Joff Wild

Well, we have only gone and done it. By a margin of 17,410,742 votes to 16,141,241 the people of the United Kingdom have decided that they want their country to leave the European Union. As an added extra, they have also forced the resignation of Prime Minister David Cameron and precipitated sharp falls in the value of sterling and share prices across the world. All on the back of a referendum promise that Cameron made in January 2013 when he was having a spot of bother with the Eurosceptic right wing of his party. I guess it seemed like a good idea at the time.

Throughout this referendum campaign the betting markets were convinced that Cameron would lead the Remain side to a handy win; this week the financial markets also started to believe the same. This despite continuous opinion polls indicating that the result was on a knife-edge. Then even the opinion polls started moving Remain’s way. But it never felt quite right – which is why I wrote on Wednesday that I thought Leave would just come out on top. I was wrong too, though: a winning margin of well over one million votes is a convincing one. Turns out there was nothing close about it at all.

There will be countless articles and learned papers written about this referendum and why the result was what it was. From my perspective, this was not really a vote against the European Union as an institution. Instead, it was a cry of pain from a large number of people who feel they have been left behind first by globalisation and then by the consequences of the financial crash, the slow recovery and austerity. They work in low-paid, insecure jobs and have seen the public services they rely on cut back. Many of them live in communities that have experienced large scale immigration from other EU member states over the last ten years. It’s a potent cocktail and the EU, like the UK’s political leaders, is seen as remote, uncaring and deaf to the concerns of ordinary people. Given the chance to say “Enough” it is no surprise that so many Britons (mainly the English and the Welsh) have taken the chance to do so.

Now, of course, the UK has to disentangle itself from its EU membership. We have been part of the club since 1973, so it will be a long and complicated process. No-one has an idea of the timeframe right now, nor of what kind of relationship there will be at the end. What’s certain is that this will dominate discourse in the UK for the foreseeable future – and that is likely to have an adverse effect on business and investment planning. Unless we are very lucky, therefore, tough times lie ahead.

Brexit - patents

For IP owners, there will be many issues to deal with. However, on the patent side the good news is that nothing changes. The UK’s Chartered Institute of Patent Attorneys sent out a press release this morning explaining where things stand:

The decision to leave the EU will not affect European patent holders or restrict the ability of UK patent attorneys to carry out European patent work.

The UK’s membership of the European patent system is independent of membership of the EU, as is the UK’s membership of the World International Property Organisation.

Therefore UK patent attorneys can still prosecute European patent applications for all UK and overseas clients. European patent applicants will not lose any rights and patents already obtained via the European patent office are unaffected.

UK patent attorneys can still prosecute Patent Cooperation Treaty (PCT) patent applications – which provide protection in the applicant’s chosen countries - for all UK and overseas clients. PCT patent applicants will not lose any rights.

What will change, though, is the immediate future of the proposed Unified Patent Court and EU unitary patent regime. The UK’s ratification is a requirement before they can enter into force. That was scheduled for this summer, but is now not going to happen. That means until the UK has formally left the EU they will not proceed. So we are looking at a minimum two years delay, though I would bet on longer.

In the meantime, we can expect that Germany’s popularity as a patent litigation venue will continue to increase, and that other European jurisdictions – including the UK – will also see increased activity, especially involving American plaintiffs. But national courts are not the UPC and any injunctions they grant will cover a much smaller, national territory; thus, I would expect the value of European patents not to be as high as they might have been had the UK voted to Remain. What’s more, a lot of companies, law and attorney firms, and others that have invested a great deal of time and money in preparing for regime change will essentially have to write it off as a loss. That will hurt.

Brexit – trademarks and designs

In other areas of IP, though, there will be direct consequences to the Brexit vote that will have to be planned for. For example, our sister publication World Trademark Review has had a detailed look at what it will mean from a trademark and design perspective:

An exit would mean that the protection offered by EU trademark and Community registered designs would no longer extend to the UK (with the disappearance of EU trademark courts in the country). AS HGF’s Lee Curtis and Lauren Somers wrote previously in World Trademark Review: “If the United Kingdom were to leave the Community, presumably the provisions of the regulation and consequently Community trademark registrations would no longer have any effect – unless new legislation were provided by the European Union or indeed the UK Parliament. Community trademark registrations would thus effectively shrink in scope, leaving their owners with no legal protection within the United Kingdom unless they also owned UK trademark rights – either via statutory UK trademark registrations or based on use in the United Kingdom.”

What this would mean for trademark owners (whether in the UK or international companies doing business in the country) is that – if they don’t currently hold a national registration and wish to continue their coverage in the UK – a national registration will be required. Perhaps good news for the UK IPO but potentially a budgetary burden for those who have opted for EU trademarks to date.

The impact for law firms in the UK will be somewhat greater. In theory, an exit would mean that UK based practitioners would no longer be able to represent clients before the EU Intellectual Property Office. In an advisory issued by The Institute of Trademark Attorney (ITMA) states: “It is reasonable to suggest that a big percentage of the EU trademark and design work currently undertaken by the UK profession, including a large volume instructed from overseas, would move to attorneys within the rest of the EU.” Additionally, for those involved in litigation, the lack of an EU trademark court in the UK may also lead to a reduction in work.

One possible silver lining for law firms is that corporates doing business in the UK and which have, to date, been reliant on EUTM protection will likely file in the UK. This could result in UK filing work replacing some of that lost at the EUIPO – but as ITMA observes, many such applications may be made via Madrid.

For both law firms and corporate trademark owners, the legal environment could also become more complicated, with UK and EU trademark and design law potentially diverging. ITMA suggests this “would result in additional complexity and resultant cost”.

So will this be the reality? This is where the questions arise. For applicants with EU trademarks wishing to continue doing business in the UK, Curtis and Somers suggest that some form of transitional provisions – established under UK law, EU law or both – could enable owners of EU trademarks to obtain corresponding rights under UK law. Similarly, with regard to pending EU trademark applications, it is possible that the UK and other European governments would give applicants the choice of proceeding with their applications with respect to the United Kingdom or the remainder of the European Union only, or of proceeding with both. However, as they note, “this would undoubtedly result in increased fees for rights holders and proper advance planning would be crucial”.

The transitional work similarly is no guarantee of additional revenues for law firms in the country. ITMA notes: “There are huge numbers of rights that would need to be registered in the UK, and it is possible that the transitional provisions put in place in the event of Brexit would result in a short-term increase in work for UK attorneys, relating to the ‘re-registration’ of EU Trademarks and Designs in the UK. However, if the process is purely formalistic, a significant proportion of this work may go to dedicated renewal/recordal firms rather than attorneys.”

One possible positive for UK law firm practitioners with respect the representation of clients before EUIPO would stem from the UK doing a deal to remain in the European Economic Area (EEA). Under the recently enacted European trademark reforms, the right to act as professional representatives before the office was extended to those qualified in one of the member states of the EEA. In the same way that professionals from Iceland, Liechtenstein and Norway are now able to practice at the EUIPO, should the UK be in the EEA this right would extend to UK practitioners.

Note, though, that the leaders of the Leave side ruled out EEA membership during the campaign because it would make it hard for the UK to control immigration levels. The likelihood of the UK ending up in that kind of relationship with the EU is, therefore, pretty unlikely.

Elsewhere, the UK would presumably no longer be bound by the provisions of IP-related EU directives dealing with, for example, enforcement, trade secrets and copyright, while the country’s courts would no longer be able to refer issues to the Court of Justice of the European Union. Instead, the UK Supreme Court would be the final arbiter of all IP-related disputes. In terms of influence, the EU will lose a major global IP voice and also a significant common law perspective when policy is being framed. The British, meanwhile, will be on the outside looking in when IP is being discussed by the member states.

In short, Brexit will make Europe a more complicated place in which to be an IP owner and will also make it more expensive if you are looking for continent-wide protection. It’s not a happy prospect, but it is now the reality and will have to be planned and budgeted for. My advice to IP owners active in the UK, as well as other European jurisdictions? Bite the bullet and contact a lawyer or attorney who can talk you through everything in detail and help you build a strategy. It’ll be worth the fees. Europe is about to change utterly. Make sure you are on top of that for there are bound to be perils ahead.