Breakthrough in Brexit negotiations – what about intellectual property rights?

On 14
November 2018, following 17 months of intensive negotiations, news broke that
the negotiators of the European Commission and the United Kingdom reached an
agreement on the entirety of the Withdrawal Agreement. This agreement
establishes the terms of the withdrawal of the United Kingdom from the European
Union. While this agreement is undoubtedly a major Brexit breakthrough, the
question remains whether it will be accepted by all parties involved, including
the UK and EU Parliaments. Political questions aside, it is rather interesting
to note how the negotiators envisage the future of intellectual property rights
in a post-Brexit world.

On 23 June 2016, a majority of 51,9 percent of UK
citizens voted to leave the European Union. Little over nine months later, on
29 March 2017, UK Prime Minister Theresa May sent a letter to European Council President Donald
Tusk, notifying him of the intention of the United Kingdom to leave the
European Union and thus triggering the withdrawal procedure as set forth in Article 50 of the Treaty on the European Union (TEU).
Since then, political negotiators at the highest level have been discussing the
terms of the UK’s withdrawal from the European Union.

The Withdrawal Agreement, or “Draft Agreement on the withdrawal
of the United Kingdom of Great Britain and Northern Ireland from the European
Union and the European Atomic Energy Community” in full, was agreed upon at the negotiators’ level on 14
November 2018. This document records the progress that has been made in
reaching an overall understanding on the framework for the future relationship
between the European Union and the United Kingdom. As stated in the European
Commission’s press
release on this topic, the EU and UK
negotiators will continue their work based on the outline. In this regard, it
is to be noted that “(n)othing is agreed
until everything is agreed.”

While a political storm is raging in relation to the
draft agreement as it currently stands, we have taken the time to examine what
a post-Brexit future might have in store for intellectual property rights.

Intellectual property rights protected under “pure” UK law will in any case remain
unaffected. As a result, all UK trademark rights and UK design rights (either
registered or unregistered) will remain in force. The same is true for UK
patents and the UK part of European patents.

However, the story is significantly more complex when
it comes to the unitary patent package.
Put simply, the unitary patent package presupposes the primacy of EU law and
provides for the possibility to obtain a preliminary ruling from the Court of
Justice of the European Union (CJEU). Regardless of Brexit, the United Kingdom ratified the UPCA on 26 April 2018 and has since then expressed its wish to “explore staying in the Court and unitary patent system after the UK
leaves the EU”. It is not yet clear how the continued participation of the
United Kingdom will be possible in a post-Brexit scenario.

The fate of other unitary IP titles is the subject of
a separate Title in Part 3 (“Separation Provisions”) of the draft Withdrawal
Agreement. Articles 54 through 61 discuss the continued protection in the UK of
registered EU/international rights, unregistered Community designs and
databases and further specify what will happen to the right of priority,
pending SPC applications and the principle of exhaustion.

A transition period has been put in place until 31
December 2020, during which EU law and EU IP titles remain applicable and
everything remains unchanged. The draft Withdrawal Agreement sets forth the
following main principles to apply after this date:

• The UK part of EU trademark registrations will be cloned and replaced by a UK
  trademark registration, for the same sign and the same goods or services as the
  EU trademark and maintaining the original filing and/or priority date;
• The UK part of Community designs (either registered or unregistered) will be
  cloned and replaced by a UK design right (either registered or unregistered).
  This might lead to a rather uncomfortable situation in relation to unregistered
  designs, since the UK legal system already includes the so-called “unregistered design”, a form of protection that is not
  identical to the protection provided by an unregistered Community design.
• The abovementioned cloning principle
  will also apply to plant variety rights;
• Geographical indications, designations of origin and traditional specialities that
  are in force at the EU level on 31 December 2020 will be able to claim the same
  level of protection in the United Kingdom subsequent to that date;
• If one of the IP rights described above
  is revoked in the context of proceedings commenced before 31 December 2020, the
  “cloned” UK right will in principle also cease to exist;
• International trademark and/or design registrations obtained before 31 December 2020 and designating the EU will remain in
  force in the United Kingdom;
• Database rights arisen before 31 December 2020 will
  remain enforceable in the United Kingdom under the same conditions as provided
  for in the Database Directive;
• SPC applications and
  applications for paediatric extensions that were filed in the UK before 31
  December 2020 will enjoy the same level of protection as provided for in the
  relevant EU Regulations;
• As for the principle of exhaustion, IP rights that were exhausted both in the
  EU and in the UK before 31 December 2020 shall remain exhausted in these
  territories.

The principles outlined above will apply in case a
deal is made across the board. If this does not occur, the entire Withdrawal
Agreement is off the table. In case such a scenario were to unfold, the UK
Intellectual Property Office has drafted a number of Guidances setting out the consequences for the
main IP rights.

Finally, we do note that there is another important
legislative document that will govern IP rights in the United Kingdom in a
post-Brexit scenario. Indeed, the European Union (Withdrawal) Act 2018,
which was adopted by the UK Parliament and received royal assent on 26 June
2018, importantly contains provisions that convert directly applicable EU law
into UK domestic law when Brexit becomes a reality. This means that all Decisions
and all Regulations, such as the EU Trademark Regulation and the Community Design Regulation, will be incorporated
in UK law. As for Directives, which must be implemented in the domestic law of
member states, the UK decided to preserve such legislation, such as the Design Right (Semiconductor Topographies) Regulations 1989, which implemented the Topography Directive.

The above overview of main principles in our opinion
already illustrates the sheer complexity of this matter and the vast legal task
that Brexit entails. A challenge with many tentacles, and this is only the
beginning.