Is Brexit an IP Exit?

Summary

Voters in the U.K. recently passed a referendum paving the way for the U.K. to leave the European Union (EU). In response, British Prime Minister David Cameron resigned on Wednesday, July 13, 2016, with Theresa May as his successor.  These events have raised many questions within the intellectual property community, including U.S. companies with a European intellectual property presence.

In sum, should the U.K. actually leave the EU, patent, trademark or design applications or registrations directly filed in the U.K. should not be significantly affected.  In addition, patents in the U.K. based upon an EPO application should also not be significantly affected.  However, there currently remains some uncertainty with respect to the impact of this referendum, should it become law, as to EU Trademarks, EU Community Designs, and the proposed Unitary Patent.

Background

The EU is a political and economic partnership established through treaties between a large number of European countries. On June 23, 2016, a referendum was held in the U.K. to determine by public vote whether the U.K. should remain in or leave the EU. The vote to leave, or “Brexit,” passed by a 52%-48% margin, in the highest voter turnout in almost 15 years. However, the referendum is not self-executing. In order to begin the formal steps of leaving the EU, the U.K. needs to officially invoke an agreement known as “Article 50” of the Lisbon Treaty. The timing of any such Article 50 invocation is uncertain. Additionally, even after invocation of Article 50, EU law will continue to apply in the U.K. for at least a two-year period, during which the U.K. will negotiate the specific terms of its exit with the EU governing body. Brexit nonetheless raises questions as to its potential impact on European Patents, Trademarks, and Designs.

Patents

Patents can presently be granted in the U.K. through either the U.K. Intellectual Property Office (UKIPO) or the European Patent Office (EPO).  The EPO provides for centralized examination and validation through individual European countries, including the U.K.

Brexit is unlikely to affect the validity of existing patents or the ability to obtain an issued patent in the U.K. filed through either the UKIPO or the EPO.   A direct application in UKIPO is based upon U.K. law and international treaties with other countries regarding priority, and should not be affected by Brexit.  The EPO is based upon the European Patent Convention, which is separate from the treaties that establish the EU.

The Unitary Patent, which has been moving towards approval, provides for a single patent which can be granted for all EU-member countries, with a single Unified Patent Court for enforcement throughout the EU.  Prior to the Brexit vote, it was widely expected that the Unitary Patent and Unified Patent Court would be implemented by mid-2017.  However, it is likely that the uncertainty created by the Brexit vote will delay this implementation date. Moreover, many commentators believe that the U.K. is unlikely to be allowed to participate in the Unitary Patent and Unified Patent Court after it leaves the EU, as it would require the EU to provide the U.K. with a benefit without its corresponding EU obligations.

Trademarks

Trademarks can presently be registered in the U.K. through a national U.K. application, or an EU Trademark (EUTM) application, which is a centralized application covering EU member states.

A national U.K. application should not be affected by a potential Brexit, as it is based primarily on U.K. law, or treaties with other countries based on priority. Thus, U.K. or foreign entities can continue to protect their U.K.-specific marks under a national U.K. application, with a foreign priority claim where permitted.

However, rights under EUTM applications are available only within EU member states. Thus, should the U.K.’s exit from the EU be finalized, the protection provided by a registered EUTM mark may no longer apply in the U.K. However, most commentators believe that transitional provisions will be put into place to avoid a loss of these trademark rights upon the U.K.’s departure from the EU.

With the uncertainty as to whether Article 50 will be invoked, and if invoked, the uncertainty in the timing and terms that might be negotiated between the U.K. and the EU, owners of EUTM applications are encouraged to stay in contact with their IP attorneys and seek further trademark counsel as events unfold.

Designs

The situation for designs is similar to that for trademarks, as designs may also be protected either through U.K. national applications, or through EU Community Design applications, which are centralized applications covering EU member states. Thus, the same considerations discussed above for trademarks apply equally to designs.  U.K. national design applications should not be affected by Brexit, but EU Community Designs may no longer apply in the U.K., if the U.K. exits the EU. However, as for trademarks, many commentators believe that transitional provisions will be put in place to avoid loss of design rights upon the U.K.’s departure from the EU. Thus, as the formalization, timing and terms of Brexit gain more clarity, owners of EU Community Designs are also encouraged to seek further advice from their IP counsel.