member state.

With the UK’s landmark vote to leave the EU as a member state, however, it is questionable as to whether the UK would be part of the current scheme that is available to only EU member states. It is possible that the UK could remain within the EU Trademark and Community design system even after its departure pending the results of the negotiations.

But, if the UK does not negotiate to stay with the present system, the impact and disturbance of such unravelling can be significant. It is expected that existing EU-wide rights would no longer be effective in the UK, leaving a great amount of ambiguity amongst rights holders and challengers. While there is likely to be a procedure for re-registration or conversion such that brand owners can maintain their EU trademarks and design rights in the UK, it is not clear whether EU rights holders would retain their original priority filing dates. This could create issues for both EU and UK rights holders in the protection and enforcement of their intellectual property rights. For example, would the converting or re-registering of EU rights into separate UK rights involve re-examination by the UKIPO and/or re-publishing of marks for UK holders to oppose?

A break from the current EU Trade mark and Community Design system could present additional challenges and issues for clients to confront, including:

  • Potential difficulties in establishing genuine use where existing EU trademarks have been used in only the UK, creating a possible collapse of the EU right;
  • The need to file applications at both the EU level and in the UK to maintain existing coverage that an EU trademark presently provides; and
  • The inability to assert earlier EU trademarks and designs in enforcement actions and litigation in the UK.

Hence, the impact of Brexit could require clients to re-assess their existing portfolios with the development of comprehensive filing, renewal, maintenance and enforcement strategies that protect and/or maintain their IP rights in the UK.

IP agreements

In relation to contracts affecting areas of IP, inclusive of licensing and other agreements, clients should pay attention to clauses referring to EU rights or that select the EU as the governing jurisdiction and choice of law along with provisions defining the territory as the EU. A UK withdrawal may also require clients to revisit already executed agreements to ensure that they align with and are effective under the new relationship the UK negotiates with the EU.

What to do now?

Maintain the status quo. Given the estimated timeframe for negotiations and that the UK has not yet provided formal notice pursuant to Article 50, there is no immediate change. So, for now, EU Trademarks and designs remain valid in the UK with no abrupt loss of protection and are thus enforceable in the UK until new provisions are implemented. Accordingly, we recommend that clients keep the status quo with their new and on-going IP strategies.

Nixon Peabody has formed a dedicated team of legal professionals who are monitoring critical, Brexit developments as and when they arise, including any transitional provisions that the UK government might enact. Our Intellectual Property team stands ready to assist and put in place approaches that enable our clients to address the changing landscape in Europe and the UK. We will keep relevant updates on our Brexit Response page.

  1. Some pundits and observers are forecasting that Brexit may not actually occur due to either a second referendum on the vote to leave the EU, Parliamentary sovereignty overriding the vote, or the UK’s failure to trigger Article 50. See, e.g., Gideon Rachman, I Do Not Believe That Brexit Will Happen, The Financial Times (June 27, 2016, 2:04 PM), click here to read the article ; Gabriel Roth, Brexit May Well Never Happen, Slate (June 25, 2016 at 7:14 PM), click here to read the article.

    Max Bearak, An Astute Online Comment Has Some Wondering Whether Brexit May Ever Happen, Wash. Post, June 26, 2016, click here to read the article. [Back to reference]

  2. The EUIPO is formerly known as the Office for Harmonization in the Internal Market, or OHIM. [Back to reference]
  3. This is in addition to seeking a separate trademark/design registration from the UK via the United Kingdom Intellectual Property Office (“UKIPO”), which not all rights holders do even if they have use in the UK. [Back to reference]

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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