IP Protection Post BREXIT Part 2: A Right-by-Right Analysis

by MoFo Tech
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Progress is being made regarding the protection of intellectual property (“IP”) rights in a post-BREXIT scenario on both sides of the English Channel. With BREXIT fast approaching, the European Union (“EU”) and the United Kingdom (“UK”) have been pushing things forward at the negotiator level, but also independently. The latest of these developments is the White Paper, released by the UK Government on July 12, 2018 (“White Paper”), that laid down a proposal for the future relationship between the UK and the EU. It highlighted the importance of further cooperation in matters of IP protection and touched on issues like the participation in the Unified Patent Court (“UPC”) System and the establishment of an own protection scheme for Geographical Indications (“GIs”). Moreover, on July 19, 2018, Parliamentary Under-Secretary of State for Exiting the European Union, Robin Walker MP, reassured businesses of the UK Government's intention to grant equal protection to IP rights holders in the UK following BREXIT, which has been reaffirmed on July 23, 2018, by a news story titled “IP and BREXIT: The facts,” which was posted by the UK Government on www.gov.uk (“UKGov News”).

This is the second part of our article on IP protection post BREXIT, which is dedicated to giving a comprehensive overview of what IP right owners can expect when the UK leaves the EU on March 29, 2019 (“Exit Date”), by summarizing the state of affairs for each IP right category separately. The first part of the article dealt with post BREXIT issues relating to European Union trade mark Registrations (“EUTM”), Registered Community Designs (“RCDs”), Unregistered Community Design Rights (“UCDs”) and granted Community Plant Variety Rights (“CPVRs”) (together, “EU-IP”). In case you missed it, you can read it here. This second part will be directed at issues relating to Geographical Indications (“GIs”), eu. country code TopLevel Domains (“ccTLD”), data base rights, European Patents (“EPs”) and Supplementary Certificates (“SPCs”). Both parts of the article will be supplemented by a set of actions that we suggest can be taken to address the risks indicated by the probable future IP right regimes that we are facing and the risks associated with the uncertainties of a “deal or no-deal” scenario.

Agreed and not agreed (until everything is agreed) – Part 2

1.     Geographical Indications and Protected Designations of Origin

According to the proposal made by the EU under Article 50 Sec. 2 of the Draft Agreement on the withdrawal of the United Kingdom and Northern Ireland from the European Union and the European Atomic Energy Community (“Draft Agreement”), the UK should provide holders of Geographical Indications and Protected Designations of Origin with continued protection of their rights in the UK after expiry of the Transition Period. The parties have not yet been able to agree upon this provision at the negotiator level. However, the White Paper states that the UK will establish its own GI scheme consistent with, and possibly going beyond, the provisions of the World Trade Organizations Agreement on Trade-Related Aspects of Intellectual Property (“TRIPS”). According to the statement, the new scheme will provide a clear and simple set of rules on GIs and continuous protection in the UK for UK GIs, notwithstanding exit from the EU. It will be open to new applications from both UK and non-UK applicants.

2.     “.eu” Country Code Top Level Domains (“ccTLD”)

In addition to the Draft Agreement, the European Commission released another statement on March 28, 2018 (“ccTLD Statement”), announcing that the regulatory framework pertaining to .eu ccTLDs will cease to apply to the UK from March 30, 2019. Thus, undertakings and organizations that are established in the UK but not in the EU and natural persons who reside in the UK will:

  • no longer be eligible to register or renew .eu ccTLDs;
  • be subject to revocation actions by EURid without the right to submit the dispute to any extrajudicial settlement of conflicts (as provided for in Article 20(b) of the Commission Regulation (EC) No. 874/2004);
  • no longer be eligible to rely on IP rights recognized or established under UK law but not in the EU Member States (e.g., common law rights) in .eu domain name dispute proceedings, which, until such date, has been the case in accordance with Article 21 of the Commission Regulation (EC) No. 874/2004; and
  • not be eligible to rely on a choice-of-law clause in agreements concluded between the Registrar and the .eu domain registrant if such clause designates UK law.

The ccTLD Statement stresses that a transitional arrangement may be contained in the final Withdrawal Agreement. The Draft Agreement in its current form, however, provides no information in this regard.

3.     Database Rights

Database rights were introduced in the UK with the implementation of the EU Database Directive (Directive 96/9/EC). This protects databases where, at the time the database was made, its maker is (1) an individual who is a national of or habitually resident in the EEA; or (2) a company incorporated, or an unincorporated body formed, under the law of an EEA state that has its central administration, principal place of business or registered office within the EEA. In the Draft Agreement, the UK now agrees that the holder of a right in relation to a database that arose before the end of the Transition Period shall be granted an IP right in respect of the UK with the same level of protection as afforded under the EU Database Directive if such person or entity is: (i) a UK national, (ii) a person with a habitual residence in the UK or (iii) an undertaking established in the UK. In relation to (iii), where an undertaking has only its registered office in the UK, its operations must be genuinely linked on an ongoing basis with the economy of the UK or of a Member State.

4.     Patents

In general, there will be no impact on European patent protection in its current form, which is granted as a bundle of national rights in selected countries of the European Patent Convention (“EPC”). This is because, in contrast to what its name suggests, the EPC is not solely an EU institution, but has several non-EU Member States (e.g., Morocco) being a party to it. 

However, it remains an interesting question whether the UK will be party to the Unified Patent Court (“UPC”) System, under which a new type of patent will be issued by the European Patent Office conferring protection across the entire territory of the participating European nations as one single right. As indicated in the beginning of this article, the UK ratified the UPC Agreement (“UPCA”) and thereby paved the way for negotiations to ensure the UK’s continued participation in the UPC following BREXIT. In the White Paper, the UK again affirmed its intention to further explore staying in the Unified Patent Court and Unitary Patent system post BREXIT and to “work with other contracting states to make sure the Unified Patent Court Agreement can continue on a firm legal basis.

However, as with almost everything concerning BREXIT, the UK’s participation in the UPC System is still far from certain. On the one hand, it is yet to be seen whether the UK is willing to accept the role of the ECJ in the UPC System despite its intentions to end the ECJ’s jurisdiction in the UK overall. On the other hand, as reported earlier here, the UPCA must enter into force before the UK leaves the EU – i.e., before March 29, 2019 – but there are still outstanding ratifications, inter alia, from Germany, where a constitutional claim filed with the German Federal Constitutional Court (Bundesverfassungsgericht) is currently pending, barring the German Federal President (Bundespräsident) from signing the UPCA and the UPC’s Protocol Privileges and Immunities.

5.     Supplementary Certificates (“SPC”)

SPCs can provide up to five (5) additional years of protection for a marketed medicine or plant protection products. As confirmed in the UKGov News during the Transition Period, businesses can continue to apply for and be granted SPCs using the current SPC system and existing UK SPCs granted under that system continue to be valid. Since these SPCs are based on EU Regulations No. 1610/96 and No. 469/2009, the UK will need to replace the existing legal framework for rights of patent term extension with a new framework to be available at the end of the Transition Period. As suggested in a jointly released a statement on June 19, 2018 (“Joint Agreement”), the UK and the EU came to the agreement that Article 56 of the Draft Agreement shall apply. This states that SPC applications filed before the end of the Transition Period and still pending at its end will be granted even after the end of that Period and provide for the same level of protection under UK law as under the EU Regulations.

WHAT'S LEFT TO DECIDE

Although the Draft Agreement and the Joint Statement suggest that, at least with regard to IP protection post-BREXIT, consent has so far been reached for the majority of issues and the negotiators of the EU and UK Government in the Joint Statement committed themselves “[ . . . ] to making progress as quickly as possible on all aspects necessary to reach such an agreement [ . . . ],” there are still open issues that need to be addressed in the final Withdrawal Agreement, which is targeted for signing by October 2018.

One such open issue is the actual registration procedure for equivalent rights to EU-IP (“UK Equivalents”), including the question of whether any payments from IP rights holders will be required for the creation of UK Equivalents or whether such registration will be provided free-of-charge, which the parties have not yet announced as agreed upon at the negotiator level. However, at least on a unilateral basis the UK Government in the statement of Parliamentary Under-Secretary of State for Exiting the European Union, Robin Walker MP, has indicated that the UK will grant UK Equivalents free of charge: “We have agreed to protect all existing EU trade marks, community registered designs and unregistered designs in the UK as we leave the EU. In place of those EU-level rights, 1.5 million new UK trade marks and registered designs will be granted automatically and for free.

ACTIONS THAT CAN BE TAKEN NOW

Despite the fact that the EU and the UK constantly reassure that they want a deal in place by October 2018, the possibility remains that topics other than IP prevent the UK from signing the final draft of the Withdrawal Agreement. IP owners are advised to bear this in mind when planning their future IP strategy.

In our first part of this article, we pointed out actions that can help address risks associated with the uncertainties contemplating to the protection of EUTMs, RCDs and CPVRs. Here we want to supplement these suggestions with the following:

  • .eu ccTLDs: Holders of eu. ccTLDs located in the UK with no establishment in the EU may want to consider registering other ccTLDs.
  • License agreements: Existing license agreements where (i) the UK is part of the license territory and/or (ii) EU-IP or International Registrations designating the EU are licensed will need to be carefully examined, and, with regard to new license agreements, emphasis should be given to the contractual language to not only provide for a license to the EU-IP or the International Registration itself but to also encompass its future UK Equivalent. Furthermore, territory definitions should make express reference to the UK, rather than to the EU as a whole.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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