Brexit and intellectual property (IP)

The surprise following the result of the referendum, in which the United Kingdom decided to withdraw from the European Union was quickly replaced by the question of how this decision will affect daily life and the economy of the country. There are also doubts about how the legal system will function in the new reality and what Brexit will mean in practice – including intellectual property (IP).

June 23, 2016 will go down in history of Europe as a day that shook the foundations of the European Union and caused considerable consternation of many citizens of both the United Kingdom, and the other 27 countries of the Community. The “Brexit” has stirred a lot of emotions within the legal and business environments, and one of the key subjects around which questions pile up in the new situation, is the protection of intellectual property. A lot of myths and half-truths have already accumulated in this area. Let’s try to confront them.

Did the British ship leave the EU port? That is, what really happened?

A referendum was held. With a narrow majority (about 52% to 48%,) the British voted in favour of leaving the EU. The referendum itself, however, does not cause any legal effect. The United Kingdom today is still in the Community and the existing rules and regulations still apply to its citizens on its territory. This does not mean that the referendum does not and will not have consequences. These, so far, are primarily of political and economic nature; David Cameron announced that he will resign. He added, however, that the result will be respected and that the United Kingdom will withdraw from the EU.

For this to happen, the government in London will have to make a formal notification of intention to withdraw from the European Union, in accordance with Article 50 of the Treaty on European Union (TEU) and start the period of two year of negotiations – the divorce principles. There are many subjects because although the islanders did not belong to the vanguard of the integration (e.g. did not adopt the Euro, and did not join the Schengen area), the number of connections built over 40 years is really large.

A lot of questions, only few answers

The effects of the “divorce” negotiations will determine how the legal environment will change and what real consequences will be triggered by the withdrawal of the United Kingdom from the EU – also for IP issues. A lot depends on the political will on both sides of the Channel, and several scenarios are possible.

Britain and the EU could adopt a model of cooperation similar to the one between the European Union and Norway, Liechtenstein and Iceland (EEA), or develop rules similar to those that apply to the EU and Switzerland (a series of bilateral agreements). They could also remain only in the customs union (Turkish model), and finally – break off any relationship with Brussels.

For the record, it is worth noting that the very fact of the United Kingdom withdrawing from the EU, i.e. “Brexit”, is not yet one hundred percent sure. For now, the British “constitutionalists” must answer the question of whether the parliaments of Scotland and Northern Ireland can block an application voted in the referendum, and politicians and their voters – whether to repeat the referendum on the separation of Scotland from the Crown in order to obtain the right, as an independent state, to decide to stay in the EU, or withdraw from the EU.

What about intellectual property?

Over the past two decades there has been a fairly substantial harmonization of EU legislation in the field of intellectual property. Starting from copyright, through trademarks and Community trade mark, Community industrial designs, the protection of personal data, ending with the new drafts for the protection of know-how. The withdrawal of the of the UK from the EU will not shatter it. It must be remembered that EU law is in force in the Member States, either directly (regulations) or after implementation into national law (directives). While the Brexit itself will make it so that the rules no longer apply in the UK, the implemented directives will probably continue to make an impact on the legal system in the UK. So, many of the effects of harmonization, will remain in force, probably for a long time. However, over time, common law and precedent judgements of British courts, which will no longer have to take into account the jurisdiction of the Court of Justice will compensate for this effect.

We must also remember that – if there are no other arrangements – the fact of the withdrawal from the EU will make the UK, all IP rights, stemming from Community law, cease to apply. In order to obtain trademark protection, or the protection of industrial designs, it will be necessary to obtain registration in accordance with British procedures and before British authorities.

Many questions may raise the solution to the problem of Community trade marks and Community industrial designs, which are now, by a single registration, covered within the EU, including the UK. In extreme cases, it could be argued that after the real Brexit, the protection obtained before EU authorities no longer applies in the UK. It does not seem very likely, however, due to the extremely serious branding and business costs, which would follow. It seems more likely that the government in London either decides that trademark law, obtained before the Brexit remains in force, or makes specific conversion of these rights to their British counterparts.

The Brexit will probably also have important implications for other aspects of IP law – e.g. the emerging digital single market, or to other spheres firmly rooted in EU law – the protection of personal data and the protection of competition and the consumer.

What do we know for sure?

As pointed out by Niels Bohr, forecasting is difficult, especially when it concerns the future. It is no different in the case of Brexit. At present, the legal situation with regard to the regulation of intellectual property has not changed at all. How long will this state continue? It will depend on political decisions and the outcome of negotiations. Nevertheless, it can be reasonably assumed that at least in the next two years virtually nothing will change. Some also predict that this period may be much longer.

Negotiations between the UK and the EU: who should be particularly interested in them?

Changes should be followed primarily by those who pursue their economic interests in the UK, plan to obtain protection of trademarks and industrial designs there, and claim, or are planning to pursue claims relating to the infringement of intellectual property. Any issues related to IP resulting from Brexit will be announced on our blog.

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So far, the captain of the British ship gave the crew the opportunity to choose the future course. The crew has decided that it should cast off from the EU port. However, the captain does not hurry with raising the anchor. He is aware of the risks associated and knows that part of the crew liked the life in the harbour. He also has no idea how to negotiate with the EU harbour authority’s precise terms of departure from the port’s jurisdiction. And as long as the empire’s ship, upon which the sun never sets, remains in port, so long it must follow its customs and laws.