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What are the immediate effects of the Brexit referendum on my intellectual property rights?

What are the immediate effects of the Brexit referendum on my intellectual property rights?
The UK is at the moment still a member of the EU and has not yet officially filed to leave it. This means that all EU regulations are still effective. Therefore the Brexit referendum does not have an immediate effect on either your European Union trade marks, registered or unregistered Community designs or European Patents.

What will be the terms of the withdrawal agreement between the EU and the UK regarding IP rights?

It is currently impossible to foresee the results of the forthcoming negotiations between the EU and the UK. Possibilities could be:

continuing validity of the existing EU IP rights, or
automatic transformation into British law or
having to reapply in the UK for your IP rights.

While the first or second solution would be favourable, especially because the priority of the right would likely be maintained, the third one would cause significant additional effort and costs.

What will be the effects on my existing intellectual property rights after Brexit is executed?

Trade marks and designs: the scope of protection of the European Union trade mark and the Community design will be reduced in territory so there will be no protection in the UK. The future of those existing trade marks and design rights in the UK-territory will depend on the withdrawal agreement between the EU and the UK.

With that in mind, you should check your portfolio and single out trouble spots (see also no. IV.).
Patents: The European Patent Convention will not be affected at all by Brexit because it is not an EU organisation.
For the effects on the Unitary Patent, see no. XI

What are the risks?

The worst-case scenario would be that European Union trade marks and Community designs become ineffective in the UK without any kind of transformation into British IP rights, which would mean losing the priority of the original EU registration in the UK.

Trade marks and designs could be registered in bad faith by whoever is the fastest, but this scenario seems unlikely, as neither the EU nor the UK would benefit or have any interest in this state of uncertainty. The Community unregistered design could give rise to a gap in protection even if there were to be a transformation mechanism. The Community unregistered design protects the lines, contours, colours, shape, texture or materials of the product or its ornamentation – unlike the UK unregistered design, which only protects the shape or configuration of an article and expressly excludes surface decoration. However, to ensure that you are on the safe side see possible solutions in no. V.

There are no risks regarding patents under the European Patent Convention.

What would be the safest solutions regarding European Union trade marks and Community Designs?

The registration of a national UK trade mark or design or a registration according to an international agreement (e.g. Madrid Agreement or Protocol) would be a way to ensure that – regardless of any kind of withdrawal agreement – your IP-rights are protected in post-Brexit UK. If, in the past, you have relied on an unregistered Community design you may need to consider obtaining registered rights. Unlike the UK unregistered design, the UK registered design also protects the lines, contours, colours, shape, texture or materials of the product or its ornamentation.

The UK also intends to ratify the Hague Agreement which provides a solution for registering up to 100 designs in over 65 territories through filing one single international application. It is expected to be introduced in the UK in 2017.

These measures however would cause additional costs (see no. IX.) which later – depending on the withdrawal agreement – could prove to have been in vain. Therefore you should be weighing the importance of your IP right(s) in the UK market against those additional costs: If you are heavily dependent on your IP right(s) you might not want to take any risk and therefore consider registering a UK IP right.

The alternative is to only monitor the negotiations between the EU and UK. Because of the ongoing effectiveness of European law and the expected timespan of the withdrawal negotiations at this stage, there might still be enough time left to react to new developments.

What changes regarding litigation and enforcement do I have to consider?

There are no immediate changes. Regulation No 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters will be effective in the UK as long as it is a member of the EU.

If the withdrawal agreement fails to establish regulations on this matter, there is an international agreement on the recognition and enforcement of judgments relating to civil or commercial matters from 1972 between Britain, Belgium, France, Germany, Greece, Italy, Ireland, Luxembourg, The Netherlands, Portugal and Spain. The UK also has bilateral treaties with several other European countries.

Therefore European judgments will at least stay enforceable in the above-mentioned countries in post-Brexit UK.

What do I have to consider if I want to register a new intellectual property right in multiple states with a focus also on the UK?

If you want to apply for new trade marks in multiple states and the UK is one of the important countries for your business, you might want to consider a national UK trade mark or a trade mark according to the “Madrid Agreement Concerning the International Registration of Marks” of which the UK is part. Registering an EU trade mark could prove not to be a long-lasting protective measure for the UK.

The same goes for designs, so a national registration in the UK should be considered.
There will be no changes to the registration process for the European Patentas it will still be effective in post-Brexit UK.

What do I have to consider regarding license agreements?

An execution of Brexit would affect license agreements if an EU trade mark or Community Design is licensed for the UK and this territory drops out of the scope of protection.

Therefore, you should draft new contracts with the worst-case scenario of a possible withdrawal agreement in mind. If an EU trade mark or a Community Design is licensed, you should explicitly regulate that, in the event a Member State leaves the EU, the licence includes national or international IP rights as a substitute.

For existing license agreements you have two options:
You do not renegotiate your contracts. It is likely that national courtsmight rule that the licence includes national or international IP rights as a substitute, if a Member State leaves the EU (supplementary interpretation of the contract), or
if the first option seems too risky (e.g. because of the high commercial value of the licence for the UK territory), you could try to renegotiate or make an amendment to the contract.

Does Brexit cause any additional costs regarding the protection of my IP rights?

There will be no immediate additional costs because of the Brexit referendum. However, adjusting contracts and other measures to prepare for the worst case will cost time and money.

If you decide to register your IP in the UK now, the registration fee for a UK trade mark in one class is GBP 170 (about EUR 200.00), and GBP 50 (about EUR 60.00) for each additional class.

The registration fee for a UK registered design is GBP 60 (about EUR 70.00) for your first design, the fee for each extra design is GBP 40 (about EUR 50.00).

I want to buy a business. What do I need to consider regarding IP-rights?

Part of any due diligence should be to do the same checks which we have advised for your own portfolio on the targets portfolio. Are the IP-rights valid in post-Brexit UK? Can existing contracts be renegotiated if necessary? (see no. VIII.)

What are the effects on the Unitary Patent?

The effects on the Unitary Patent, which in its current shape only comes into force if it is ratified by the UK, cannot yet be predicted. It is safe to say that the Unitary Patent would be less attractive without the UK and there is a possibility that the whole project itself is endangered. Brexit will surely delay the process, some say for at least two years. However, Germany has taken the first steps to ratification and the UK – once one of the driving forces of the Unitary Patent – is seeking a way to become part of the Unitary Patent system nevertheless. The idea of a Unitary Patent with the UK as a member is not dead yet, but a Unitary Patent without the UK is also still possible.

What should I do right now?

Your first step should be to check your portfolio and evaluate your interests in the UK. Which of your IP-rights are affected by Brexit? Would they be protected in the EU as well as post-Brexit UK, regardless of any withdrawal agreement? Right now is the time to evaluate those questions and prepare, if necessary.
Step two could be to amend your old and new contracts if necessary (see no. VIII.).
Step three should be to monitor the negotiations between the EU and UK in order to be able to react to new developments and challenges.

Compliments of CMS – Law – a member of the EACCNY