Despite the UK’s vote to leave the European Union, companies doing business in the UK can still continue to trade with the European Union in exactly the same way as they have done in the past.
The UK is still a member of the EU and until it negotiates an exit deal or the two year period for the re-negotiation for such a deal expires the UK remains a full member of the European Union subject to its rights and obligations under the EU treaties.
The Vote
The UK woke up on June 24 to the news that the UK had voted to leave the European Union by 52% to 48% .
Although the vote was always forecast to be close the British public voted by a larger than expected margin to leave. The British Prime Minister, David Cameron, has resigned and is expected to step down in October.
So in the aftermath of this historic vote, what does this really mean for companies trading in the UK and their access to the European single market.
The hysterical reaction of a number of UK politicians would lead us to believe that this vote will immediately lead to a reappraisal of the UK ‘s relationship with the EU and many EU laws will now change.
While the vote has certainly heightened uncertainty in the international markets companies trading in the UK will not be affected in the aftermath of this vote. Their ability to access the single EU market tariff free and conduct business will remain unchanged.
The Exit Process
Now the UK has voted, the UK has to give notice to leave the EU under Article 50 of the Lisbon Treaty. Once it does there is a two year period in which to negotiate an Exit Treaty. Once that period ends the UK leaves the EU whether an exit Treaty has been negotiated or not. The two year period can be extended by mutual agreement of the Uk and the EU.
The UK has not given notice under Article 50 yet and it is unclear when it will. Several leading Brexiteers have argued that they want to negotiate the terms of the UK’s divorce without being put in the straightjacket of the two year period. The Eu says it won’t negotiate leaving terms until Article 50 is exercised.
However until an exit Treaty is signed or the two year period expires (or any extensions mutually agreed between the UK and the EU) the UK is fully bound by its EU Treaty rights and obligations. That means that unless the UK wants to breach its international treaty obligations it cannot dis-apply EU law nor the reach of the CJEU judges.
So from a legal perspective nothing is going to change for a long time . In fact the UK is still going to be legally obliged to implement new EU Directives as long as the UK is a member. Depending upon the terms of the UK’s exit deal the country may still find itself having to implement those laws to gain access to the EU single market and to obey the free movement rules.
So the vote is only the start of a long process and the challenges of the Brexit issues both legally and politically are only just beginning.
Where do we go from here?
The UK has to negotiate a deal to leave the EU. No member states has seceded from the EU. Only Greenland (as part of Denmark) left and that was over 25 years ago.
So the UK is in unchartered waters. However it appears clear that the EU is unlikely to do the UK any favours in these negotiations. It will not compromise its fundamental principles of free movement of goods, services, capital and people. So the UK may have to rely on international trading rules to access the EU markets which may mean tariffs and other restrictions or – much more likely – agree to a free trade deal based on membership of the EEA like Norway.
However many political commentators believe that if the UK does not negotiate to have free access to the EU single market the UK Parliament is unlikely to ratify the Treaty. The Leave vote did not cover what the leaving terms should be so it is far from clear how the Brexit drama will play out.
This is unlikely to be a “leave the EU at all costs” vote. It is more likely to be just re-arranging the chairs in this EU game of musical chairs.
European Patents
The UK will continue to be a member of the European Patent Organisation (EPO) which is a separate body from the EU. Thus, patent protection in the UK will continue to be available via the European Patent Office. The European Patent Convention will continue to be part of UK law and European Patent attorneys will continue to act in the usual way in all matters before the EPO.
EU Trademarks (formerly CTMs) and registered designs
The legislation governing these is silent as to what happens when a country leaves the EU. Best case scenarios are (i) the UK will enact national legislation deeming the European registrations to extend to the UK or (ii) the EU will agree that European registrations can be converted to UK trademark and design registrations.
Given that the UK will remain a member of the EU for some time, we do not recommend, at this stage, that you take further action (e.g. re-file your marks in the UK), but we shall be monitoring developments and will update you as the position becomes clearer.
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