Brexit and the Licensing Business: A Legal View

Posted by Christian Fortmann, LL.M. on July 07, 2016

The United Kingdom has voted to leave the European Union. We’ve already heard from Kelvyn Gardner about it, detailing his view on what that may mean for the licensing industry. My position looks in more detail at how a Brexit – if and when it finally comes about – might affect intellectual property rights, which, as we know, are the inevitable basis for any licensing deal.

Before I start digging into legal details, I must point out again that, for the moment being, nothing has happened. The UK (including Scotland) remains subject to European Union laws and obligations. Only if the UK administration informs the other member countries of the EU that they wish to leave will this trigger the Brexit. This would start after a transition period of two years during which negotiations will happen and should be concluded with the UK leaving the European Union – with or without new trade deals.

SO WHAT WILL THIS MEAN FOR INTELLECTUAL PROPERTY RIGHTS?

It’s actually difficult to say, because there are no precedents. There are a few international agreements (principally the Vienna Convention) in place which state that any acquired rights should remain in place. However not all EU countries have signed up to all of the relevant agreements. Much will depend on whether the United Kingdom remains part of the European single market with free movement of goods and services between European countries.

The information provided below is based on our current assessment of the situation. It could change and we shall try to keep this up-to-date for the LIMA membership.

TRADE MARKS AND DESIGNS

Currently trade mark and design protection in the UK can be obtained either through a national UK trade mark or design right protection or through a registration at the European Union’s IP office (EUIPO) in Alicante. In recent years, many international companies have preferred to use the Alicante route since this protection covers all 28 member countries of the European Union, including the UK, and is substantially cheaper than filing in each individual country.

Once the UK leaves, we assume that it will be possible to apply for a re-registration of EU trademarks and design rights as national rights in the United Kingdom, whilst maintaining the original application and priority dates. This might happen automatically or there may need to be a separate request submitted, depending upon the negotiation outcome. In any case, it is probable that once renewal fees need to be paid, then separate fees will also need to be paid to both the EU’s IP office and the UK’s IP office to keep the respective rights alive.

In the past, a similar situation has occurred for trademarks registered under the international system governed by the Madrid Agreement. It was possible for holders of such marks to inform WIPO that they wished protection to extend to further territories after the break-up of the original country, such as the Soviet Union and Yugoslavia in the 1990s. We assume that this will be possible when the UK leaves the EU, with or without Scotland.

PATENTS

Patents are likely to be the least affected rights, at least at present, as the European Patent Office is actually a separate body from the European Union. It will be possible, even after Brexit, for patent applicants to designate the UK. It’s not clear what will happen to the proposed Single European Patent, which was designed to extend protection to all EU member states. The relevant agreement was expected to come into force in 2017, but may be delayed because of the UK vote. In any case, once the UK leaves the European Union it will no longer be possible to include the UK as part of this patent protection.

COPYRIGHT

The EU has just started harmonising protection for copyright and neighbouring rights under its Digital Single Market initiative. No country in the EU requires registration of the rights and, under the Berne convention, copyright protection extends to all member countries. There is therefore unlikely to be any major change to copyright protection at this stage.

The EU has been proposing to harmonise some further aspects of copyright protection over the next few years to introduce a single market. It is probable that the UK will no longer be part of this harmonisation effort.

INFRINGEMENT

One of the major implications of the UK’s withdrawal will be the limitation of injunctions. It will no longer be possible to get a single injunction for infringement of a trademark or design right covering a number of European countries, including the UK. It will be necessary to go to a British court to obtain an injunction to cover the UK and separately to a court in the European Union for an injunction to cover other countries in Europe. This is similar to the need to go to a Swiss or Norwegian court if the holder of the IP right needs protection in these countries. With the difference that the UK market is more important than the aforementioned in terms of Licensing within the European context.

Similarly, it will probably be necessary to file a request for border seizure measures in the future with both the European customs authorities and the UK’s Border Force, which so far can be done with a simple EU customs authorities request.

LICENSING

As Kelvyn pointed out in his blog already, probably the most urgent item of work relates to licence agreements. Many recent IP licence agreements make the assumption that the European Union is a single territory and are valid for all countries in the EU. It is only possible to divide up licences into different countries under a very limited set of circumstances. In the future, however, it is probable that the UK will be treated differently and licenses may need to take this into consideration.

Cross European Licensing including the UK may become more complicated as the United Kingdom will no longer be covered by the European Union’s rules on active and passive marketing, etc.

LOOKING AHEAD

This is only a brief summary of the issues involved and does not represent legal advice. We shall update this information as the situation becomes clearer.

Christian Fortmann is a Patent and European Trademark and Design Attorney at 24IP Law Group.

Christian Fortmann, LL.M.

Christian Fortmann, LL.M.

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