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Brexit – what could this mean for intellectual property?


31st Jul 2015

It has now been over two months since the UK general election concluded with a surprise victory for the Conservative party. The dust has now settled and the media has moved on. While few in the media considered the effects of this historic election result on intellectual property, the Conservative victory does have some interesting potential consequences on intellectual property in the UK and Europe.

A key policy of the Conservative manifesto was a referendum on the UK’s membership of the European Union. The European Union Referendum Bill is now on its passage through Parliament, and the referendum will now almost certainly happen.

You may wonder what this has to do with intellectual property, but the prospect of a British exit (BREXIT) could have some intriguing consequences for patents and other forms of IP in the UK and Europe. We should stress from the outset that a UK exit is widely considered to be unlikely. However, should it happen, what could this mean for patent systems and other forms of IP in the UK and Europe?

If the British people do decide that the UK should leave the EU, then withdrawal will not occur immediately. Firstly, the UK will have to formally notify the European Council. EU treaties will then cease to apply in the UK when a withdrawal agreement negotiated between the EU and the UK enters into force, or failing that, after two years from the European Council being notified. The two year term could be extended by agreement between the UK and the EU.

Bearing in mind the complexity of the interrelationship between the UK and the EU, it is likely that the negotiation period will be long. It is likely that transitional provisions will be established as part of the negotiated withdrawal, and transitional provisions are likely to be applied to the various EU wide IP rights currently in place.

The Current European Patent System (EPC)

A British exit from the EU will not affect the current European patent system governed by the European Patent Convention (EPC). If the UK were to leave the EU, it will still be possible to obtain a UK Patent via the EPC system, and British European patent attorneys will still be able to represent applicants in all proceedings before the European Patent Office.

The Unitary Patent System

The new EU Unitary Patent and Unified Patent Court system moved one step closer last May, with the CJEU dismissing the latest Spanish challenge. This new system will only apply to participating EU member states; a UK exit from the EU will thus have an impact on the new Unitary Patent system, but to what extent?

The UK is one of three countries that must ratify the Unified Patents Court (UPC) agreement. However, if the British people vote to leave the EU, then the issue of ratification will probably not topple the whole system. This is because the relevant article of the UPC agreement (Article 89) specifies that the court agreement must be ratified by the three EU Member states in which the most European patents have effect in the year preceding the year in which the agreement was signed.

If the UK leaves the EU, this mandatory ratification will fall to another member state. Some commentators have suggested that this will be the Netherlands, although data for European patent designations 1 seems to suggest that Italy could be the country with the fourth highest number of European patents having effect. However, relying on data relating to designations may not be wholly indicative because it does not take into account patents that are withdrawn after validation.

Italy signed up to the Unified Patent Court agreement, so it is possible for Italy to ratify the agreement. However, if it turns out that Spain had the fourth largest number of European patents in effect, then this will lead to the strange situation in which Article 89 requires Spain to ratify the agreement, despite Spain not being part of the UPC agreement itself. At the moment, it is not completely clear which country along with France and Germany will need to ratify the agreement, should the UK leave the EU.

The UK is set to hold one of the three branches of the Central Division of the Unified Patent Court. Article 7(2) of the UPC agreement specifies that the Central Division shall have its seat in Paris, with sections in London and Munich. The UK branch was assigned cases relating to “Human necessities”, Chemistry and metallurgy (UPC agreement Annex 2). Interestingly, there does not appear to be anything in the UPC agreement to prevent the Central division from remaining in London if the UK were to leave the EU.

To move the London branch is likely to require amendment of the UPC agreement, which could be time consuming and will probably require participating states to ratify the agreement again. Thus, if the UK leaves the EU, then there is a reasonable chance London will keep its branch of the Central Division. If this were to happen, then appropriately qualified British European patent attorneys would still be able to represent parties before the central division in London (Article 48 UPC agreement). Indeed, appropriately qualified European patent attorneys should also be able to represent parties in the other branches and divisions of the Unified Patents Court across Europe.

If the UK leaves the EU, then the Unitary Patent will be weaker because it will not cover one of the major European economies. It will, of course, still be possible to obtain UK patent protection via European patents granted under the EPC and validated in the UK.

Under the new UPC system, the Unified Patents Court will have jurisdiction over classic European patents granted under the EPC, in addition to Unitary Patents. This aspect of the system has concerned many who are uneasy with the legal uncertainty that comes with a whole new court system, as well as other perceived drawbacks, such as the possibility of bifurcation. If the UK were to leave the EU, then the UK part of a European patent would need to be litigated in UK courts, and not in the new UPC court system.

The Current UK Patent System

As discussed above, BREXIT will not affect the current European patent system, and it will not affect the ability to obtain UK patent protection via the EPC. While the UK Patents Act has implemented various EU directives over the years, for example the Biotech Directive and the Bolar Directive, there is no reason to suppose these implementations will be repealed if the UK leaves the EU.

Supplementary Protection Certificates

Supplementary Protection Certificates (SPCs) for medicinal and plant protection products are governed by EU regulations, so a UK exit from the EU would probably require amendment of UK Patents Act or a new act to enable SPC protection to continue to apply in the UK. This will also depend on whether the UK stays in the European Economic Area (EEA). Bearing in mind the importance of SPCs to UK based innovators, it seems highly likely that some form of SPC protection will be established if the UK decides to exit. As for SPCs that are in force at the time of exit, it seems likely that transitional provisions will be established, so these SPCs do not suddenly cease to have effect in the UK.

Registered Community Designs (RCDs) & Community Trade Marks (CTMs)

A UK exit from the EU would have a significant effect on RCDs and CTMs. New design filings and Community trade marks would not cover the UK, so separate applications would have to be filed in the UK. There is also the question of what happens to RCDs and CTMs that are already registered. It is likely that during the withdrawal negotiations, transitional provisions will be agreed and implemented for existing rights in force. It therefore seems unlikely that RCDs and CTMs would suddenly cease to have effect in the UK and some form of conversion would almost certainly be put in place.

Conclusion

A BREXIT will inevitably delay progress of the new Unitary Patent system, but it seems unlikely that it will topple it. A UK exit will not affect the granting of patents under the EPC, and there is no prospect of the UK leaving the EPC. British European patent attorneys (EPA) will still be able to represent applicants before the EPO; and appropriately qualified EPAs will even be able to represent parties in proceedings before the Unified Patents Court. However, the effect on the EU Trade mark and EU Design systems may be more significant, although the issues raised by a BREXIT will presumably be reasonably straight forward to overcome during the negotiated withdrawal process.

A UK exit seems unlikely, but if we do receive another surprise in 2016, then it is reassuring to know that the effects on current UK and European patent systems will be minimal, and the new Unitary Patent system will probably go ahead, just without the UK.

This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking before any action in reliance on it.

Author
Zack Mummery
Senior Associate
About the author

Would you like to know more? You can talk to Zack Mummery who will be able to help. Call +44 (0)20 7242 0901

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