Brexit - Where Are We Now?
The Brexit timeline
Following the Referendum on 23 June 2016, the United Kingdom (UK) took the historic decision to exit from the European Union (EU). Even though the future relationship between the UK and the EU remains unclear, some details have now started to emerge. On 2 October 2016, British Prime Minister Theresa May announced that the official Brexit negotiation process under Article 50 of the Lisbon Treaty will be triggered by the end of March 2017. However, this timeline is far from set in stone after the UK High Court held on 3 November 2016 that the UK government did not have the power under the Royal prerogative to give notice pursuant to Article 50 for the UK to withdraw from the EU without consulting parliament first. (R (Gina Miller and Deir Tozetti Dos Santos v The Secretary of State for Exiting the European Union  EWHC 2768 (Admin) (3 November 2016).) The UK government has appealed this judgment to the Supreme Court. The potential impact of this judicial challenge and the involvement of Parliament is yet to be seen.
However, once Article 50 has been triggered, the process for withdrawal will - unless an extension is agreed - take two years, meaning the UK could leave the EU in spring 2019.
"Great Repeal Bill"
Mrs. May on 2 October 2016 also announced a “Great Repeal Bill," which will repeal the European Communities Act 1972 (ECA), i.e., the act that gives effect to EU law in the UK, as well as primacy to EU law over UK law. However, the Great Repeal Bill will not rid the UK of EU law straightaway. The UK Government has indicated that the current corpus of EU law is likely to be transposed into UK law, which is meant to avoid any legislative gaps. It will also allow the UK government to amend and/or remove any EU based laws in due course and once Brexit formally occurs, thereby allowing the UK to retain selected EU based laws as national UK law. However, this also - and crucially - means that the various EU treaties will cease to form part of UK law and the European Court of Justice’s (ECJ) jurisdiction over the UK will end once Brexit is complete. Moreover, UK courts will no longer be able to refer questions to the ECJ, will not be able to issue pan-EU injunctions, and/or act as EUTM courts. UK law will, in all likelihood, develop more and more independently from EU influences.
Effect of the "Great Repeal Bill"
The "Great Repeal Bill" is a broad stroke move which would, if implemented, initially provide welcome stability and certainty for rights holders.
However, it does not address the fate of existing IP rights post-Brexit, and the more complex details concerning harmonised IP rights and Pan-European rights would still need to be negotiated. This would include the mechanism of converting so-called unitary Pan-European rights, such as European Union Trademarks (EUTMs) and Registered Community Designs (RCD), into national UK rights and/or otherwise ensuring continuity of protection in the UK, as in the case of unregistered EU design rights and Supplementary Protection Certificates. Other issues which would need to be addressed are the question of exhaustion of rights, whether or not to adopt the Trade Secrets Directive and/or the Copyright Reform package (including plans for the Digital Single market) in due course. The list goes on.
In the case of patents, however, triggering Article 50 and completing Brexit will not have any effect on existing patent laws in the UK and Europe, since the European Patent Convention (EPC) is entirely independent from the EU.
The future of the pending Unitary Patent (UP) and Unified Patent Court (UPC) is discussed below.
Brexit and the Unitary Patent and Unified Patent Court
On 28 November 2016, the UK government - unexpectedly - announced that it will continue preparations to ratify the Unified Patent Court Agreement (UPCA) to bring the UPC system into effect "as soon as possible". The UK government's announcement ends months of speculation about the UK's next step and may lead to the implementation of the UPC and the UP much sooner than had been widely-anticipated following the Brexit vote. To date eleven countries, including France, have ratified the UPCA. Therefore, if the UK and German governments decide to ratify the UPCA in the coming months, the UPC and the UP could come into existence as currently envisaged (including with a section of the Central Division court located in London) as early as mid-2017.
By way of background: the legal position regarding the UPC is complex since the UPC Agreement is not an EU instrument but, to be compatible with EU law, was required to include in its terms submission to the jurisdiction of the ECJ by the parties on certain aspects of patents law. However, a recent legal opinion by two UK barristers had suggested that it may be legally possible for the UK to ratify the UPC Agreement and to remain part of the UPC post-Brexit.
Having said that, the UK government has so far (as of 29 November 2016) not provided any guidance as to its longer-term intentions with respect to the UPC and UP. In particular, there is no indication whether and how the government will ensure the UK can remain within the system post-Brexit or, indeed, if that is even its intention. If anything, the official statement that "… the decision to proceed with ratification should not be seen as pre-empting the UK’s objectives or position in the forthcoming negotiations with the EU”, suggests that the government intends to deal with the long-term membership of the UPC and UP as part of the wider Brexit negotiations and potentially, therefore, subsequent to commencement of the UPC and UP.
Accordingly businesses that rely on patents, many of whom will have put their UPC and UP preparations on hold following the Brexit referendum vote, will now need to dust down their plans and re-start the process of considering their future European patenting strategy within the context of greater uncertainty over the longer-term future of the UPC and UP system.
Brexit, the EU Copyright Reform and the Digital Single Market
The EU Commission in early September 2016 released its digital single market provisions (including a proposed EU copyright Directive and Regulation, and other laws in the “Digital Single Market") under its wide-reaching EU copyright reform. The EU Commission’s plans have attracted praise (sensible) and criticism (disaster), notably over its plans for an ancillary copyright for the press similar to controversial German and Spanish national laws.
In this context, the UK government on 21 September 2016 launched an inquiry seeking stakeholder comments on Brexit’s impact on, inter alia, copyright, creative industries and the digital single market. As of December 2016, it is completely unclear if and how the UK may adopt the EU copyright reform plans.
We already mentioned in our last alert that there is no copyright registration system in the UK or on a Pan-EU level and that national law UK could continue as is despite Brexit, though there may be some impact on exhaustion principles should the UK not end up in the EEA, which appears increasingly likely. Unless the UK decides to join the EEA, Brexit may have an impact on the broadcasting industry if uplinkers in the UK can no longer benefit from the country of origin rule in the SatCab Directive.
Brexit and Unregistered Designs
Noteworthy in the context of Brexit are the potential effects on "unregistered design rights". In England and Wales, design rights are currently protected by a combination of overlapping and partly harmonised UK and EU laws. Although the UK Unregistered Design Right will be unaffected, the separate EU unregistered design right is a very important right for British designers, particularly in seasonal industries like the fashion industry, as this gives 3 years of protection to new and individual designs (including aspects such as surface decoration) against copies that produce the same overall impression. As the EU unregistered design right derives directly from the Community Designs Regulation and has not been implemented under English law, Brexit threatens to leave a gap in protection for British designers. It is unclear how the Great Repeal Bill will affect this particular right in practice. Baker McKenzie's London office is actively involved in roundtables with the UK IPO, which is advising the UK government on issues to consider.
Overall: Business as usual with an orderly transition for registered rights envisaged, details of which should soon start crystallising. Rights holders have plenty of time to plan ahead.
Licensing/brand sharing: Any existing and new IP license, agreements, etc. that include a definition of the EU (e.g., as the territory) should now be reviewed to see whether it is the EU as constituted at the date of agreement or as constituted from time to time. Amendments and/or the introduction of specific Brexit clauses etc. for new agreements may be required.
Trademarks/Designs: While there are no immediate changes for UK and EU designs and trademarks, if the UK is a main focus of business interest, rights holders may wish to consider filing new applications also in the UK and/or refiling - at least their core marks - as national UK trademarks. Once the UK has left the EU (now potentially as early as April 2019), it is currently - as of early December 2016 - considered most likely that the EUTMs/RCDs would be in some way split and the UK part will be transformed into a national UK right, with the rest of the EUTM/RCD covering the remainder of the EU.
Patents: No changes expected to existing patent laws in the UK and Europe (EPC). In light of the UK government's surprise announcement of 28 November 2016 that it will continue its preparations to ratify the Unified Patent Court Agreement to bring the Unified Patent Court system into effect "as soon as possible", businesses that rely on patents, many of whom will have put their UPC and UP preparations on hold following the Brexit referendum vote, will need to revisit their plans and re-start the process of considering their future European patenting strategy within the context of greater uncertainty over the longer-term future of the UPC and UP system.
The first decision such businesses will need to take will be whether to opt their European 'bundle' patents and applications out of the UPC system. In light of:
- the increased uncertainty regarding the long-term status of the UPC;
- the ability to withdraw an opt out (provided an action has not already been brought before a national court); and
- that there is no fee to opt out or to withdraw an opt out,
in many cases it will be advisable for patentees to opt out their existing European 'bundle' patents and applications, at least in the first instance during the 'sunrise' period prior to the UPC entering into force.
Copyright: No immediate changes expected for copyright laws, which are the least harmonised IP rights within the EU, though the impact of separation on territorial licensing will be seen once the UK is no longer subject to EU competition laws. There may be some impact on exhaustion principles should the UK not end up in the EEA (likely). Unless the UK decides to join the EEA, Brexit may have an impact on the broadcasting industry if uplinkers in the UK can no longer benefit from the country of origin rule in the SatCab Directive. It is currently completely unclear if and how the UK may adopt the EU copyright reform plans, as launched in early September 2016.
Sui Generis Database Rights: Databases created in the UK may no longer be protected. It is likely that the UK will enact similar national legislation in due course.
Trade Secrets: The “EU Directive on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure" or "Trade Secrets Directive" came into force on 5 July 2016. The Trade Secrets Directive is broadly comparable to the recently introduced US Defend Trade Secrets Act. EU Member States have two years to incorporate the provisions into national law. At the moment it remains possible that the UK will implement the EU Trade Secrets Directive despite Brexit, notably since UK laws are already broadly in line with the requirements laid down in the Directive.