Brexit: facing the consequences

In or Out? The majority of the British people (51.9%) voted in favor of leaving the European Union (EU) on June 23rd of this year. The consequences of a Brexit are still unclear but what we do know, is that there will be an undeniable impact on intellectual property rights in Europe.

It is important to keep in mind that the referendum is not legally binding. The referendum does not specify when or how the UK should leave the EU. The withdrawal of the UK from the European Union will not be immediate.

Article 50 of the Lisbon Treaty allows Member States the possibility to withdraw from the EU. A Member State who decides to withdraw, shall firstly notify the European Council of its intention. Following the notification, the EU and the UK will proceed to negotiate the arrangements for the U.K’s withdrawal as well as the framework for their future relationship. Article 50 also provides for a two-year period following the notification from the UK to the European Council, after which the treaties will cease to apply. The UK would therefore not completely leave the EU before the end of 2018.

Over the next two years, it’s “business as usual” in the field of intellectual property

It is important to note that no immediate change is expected: no loss of rights will occur and no immediate action needs to be taken. Indeed, throughout the negotiation period, European intellectual property rights (European trademarks, Registered Community designs and European patents) will be entitled to the same level of protection.

What are my options after the Brexit has become effective?

Patents:

The EPO, which operates independently from the EU is responsible for reviewing applications and issuing European patents. Non-EU member countries however (e.g. Switzerland) can also be a part of the EPO; therefore, in theory, this should allow the UK to maintain its position within the EPO. As such, European patents designating the UK may continue to be issued.

Moreover, the implementation of the Unitary Patent Court (UPC),, scheduled for early 2017 will be delayed. Indeed, the implementation of the UPC requires the ratification of the Regulation by 13 member states, including France, Germany and the UK. As EU membership is a condition of being part of the UPC and the Unitary patent, Brexit makes the setting up process more complex.

European trademarks (EUTMs) and Registered Community Designs (RCDs)

Council Regulation (EC) No. 40/94 of 20 December 1993 on the European trade Mark (“Community trade mark” at the time) and Council Regulation (EC) No. 6/2002 of 12 December 2001 on Community designs didn’t foresee the hypothesis in which a Member State would leave the EU.

EUTMs and RCDs in force prior to the UK’s official withdrawal from the EU will continue to cover the UK.

We do not yet know the consequences of the UK’s withdrawal from the EU on EUTMs and RCDs nor when these changes will occur. What we can say, is that the new EUTMs and RCDs filed with the EUIPO will not maintain the same value, as they will no longer cover the UK. To benefit from the same level of protection, one must be the holder of a European IP right (excluding the UK) and a British national IP right; therefore, in order to guarantee the same level of protection, one has to proceed with the registration of a European trademark with the EUIPO and the registration of a British trademark (the latter may be done either through national registration with the IPO or by registering an international trademark).

However, there is still the possibility of the UK reaching an agreement under which EUTMs and RCDs in force prior to the Brexit, continue to be valid on UK territory: for example, the possibility of converting European titles into British national trademarks or designs.

Copyright law:

No change is expected in the area of copyright law insofar that copyright is not very harmonized in Europe and no registration is necessary for protection. Courts will still look to the Berne Convention and the Universal Copyright Convention, but legal interpretation in accordance with EU Directives, is still to be confirmed. One needs to be cautious however in the area of contracts relating to copyright law, once the UK leaves the EU (please see below).

Contracts:

It is advisable to review each contract, especially existing license agreements, in order to examine the clauses relating to ‘territory’ and whether the EU is mentioned. One should then determine whether the term ‘EU’ in the contract refers to the EU as constituted at the date of agreement or, refers also to changing circumstances relating to the EU. This is to ensure that such contracts are in line with the original intent of the contracting parties. Agreements which are signed over the next two years will need to clearly state what is actually meant by “European Union”.

Data protection:

Whilst the Regulation on the protection of data has only just been adopted by the European Parliament (April 27, 2016) it may not actually apply to the UK. We are not presently aware on how the UK will decide to organize the flow of data but specific arrangements on this particular subject between the UK and EU member states are foreseeable.

.eu domain names:

In order to register a domain name in .eu, it is necessary to have an address within EU territory (or in Iceland, Liechtenstein or Norway), proving the registrant is subject to European law and relevant trading standards.

The UK’s withdrawal from the European Union could also have an impact on hopeful British .eu registrants.

However, EURid, the registry manager in charge of .eu and .ею (.eu in Cyrillic script) confirmed that there will be no immediate change, provided the political and legal processes have not commenced. Moreover, for some, this should not be an issue insofar as large companies will have the ability to register .eu domain names through subsidiaries located on EU territory. For smaller businesses and individuals, solutions should be devised over the next few months.

National rights:

British intellectual property rights will not be affected by the Brexit, whether these concern the acquisition or the assertion of rights over trademarks, designs and patents.

Practical guidance:

Given the current uncertainty surrounding the Brexit decision, it is now essential to analyze your intellectual property rights portfolio and to establish a strategy for your existing rights and registrations to come.

For your existing core trademarks, consider filing a UK registration at the Intellectual Property Office in addition to your EUTM. This also applies to any new EUTM filing.

A national filing is neither too costly, nor too long a process but offers a priority right so it provides a better level of protection in case EUTM filings no longer apply in the UK.

On the other hand, if the EUTM continues to apply to the UK, a national filing would allow the possibility of a seniority claim, meaning that the EUTM also includes UK registration.

Dreyfus & associés can assist and advise you on the best strategy to enhance and protect your rights.

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