Preparing for Brexit - analysis of the European Commission's position paper on key IP issues
Last week the European Commission published a Brexit position paper on dealing with intellectual property issues raised by the UK’s departure from the European Union – which is scheduled to happen at the end of March 2019. The paper focused on existing IP rights, so did not make any mention of patents. The Unified Patent Court agreement is not yet up and running (and thanks to Brexit and a recent court challenge in Germany may not be for quite a while) and, in any case, is not structured as an EU body, while current patent rights are either national or issued by the European Patent Office, which is not an EU institution.
In place of patents, the relatively brief paper considered topics including the treatment of unitary rights post-Brexit, the protection of geographical indications (which has the potential to be quite a big issue as the UK seeks free trade agreements once it leaves the EU), trademarks and data rights.
Stephen Hodson, a partner in the Cambridge offices of patent and trademark attorney firm Mewburn Ellis, has put together a summary of the major issues the position paper covers.
For many months now, it has been clear that Brexit is likely to bring changes to IP rights in Europe. However, whilst we know that there are many questions that will need addressing, we have seen no official communications from either the UK or the EU which give any indication of the possible answers. That changed last week with the publication of the European Commission’s position paper on IP.
The EU position paper is relatively short and the contents are, to a large extent, unsurprising. Many of them are likely to be entirely acceptable to the UK and should be readily agreed. However, we have yet to see a position paper from the UK on this subject.
The main demand in the paper is that all IP rights having unitary character in the EU should result in enforceable rights in the UK after Brexit. This is something that has always seemed the only practical outcome as otherwise there will be a retrospective denial or extinguishing of a property right on the day that the UK leaves the EU. However, whilst practitioners are mainly concerned about EU trademarks (EU TMs) and registered designs (RCDs), the EU paper reminds us that there are a wide range of unitary rights which fall within the broader ambit of “intellectual property”. In particular, the EU paper appears particularly concerned with “protected geographical indications” (PGIs), “protected designations of origin” (PDOs) and similar rights, noting that the UK does not currently have domestic legislation for such rights (although the proposed “Great Repeal Bill” would automatically import these into UK law, at least temporarily).
It is notable that, whilst the EU explicitly considers it essential that existing rights should continue to be protected in the UK post-Brexit, there is no explicit mention of what will happen to EU rights currently held by UK entities, where being established in an EU member state is an explicit requirement for eligibility (this does not apply to EU TMs or RCDs). However, it is difficult to imagine a position where these rights are extinguished, but EU holders continue to enjoy protection in the UK.
The paper recommends that, where applications for intellectual property rights filed pre-Brexit are still pending at Brexit, the applicant “should be entitled to keep the benefit of any priority date” when applying for an equivalent right in the UK after Brexit. This position suggests that, unlike granted rights, such applications would not be automatically converted and a separate application in the UK might be required. If so, and the position is agreed, then this will be of concern as applicants will not necessarily know how long the grant process will take when applying for EU rights prior to Brexit. This point should be closely monitored.
The EU paper provides potential answers to some of the questions surrounding EU TMs. In particular, the Commission proposes that the recognition of EU TMs (and other rights) in the UK post-Brexit should be “automatic”, “should not result in financial costs for the holders” and that any “administrative burden … should be kept to a strict minimum”. This appears to closely match proposals from within the UK (the “Montenegro” model) and also appears to be the most likely for practical reasons.
Another question that has been highlighted by many is how the provisions for revocation of trademarks for non-use should apply in the cases of former EU TMs which have not been used in the UK prior to Brexit, and EU TMs which have only been used in the UK prior to Brexit. A related question is whether reputation acquired in one territory pre-Brexit will attach to the registration in the other post-Brexit. The Commission’s position on non-use is very plain: “Recognition of a TM in the UK should not be refused on the ground that the equivalent EU TM had not been put into genuine use in the territory of the UK before [Brexit]”; but the position on reputation specifically says that such requirements should be “temporary”. It does not appear legally realistic that a UK registration could be protected from revocation based on use in the EU once five years have elapsed since Brexit and so we would expect this provision to be temporary as well. Notably, there is no indication that the same principles should apply to EU TMs based on UK use, but it seems unlikely that agreement will be reached without a reciprocal arrangement.
The paper recommends that if exhaustion of rights has occurred in EU before Brexit (for example, by sale of goods by the proprietor), then these rights should remain exhausted in both the EU and UK after Brexit. While this seems entirely reasonable, it is difficult to see how it will be possible to distinguish the date on which the act resulting in exhaustion took place. This may be a precursor to the position that the UK is still considered part of the EU for exhaustion purposes, but there is no specific indication of this.
Other IP rights
The paper recommends that supplementary protection certificates (SPCs) should continue to be granted in the UK based on applications made before Brexit. This suggests that SPCs might not be available in the UK post-Brexit, which appears unlikely given the importance of the pharmaceutical industry to the UK economy.
The other right specifically mentioned is the EU database right. Here the Commission explicitly recommends that UK owners of such rights should not be prevented a) from owning them post-Brexit (again, the principle of no retrospectively denial of a property right) or, apparently, b) from qualifying for new such rights post-Brexit (disapplication of the qualifying criteria based on nationality in respect of UK nationals/companies). This is presented as a trade-off (ie, that the UK should not prevent EU nationals/companies from owning equivalent rights in the UK on nationality grounds), but suggests a willingness to reciprocate which is not explicit in relation to other rights discussed.
Over to the UK
The publication of a position paper explicitly dealing with IP rights is very welcome. Hopefully we will see a corresponding position from the UK in the near future which will indicate areas of agreement and thus allow us to have a clearer picture of what will happen to IP rights during and after Brexit.