This article was first published on Lexis®PSL Public Law on 11 May 2017.

What are the main areas of IP law affected by Brexit?

The main rights affected are those governed by EU regulations having direct effect, ie trade marks, designs and supplementary protection certificates. In these cases, without government action, the legal basis for these rights will simply cease to exist on Brexit. Not that that will be allowed to happen, since the government mantra is ‘no loss of rights’. But the question is how exactly will these rights be preserved? Patents are largely unaffected, but there are question marks over the unitary patent system and the Unified Patent Court (UPC). In addition, there are areas of law peripheral to IP rights, such as exhaustion of rights, competition law, enforcement (which is a much larger topic than just IP) and data protection. In all of these cases, IP practitioners will need to be aware of developments.

Focusing on trade marks, what are the issues?

As I say, the government has said that there will be no loss of rights, but for owners of EUTMs the main question is whether they will have to take any affirmative action or not.

Trade mark owners would like to see the conversion of EUTMs into UK national TMs adopting the so-called ‘Montenegro model’, that is with automatic conversion of their rights. In this case, the first actions required by owners would be in years to come when paying renewal fees. However, an alternative being mooted is the ‘Tuvalu model’ under which owners would have to opt in. Any such non-automatic process, of course, risks the chance of errors if owners inadvertently failed to take the required steps.

When will we know which model the government will adopt?

Unfortunately, in all of these cases, we may not know (at least for certain) for quite some time—perhaps only until a few months before Brexit.

What about designs?

It’s a similar story, but in some ways even more complicated because of the dual-registered and unregistered systems at both a national and EU level. Hence registered and unregistered rights need to be considered separately. For the registered rights the same principle applies as for trademarks, that is one could envisage a conversion (hopefully automatic via a Montenegro model) of Registered Community Designs into UK national Registered Designs. However, for the unregistered rights, it is very different. The rights have some overlap, but some major differences, both in terms of scope and duration of protection—the Community UDR is of three years’ duration as compared with the national UDR which is up to 15 years. The only way of avoiding a loss of rights, while avoiding extending the duration of the Community UDR, seems to be for the UK to create a second unregistered three-year design right in a mirror image to the Community UDR. Again there could be a Montenegro-style provision which deems all pre-existing Community UDRs as converting to the new three year national UDR, plus all new qualifying designs would benefit from the new UK UDR as well as (potentially) the existing national UDR.

And supplementary protection certificates (SPCs)?

At least SPCs are already a national right. What needs preserving is the legal basis for existing and future SPCs. However, it is not a simple case of copying and pasting the SPC regulations into UK law. Notably, having the duration dependent upon first marketing in the Community makes little sense in a post-Brexit context, at least assuming the UK is not a part of the single market. Hence some amendments will be required, and perhaps there is an opportunity to introduce more clarity into some of the SPC concepts, although that may be too ambitious given the pressures caused by Brexit to do the minimum to preserve rights and look at reforms only later. But even if there are no such wider-ranging changes in the legislation, in the longer term, with the UK not bound by case law of the Court of Justice of the European Union, one can see scope for the UK courts departing from some EU decisions.

Finally, what about the unitary patent and UPC?

Here we have to look at the short term and the long term.

In the short term it’s not so much Brexit as the UK parliamentary general election that has caused a further hiatus. The jury is still out on whether, with UK ratification impossible before the election, the other states will want the provisional application phase (PAP) to start as planned at the end of May 2017. It should be stressed that the UK is ready.

The issue is first that not enough other states are ready (Austria, Bulgaria, Malta and Portugal have ratified the UPCA, but have not approved the PAP), although it is expected that enough states will be able to take the necessary steps in time.

Second, some states (Malta, and perhaps Germany) seem cautious about doing so without UK ratification in the bag and relative certainty, therefore, of a 1 December 2017 start date for the court itself. But that becomes circular, since unless the PAP starts pretty much on time, there is no way the system can be ready by December as a matter of practicality: in particular judges need to be interviewed in June and July.

PAP commencement certainly cannot be delayed by more than a very few weeks. Hence, we could end up with a situation where it turns out that the UK completes its parliamentary ratification process before Parliament rises in late July, and can lodge its instrument of ratification in August, but because the PAP was delayed by other states, the system cannot start in December. The best thing will be for the PAP to go ahead as planned and then hopefully the UK will ratify by August. If this doesn’t quite work out and UK ratification follows only after the summer recess, then start-up would be delayed until about March 2018.

So far as I can see, there is no reason at all to think that the UPC will become a football in political negotiation—after all, both sides want the same thing (and know they want the same thing), so how can either side really hold a negotiating card? If that is right, then there is no reason to think the new government might delay ratification other than for purely practical reasons. Unfortunately, we just cannot now say exactly when ratification can be completed.

In the longer term, I strongly suspect that the UK government will want us to be a continuing member of the system, because for decades (and independently of the EU), governments of all political persuasions in the UK have worked toward this goal. Further, industry both in the UK and internationally want the same. What needs sorting out is whether there are any legal obstacles in the way, and to take steps to overcome them. Plus, there needs to be an insurance policy of UPC exit provisions—not because of any desire to exit, but to regulate in a clear way how, for example, unitary patents would convert to UK national patents or EP(UK)s if the UK left the system.

After all, just as uncertainty causes caution among users, a clear exit route would give them confidence to embrace the system. But these are topics for another day. First, we need to get the PAP under way—within weeks, not months—and given the election, our partner states need to have faith that the UK really will deliver ratification just as soon as it can.