Brexit outcome - some possible relief for holders of IP rights

The United Kingdom is gearing up to leave the European Union on 29 March 2019 and has been working hard to provide guidance on what will happen to intellectual property (IP) rights in both a deal or no deal scenario.

The good news is that, deal or no deal, holders of EU IP rights will, for the main part, automatically retain those rights in the UK. The primary exception is owners of EU trade mark, design, or plant variety rights who file too late and cannot get them ’registered‘ before the end of the transition period on 31 December 2020 (or 29 March 2019 in a no deal scenario). These owners will need to proactively identify which of these rights are relevant to the UK and pay to file an equivalent UK application.

It is therefore a good time for EU IP right holders to undertake a review of their portfolios. If the current deal is agreed, it will be worthwhile filling any gaps in EU portfolios as soon as possible to try and obtain EU registration before the end of the transition period. This will enable holders to take advantage of the automatic conversion of EU registered rights to national UK registrations, and avoid the costs of separate application fees in each jurisdiction.

A review should also look to identify where there might be any duplicate rights that result from the creation of new UK registrations. Identifying these duplicate rights will ensure holders rationalise their portfolios and reduce any ongoing maintenance costs.

After Brexit, thought will be required to ensure that any new IP rights are protected separately in both the EU and UK. IP rights will also need to be enforced separately in each jurisdiction.

Is there any difference between a deal, or no deal, Brexit?

The guidance for both scenarios is very similar and is intended to ensure that current owners of European IP rights obtain equivalent UK rights after Brexit. However, each scenario will bring with it different timing. Geographical indications and the current exhaustion of rights scheme will also be impacted differently in a deal or no deal scenario.

We discuss each of these differences in more detail below. We also outline the key proposals for each IP right in a deal or no deal scenario in the table below.

Timing

If the deal is agreed, there will a transition period until 31 December 2020. During this time, the current IP regimes in UK and EU will remain relatively unchanged. Most changes to IP rights will occur at the end of this transition period.

In contrast, in a no deal situation, the changes to the IP regimes will kick in from exit on 29 March 2019.

Geographical indications (GIs)

If the deal is agreed, all owners of EU GIs will get equivalent protection in the UK. However, in a no deal situation, the UK will set up its own GI scheme and will only automatically grant UK GI status to existing GIs owned by UK producers.

Exhaustion of rights

The UK is part of the European Economic Area (EEA) exhaustion scheme. This scheme essentially stops an IP owner from preventing the sale of products which have been put on the market in one EEA country from being sold in another EEA country.

If the deal is agreed, IP rights which were exhausted in the UK and EU during the transition period will remain exhausted. It is not clear what will happen after the transition period.

If no deal is agreed, the UK has stated it will continue to recognise the EEA exhaustion scheme in the immediate term. This will mean that there will be no change to the rules for importing goods from the EEA into the UK. But it is not clear that the EU will reciprocate this arrangement. If not, goods being exported from the UK to EU countries will no longer be subject to the exhaustion of rights scheme and UK distributors operating in the EU will need to ensure they have the right permissions to do so.

So, what happens next?

The draft deal agreed between the UK and EU on 14 November 2018 still needs to be approved by UK’s Parliament, who is expected to vote on it on 12 December 2018. If successful, the EU Parliament will then get to vote before the deal is passed. If either of these steps fail, the UK will be looking at a no deal Brexit.

We are closely monitoring these developments and will keep you updated.

In the meantime, if you are concerned about how Brexit may impact on your business in the EU and UK, or would like any further advice on the impact Brexit will have on your IP rights, please contact us.

IP right	Deal	No deal
Transition period	Until 31 December 2020. During this time, the IP regimes in UK and EU will remain largely unchanged. Most changes in rights will occur after this transition period ends.	No transition period after exit on 29 March 2019. Any changes in IP rights will occur on exit.
Trade marks (registered or pending)	All EU registered trade marks as at end of transition period automatically converted to an equivalent UK registration without charge. Owners of EU pending applications as at end of transition period have 9 months to file for an equivalent UK application. UK to take measures by end of transition period to ensure the owners of trade marks registered in the EU through the Madrid (International Registration) system obtain protection in UK.	All EU registered trade marks as at exit converted to an equivalent UK national trade mark with 'minimal administration burden'. Owners of EU pending applications as at exit have 9 months to file for an equivalent UK application UK to take measures by end of transition period to ensure owners of trade marks registered or pending in the EU through the Madrid (International Registration) system obtain protection in UK.
Use rights (trade marks)	Largely unaffected by Brexit
Designs (registered or pending)	All EU registered designs as at end of transition period automatically converted to an equivalent UK registration without charge. Owners of EU pending applications as at end of transition period have 9 months to file for an equivalent UK application. UK to take measures by end of transition period to ensure the owners of designs registered in the EU through the Hague (International Registration) system obtain protection in UK.	All EU registered designs as at exit converted to an equivalent UK registration with 'minimal administration burden'. Owners of EU pending applications as at exit have 9 months to file for an equivalent UK application. UK to take measures by end of transition period to ensure owners of designs registered or pending in the EU through the Hague (International Registration) system obtain protection in UK.
Unregistered designs	Owners of unregistered community designs as at end of transition period will become owners of an equivalent enforceable UK unregistered design right.	Owners of unregistered community designs at exit will automatically become owners of an equivalent enforceable UK unregistered design right. UK to create new 'supplementary unregistered design right' in the UK based on EU system.
Patents	Largely unaffected by Brexit
Other laws relating to patented pharmaceuticals, agrichemicals and other biotech inventions including supplementary protection certificates, compulsory licensing, exceptions from infringement for testing	No practical change. EU law to continue to apply in respect of supplementary protection certificates, and extensions of such certificates applied for in the UK before end of transition period. All other existing EU laws will remain in force in UK through EU (Withdrawal) Act 2018.	No practical change. All existing EU laws will remain in force in UK through EU (Withdrawal) Act 2018.
Unitary Patent (UP) and Unified Patent Court (UPC)	UK will be part of UP and UPC systems if ratified by Germany before end of transition period. UK looking at options to remain part of systems after this date.	UK looking at options to remain part of UP and UPC systems. If do have to withdraw: any existing unitary patents will automatically give rise to an equivalent UK patent. UK businesses will not be able to use these systems to protect new inventions in the UK. still be able to use systems to protect new inventions in contracting EU countries.
Plant Variety Rights (PVR)	All EU registered PVRs at end of the transition period automatically converted to an equivalent UK registration free of charge. Owners of pending applications as at 31 December 2020 have 6 months to file for an equivalent UK application.	All EU registered PVRs as at exit converted to an equivalent UK registration without right holders needing to take any action. For pending EU applications, a new UK application will need to be made following the normal process and using the same priority date and registration tests.
Geographical indications	Owners of EU GIs get equivalent protection in UK.	UK to set up own UK GI regime which will broadly mirror the current EU regime. All existing GIs owned by UK producers given new UK GI status automatically. UK not required to recognise EU GIs but EU producers will be able to apply for UK GI status. UK producers will need to apply for EU GIs as 'third country' producers. This will require UK GI protection.
Copyright	Largely unaffected. Exception is 'cross-border copyright mechanisms'. These rights will be incorporated into UK law through EU (Withdrawal) Act 2018, but there will be no reciprocity of these rights in the EU unless further agreements are reached.
Database rights	UK holders of database rights that arise before end of transition period will retain an equivalent enforceable right in the UK.	UK database right holders will retain protection in the UK but will no longer have protection in EEA.
Exhaustion of rights	UK rights exhausted both in EU and UK before end of transition period remain exhausted. Not clear what happens after transition period.	UK to continue to recognise EEA regional exhaustion regime in immediate term. Not clear whether EU will give reciprocal protection. If not, may be some restrictions on what goods can be exported from UK to EEA.

Authors

Zoe Dewhurst

Senior Associate

Wellington

Jonathan Aumonier-Ward

Principal

Wellington