Brexit - the future of IP law in the UK

Partner Gordon Harris and principle associate Ailsa Carter discuss the potential changes for intellectual property (IP) law in the UK in light of Brexit. IP law in the UK is currently framed by a combination of EU law and UK law. The relative contributions of EU and UK law differ across different areas of IP law, for example in respect of patents, trademarks, designs, copyright, etc. Much UK law has been enacted in order to give effect to international treaties to which the UK is a signatory state

Current Legislative Framework

IP law in the UK is currently framed by a combination of EU law and UK law. The relative contributions of EU and UK law differ across different areas of IP law, for example in respect of patents, trade marks, designs, copyright, etc. Much UK law has been enacted in order to give effect to international treaties to which the UK is a signatory state.

There are many types of IP right; this chapter considers the types that are more commonly the subject of dispute in the UK. At present, with the UK an EU member state, questions of jurisdiction regarding the courts of the UK and of different EU member states are governed by EU Regulation 1215/2012 (on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters). Proceedings concerned with the registration or validity of patents, trade marks, designs or other similar rights are reserved to the courts of the member state of deposit or registration, although the position differs for unitary EU-wide rights.

Patents

In basic terms, there are two systems pursuant to which a patent may be granted covering the UK:

• Under the national system, an application is made to the UK Intellectual Property Office (UKIPO), for a 'GB' patent which covers the UK. The grant of a GB patent, and any subsequent questions of infringement and validity, are governed by the UK Patents Act 1977 and associated legislation. (A GB patent may alternatively be designated as part of a Patent Cooperation Treaty (PCT) application, a system that enables some consolidation of patent applications made internationally.)
• Under the European patent system, an application is made to the European Patent Office (EPO) for a European patent designating the UK (an 'EP (UK)'). The system provides for the centralised application, prosecution and grant of patents (as a bundle of national designations) in and by the EPO. Aside from the EPO's remit to hear post-grant oppositions filed within the first nine months of grant, questions of infringement and validity of each national designation are a matter for the courts of the relevant country. In the UK, questions of infringement or validity of an EP (UK) patent are governed by the Patents Act 1977. (A European patent may alternatively be designated as part of the PCT system.)

The UK Patents Act 1977 is framed so as to comply with the terms of the European Patent Convention 1973 (EPC) and, in some respects, the Community Patent Convention 1975 (CPC). The EPC is an international agreement pursuant to which the system for grant of European patents was established. It was made outside the remit of the EU. The CPC was agreed between the member states of the European Economic Community (now the EU) of the time, with a view to providing a unitary patent system. The CPC was never ratified but many signatory countries, including the UK, aligned their laws regarding patent infringement to the provisions of the CPC.

Patent law in the UK is therefore currently outside the remit of the EU legislative framework, with a small number of exceptions, most notably: defences which are based upon EU competition law; and the relief awarded by the court for infringement must be compliant with the Intellectual Property Enforcement Directive 2004/48 (IPED).

However, a significant proposal is in the pipeline that would entwine UK patent law far more closely with EU law. The proposal is for the establishment of a 'Unified Patent Court' (UPC), which would have jurisdiction to resolve patent disputes covering much of the EU. The UPC's jurisdiction would cover (i) European patents which are not registered by their proprietors as 'opted out' of the new system, and (ii) new unitary patents (UPs) that would cover the EU member states that choose to participate in the new system.

The new system would represent a fundamental change to the patents landscape in Europe, supplementing, complementing and replacing aspects of the existing system in various ways.

The key EU legislation that would govern the new system is in the form of Regulations, namely 1257/2012 (creation of unitary patent protection), 1260/2012 (language regime) and 1215/2012 (jurisdiction and recognition and enforcement of judgments as amended). Before the UK's vote to leave the EU, the new system was expected to come into force in 2017. However, at the time of writing, there is uncertainty not just as to the UK's involvement, but also as to the timetable for, and shape of, the UPC and UP system more generally. At present, with the UK one of the three EU Member States in which the highest number of European patents have effect, the system will come into force only after the UK has ratified the Agreement on a Unified Patent Court, which is an international treaty. It is unclear whether the UK will do this.

Supplementary protection certificates

A supplementary protection certificate (SPC) is a form of intellectual property that extends patent protection in respect of pharmaceutical or plant protection products in qualifying circumstances. The term of an SPC is intended to compensate, to some degree, for the period elapsing between the filing of an application for a patent and the grant of authorisation to place the relevant product on the market.

For EU member states, including the UK, SPCs are granted at the national level by the relevant patent office (for the UK, the UKIPO), pursuant to European legislation which has effect across the EEA. EU Regulations 469/2009 and 1901/2006 (medicinal products) and 1610/96 (plant protection products) govern the SPC regime, along with UK implementing regulations.

Designs

There are four systems pursuant to which design protection may come into existence covering the UK:

1. Under the Community designs system (Regulation 6/2002), an application may be filed with the EU Intellectual Property Office (EUIPO) for a registered design covering the EU. A Community registered design is a unitary right which may be enforced or challenged for the whole of the EU in a single court action.
2. Under the Community designs system (Regulation 6/2002), Community unregistered design right arises automatically in qualifying circumstances. It protects the appearance of the whole or part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or its ornamentation. Questions of infringement and subsistence are considered for the whole of the EU in a single court action. The term of protection is three years from the date the design is first made available to the public.
3. Under the national system, an application for a registered design may be made to the UKIPO, which may grant a registered design covering the UK. Registration, and any subsequent questions of infringement and validity, are governed by the UK Registered Designs Act 1949 and associated legislation, which has been amended in order to comply with harmonising EU-wide legislation, in particular Directive 98/71.
4. Under the national system, unregistered design right covering the UK arises automatically in qualifying circumstances. It protects the shape or configuration of the whole or part of an article and lasts for (the earliest of) ten years from first sale or 15 years from first creation (dates calculated from the end of the relevant calendar year). It is considered to offer slightly different, complementary protection from that offered by the unregistered Community right. Questions of subsistence and infringement are governed by the UK Copyright Designs and Patents Act 1988 (CDPA).

The relief awarded by the court for infringement must be compliant with the IPED.

Copyright and related rights

Copyright and related rights are governed in the UK by the CDPA, which has been framed so as to give effect to the terms of international treaties, for example the Berne Convention of 1886, and European legislation.

At present, there is no unitary copyright protection in the EU and questions of subsistence and infringement are within the remit of the national legislatures. However, the EU has legislated in areas closely relating to, and to some extent overlapping with, the remit of national legislatures, for example, the InfoSoc Directive 2001/29, Directive 2006/115 on rental and lending rights, and Directive 96/9 on the legal protection of databases. In addition to harmonising copyright protection in databases, Directive 96/9 created an EU-wide sui generis database right protecting non-creative 'sweat of the brow' in databases.

In addition, the relief awarded by the court for infringement of copyright and related rights must be compliant with the IPED.

The complementary EU legislation, and the Court of Justice of the European Union's (CJEU) interpretation of such legislation, has led to evolution in the UK authorities regarding the interpretation of the CDPA, for example as regards what constitutes 'originality' in copyright law.

Trade marks

There are, essentially, three systems pursuant to which a trade mark may be protected in the UK:

• Under the EU trade marks system (Regulation 207/2009 as amended), an application may be filed with the EUIPO for a registered trade mark covering the EU (an 'EUTM'). An EUTM may be enforced or challenged for the whole of the EU in a single court action. (An EUTM may alternatively be sought by designating an EUTM in an international registration under the Madrid system.)
• Under the national trade marks system, an application may be filed with the UKIPO for a registered trade mark covering the UK. Registration, and questions of infringement and validity, are governed by the UK Trade Marks Act 1994 and associated legislation (as amended), which have been framed so as to comply with harmonising EU-wide legislation, in particular Directive 2008/95. (A UK-registered trade mark may alternatively be sought by designating the UK in an international registration under the Madrid system.)
• 'Passing off' is a tort that can protect unregistered trade marks, names, logos or get-up. The tort is established where there is goodwill in the UK, misrepresentation and damage (or threat thereof). A creature of the common law, passing off is outside the remit of EU law.

Confidential information and trade secrets

In the UK, the common law protects information that has the necessary quality of confidence and is disclosed in circumstances imparting an obligation of confidence. Mechanisms exist pursuant to which confidence in information may be protected in the course of litigation, where considered appropriate by the court.

A new EU Directive, number 2016/943, was published on 5 July 2016, beginning a term of two years in which member states are required to incorporate necessary provisions into domestic law. The existing UK law is considered to be largely compliant with the minimum standards set by the legislation but review will be necessary.

Transitional Framework

The UK's referendum had no legal effect upon the UK's membership of the EU. The UK remains a member of the EU.

The UK government has indicated that it will not formally notify the European Council of its intention to leave the EU (ie trigger Article 50 of the Lisbon Treaty) before the end of 2016. The UK is therefore expected to remain a member of the EU until at least early 2019.

As long as the UK remains a member of the EU, the existing legislative framework governing IP law in the UK will remain unaffected. New EU legislation, and amendments to existing EU legislation, will continue to apply to the UK. The government has indicated that it plans to continue its intended schedule for implementation of EU Directives, for example the amendments to national legislation necessary to give effect to Directive 2015/2436 (which recasts Directive 2008/95). However, faced with the unprecedented workload entailed in legislating for a post-Brexit legal framework, priority will probably need to be given to resolving the uncertainties and filling the gaps that will emerge upon Brexit.

As long as the UK remains a member of the EU, the UK courts will continue to interpret EU legislation, and UK legislation intended to give effect to EU legislation, in accordance with the case law of the CJEU. However, where questions arise as to the interpretation of EU law in litigation in the UK, there will come a time where reference to the CJEU will become impractical. Figures for the duration of proceedings before the CJEU released in 2015 indicated a mean for intellectual property cases of approximately 15 months. Once Article 50 has been triggered, it may, therefore, be sensible for the Ministry of Justice to issue guidance on the end of further references. Without the availability of the reference mechanism, UK courts will need to rule for themselves how best to interpret the legislation in force in the UK. The UK Supreme Court will be the final arbiter.

The government, supported by the Department for Business, Energy and Industrial Strategy and the Ministry of Justice, must undertake a thorough review of the UK's IP law framework, to identify where legislation is needed, and to legislate accordingly, in order to manage the Brexit process as smoothly as possible. However, where the legislative gaps arise will be determined by the UK's 'headline' post-Brexit relationship with the EU and the outcome of associated negotiations.

For stakeholders - lawyers, judges, academics, civil servants, businesses, charities and others - the transitional period, particularly the early months of it, offers an unprecedented opportunity to assist in a strategic review of UK legislation relating to IP. As well as being well placed to identify where the legislative gaps will emerge in different Brexit scenarios, stakeholders can use the period to identify areas of the law which are commonly considered in isolation but should now be reviewed in a more holistic fashion, for example, the interplay between competition law defences and patent infringement, and between regulatory law (particularly in respect of pharmaceuticals and medical devices) and patent validity.

Post-EU Exit

The nature of the UK's relationship with the EU following its formal exit will have an impact upon the legislation that remains in force.

Blanket repeal of the European Communities Act 1972, which gives effect to EU legislation in the UK, would cause EU legislation which has not been incorporated into national law to fall away from the UK legislative framework. In basic terms this would mean current EU Regulations (which generally do not require national implementation) disappearing from the UK's legislative framework.

In many instances, emerging gaps could be filled, at least temporarily, by an Act of Parliament listing EU legislation that will be deemed to continue in force in the UK until further notice.

However, this approach would not be appropriate in respect of all existing EU legislation. For example, the unitary EU-wide regimes for the grant and enforcement of intellectual property rights present more complex challenges and require more sophisticated solutions. Strategy and negotiation will be needed regarding continued UK involvement in those regimes, and if the UK does not remain involved, to manage the UK's extrication.

Three Brexit scenarios are considered in the following sections.

The UK leaves the EU but remains part of the EEA

The relationship between EEA states and the EU is governed by the EEA Agreement. A portion (the size of which is unclear) of the EU's legislation is incorporated into the EEA Agreement by an ongoing adoption process. The UK would need to decide (and legislate accordingly) whether adopted legislation would enter into force in the UK automatically, or whether a transposition process would be employed.

Where a question as to the interpretation of adopted EU legislation arises in the course of litigation in an EEA state, reference is made not to the CJEU, but to the European Free Trade Association (EFTA) Court. The EFTA Court has comparable judicial functions to the CJEU, its aim being to ensure uniform interpretation in the application of EU law by the national courts of the EFTA states.

Outside the EU, Regulation 1215/2012 (jurisdiction and recognition and enforcement of judgments) would not govern disputes regarding jurisdiction involving the UK. Instead, questions of jurisdiction between the UK and EU (or EEA) states could be expected to be governed by the Lugano Convention (2007), which contains equivalent provisions in respect of IP rights.

The consequence of the EEA's legislative adoption process is that existing EU legislation that contributes to the UK intellectual property framework would fall, broadly, into three categories:

(a) EU IP legislation adopted into the EEA Agreement

Of the EU legislation relating to intellectual property mentioned in section 1, the following has been incorporated into the EEA Agreement and so would remain applicable to the UK:

• SPCs: Regulations 469/2009 (medicinal products) and 1610/96 (plant protection products)
• Designs: Directive 98/71 (relevant to national registered designs)
• Copyright and related rights: Directives 2001/29/EC (InfoSoc), 2006/115 (rental and lending rights) and 96/9 (legal protection of databases)
• Trade marks: Directive 2008/95 (harmonising national law)

Within the EEA, some portion of future EU legislation in respect of intellectual property would similarly become applicable to the UK also. This could, for example, include EU initiatives in respect of a digital single market, digital contracts, geo-blocking, amendments to the law of geographical indications, designs SPCs and trade secrets.

(b) EU IP legislation marked as relevant by the EU but not incorporated into the EEA Agreement

Of the EU legislation relating to intellectual property mentioned in section 1, the following legislation has not been incorporated into the EEA Agreement, and so would not, pursuant to the EEA Agreement, remain applicable in the UK; the legislation has, however, been indicated as relevant to EEA states by the EU:

1. Intellectual property generally: Directive 2004/48 (IPED)
2. SPCs: Regulation 1901/2006 (in respect of medicinal products for paediatric use, extending the term of SPC protection in qualifying circumstances)
3. Trade marks: Regulation 207/2009 and amending Regulation 2015/2424 (EUTMs); Directive 2015/2436 (recasting Directive 2008/95)
4. Confidential information: Directive 2016/943 (trade secrets)

At the time of writing, Directives 2015/2424 and 2016/943 (which remain within their respective windows for national implementation) and Regulation 1901/2006 remain in the scrutiny/adoption process and so may be incorporated into the EEA Agreement in time, whereas Directive 2004/48 and Regulation 207/2009 are considered by the EEA and EFTA states not to be relevant for incorporation into the EEA Agreement.

With some exceptions, the UK could legislate so as to provide that, upon Brexit, legislation in this category remains in force in the UK. This would prevent gaps arising in respect of SPCs, and any remedies that are available pursuant to the IPED, at least pending replacement legislation in the UK. For the longer-term outlook in such areas, please see 3.3.

However, Regulation 207/2009 (as amended) establishes a unitary trade mark system. Granted EUTMs cover the EU and jurisdiction regarding infringement and validity is pooled into the courts of the Member States designated as EU Trade Mark courts, with jurisdiction regarding infringement covering the EU (for example the High Court of England and Wales and the Intellectual Property Enterprise Court). Following Brexit, EUTMs would no longer cover the UK and UK courts would no longer have jurisdiction over EUTMs. A simple statement that Regulation 207/2009 remains in force in the UK would not impact upon this.

Therefore, in the scenario that the UK emerges from Brexit as a member of the EEA, it would need to do one of the following:

1. enact transitional and replacement UK legislation in respect of EUTMs, for example to ensure that EUTMs continue to be recognised by the UK courts as covering the UK, at least until their next renewal date, and to enable right holders to maintain protection in the form a UK trade mark after that point; or
2. agree with the EU that the UK will remain within the EU trade marks regime

Membership of the EEA will only be possible for the UK if agreement is reached between the UK and the EU (and the other EEA members Iceland, Liechtenstein and Norway) as to the terms of the UK's membership. In view of the EU's indication that Regulation 207/2009 is applicable to the EEA member states, continued participation in the EU trade marks regime could, potentially, be included within the UK's negotiations, but the roles of the EFTA Court and the CJEU in the context of the unitary right would need to be agreed upon.

(c) EU IP legislation considered by the EU and EEA not to be relevant for incorporation into the EEA Agreement

Of the EU legislation relating to intellectual property mentioned in section 1, the following legislation is considered by the EU and EEA not to be relevant for incorporation into the EEA Agreement (and has not been incorporated):

• Designs: Regulation 6/2002 (Community designs)
• UPC Regulations (for the proposed unitary patent regime): 1257/2012 (creation of unitary patent protection), 1260/2012 (language regime), 1215/2012 (jurisdiction and recognition and enforcement of judgments as amended)

This category of legislation concerns the establishment of the existing unitary regimes for designs and the proposed unitary regime for patents. In the context of negotiations that result in the UK emerging from Brexit as a member of the EEA, the continued involvement of the UK (and the roles of the EFTA Court and CJEU) in each these regimes could potentially be agreed. The UK could then legislate to provide that the Regulation 207/2009 (as amended) continues in force in the UK until further notice.

If no such agreement is reached, the UK would need to legislate to extricate the country from the unitary designs regimes.

Transitional and replacement UK legislation would be needed in respect of registered Community designs, for example to ensure that existing rights continue to be recognised by the UK courts as covering the UK, at least until their next renewal date, and to enable rightholders to maintain protection in the form of a UK trade mark after that point.

In respect of Community unregistered design right, the UK would need to decide whether to legislate so as to continue to recognise a right of this scope as covering the UK. Existing UK unregistered design right is, as noted above, of slightly different scope. Absent legislative provision, Community unregistered design right would cease to cover the UK.

In the absence of agreement between the UK and the EU regarding ongoing involvement of the UK in the UPC and UP system, the existing UK patents framework would remain intact. (The UK Parliament has already passed legislation that would update UK patent law to accommodate the new patents regime, in the event that it comes into force with the UK involved.)

The UK leaves the EU but joins EFTA

The only country that is currently within the European Free Trade Area (EFTA) but not within the EEA is Switzerland. Switzerland's relationship with the EU is governed by 120 bilateral agreements. The agreements are fixed in time and do not adapt to evolving EU legislation. The task of keeping the agreement framework up to date is therefore time-consuming and resource-consuming, and is currently the subject of negotiation between Switzerland and the EU regarding the establishment of a framework institutional agreement.

In this context, the structure of any agreed framework governing the relationship between the UK, as a member of EFTA, and the EU, is uncertain.

The UK could only remain involved in any of the unitary trade mark, designs and (proposed) patent systems if agreement on this were reached with the EU, including as to the roles of the EFTA Court and the CJEU. In the absence of such agreement, UK legislation would be needed to extricate the country from the unitary trade mark and designs regimes, as discussed in 3.1.

Some of the remaining EU legislation listed in section 1 could be expected to continue to be applicable to the UK as a member of EFTA.

To the extent that the remaining EU legislation listed in section 1 did not remain in force in the UK, it would be possible to pass UK legislation providing that it be deemed to continue in force in the UK until further notice, in order to avoid legislative gaps emerging. (In practice, in respect of EU Directives, this would not be essential for a smooth Brexit transition since in the usual course UK statutes are amended in order to give effect to EU Directives where the government considers this to be necessary for compliance with the provisions of the relevant Directive). For the longer-term outlook in these areas, please see 3.3.

With the UK a member of EFTA, the Lugano Convention (2007) would be expected to govern questions of jurisdiction between the UK and other EU/EEA/EFTA states.

The UK leaves the EU and trades with the EU

In the scenario that the UK leaves the EU and trades with the EU pursuant to a bilateral trade agreement, any continued involvement of the UK in the existing unitary trade marks and designs regimes, and in the proposed UPC and UP system, would depend upon bilateral agreement. It could be expected to entail the UK submitting to the jurisdiction of the CJEU in respect of the relevant legislation.

In the absence of such agreement, the UK will need to legislate to extricate itself from the unitary trade mark and designs regimes, as discussed in 3.1 (b) and (c).

In respect of the remaining existing EU legislation listed in section 1 relating to intellectual property, the UK could pass legislation providing that it be deemed to continue in force in the UK until further notice, in order to avoid gaps emerging in the UK's legislative framework. (As mentioned above, for many EU Directives, this would not, in practice, be essential.)

Interesting questions emerge as to the extent to which UK courts would remain bound by CJEU rulings, or UK authorities based upon CJEU rulings. In practice, where UK judicial opinion differs from CJEU jurisprudence, gaps could be expected to emerge between the approach taken by the UK courts and the approach taken by the CJEU. This could be the case, for example, in respect of certain aspects of trade mark law. On the other hand, the UK courts have traditionally considered and drawn upon jurisprudence from other countries, both within and outside the EU, when developing the law in the UK. It is therefore to be expected that UK judges will continue to find inspiration from CJEU rulings, where they consider it appropriate to do so. This could be the case, for example, in respect of the availability of relief pursuant to the IPED.

In the course of time the UK could be expected to enact national legislation updating and replacing both EU law and national law relating to IP, beyond the legislation needed to extract the UK from the unitary trade mark and designs regimes. Overhaul could be expected in respect of SPCs and, perhaps, to design law. The UK may take steps to develop its law in respect of a digital markets, digital contracts, geo-blocking, geographical indications and trade secrets in line with the law in the EU, or it may not.

Questions of jurisdiction arising in respect of the UK and EU/EEA/EFTA countries could potentially be governed by one of the Lugano conventions or the Brussels Convention of 1968; the UK will need to consider its strategy in this respect. Each of these treaties reserves matters concerned with the registration or validity of patents, trade marks, designs, or other similar rights to the courts of the state of deposit or registration.

Concluding comments

IP law in the UK will continue to evolve following Brexit. The review of primary legislation entailed in exiting the UK from the EU legislative structure will, however, present the UK with opportunities both to adopt improvements in line with developments in EU legislation and to make changes considered valuable from a national perspective.

However, in the context of widespread international agreement on many aspects of the law regarding patents, trade marks, and copyright, and the readiness of the UK courts to consider jurisprudence from other countries, the scope of divergence from international norms is likely to be limited.

Finally, discussion of the impact of Brexit upon the UK legislative structure is incomplete without reference to the consequences for the following:

Outside the EEA, and in the absence of agreement to the contrary, the geographical boundaries within which exhaustion of many intellectual property rights occurs will be reduced. Placing products on the market in the UK will not exhaust rights relating to remaining EU and EEA countries, and placing products on the market in the EU or EEA will not exhaust UK national rights. The scope of the UK's customs regime will be impacted accordingly (and legislation in this area will be needed in consequence).

From a practical perspective, business should also be aware of the need to ensure that terminology used in licences and other agreements is drafted in such a way that extraction of the UK from the EU and unitary IP right regimes can be accommodated. Existing arrangements which cover the EU or EEA as a defined territory, or which concern unitary IP rights, will need to be reviewed in order to consider fitness for purpose following Brexit.

This article was originally published in the Chambers and Partners Legal Brexit, Global Practice Guide 2016.