The European Council president Donald Tusk suggested recently that Brexit could bring chaos. Does this doom laden warning extend to the world of IP?

In an earlier post we covered the discussion at the CIPA Symposium on Brexit as it related to the unitary patent system (summary: Brexit probably won’t be good for the unitary patent). In this post we recap some of the issues discussed in the sessions on general legal implications of withdrawal from the EU, the impact on European trade marks and Community registered designs and some wider implications of Brexit.

General Legal Implications

This session of the symposium was presented by Clive Thorne of Wedlake Bell who, as it turned out, was the only panellist who was pro-Brexit. The practicalities of triggering an exit from the EU under Article 50 of the Treaty on European Union would be a negotiation lasting at least two years to agree the arrangements and trade deals required for the UK to leave the EU.

As well as the IP angle, leaving the EU would have a wide impact on issues such as freedom of movement of people, access to the single market, financial service regulations, agricultural and fishing policies and foreign policies. This list is by no means exhaustive and a Brexit negotiation would involve a huge effort.

Clive noted that a major issue to discuss would be the status of the CJEU. Also, the practicalities of litigation would need to be considered and an alternative to the provisions provided by the Brussels Regulation would be needed.

It was noted that even though the EU negotiates trade deals on behalf of the EU member states, it is the individual member states that actually sign up. There may therefore be a question as to whether the UK could keep the deals that it has already signed up to.

One possibility that has been mooted if we vote to leave is joining the European Economic Area (EEA). This was generally seen as a bad suggestion by the panellists because it would effectively be the worst of all worlds as we would still be bound to adopt certain EU legislation without the ability to influence that legislation in the way we can now.

A remain vote would mean that the “February settlement” secured by David Cameron would come into play. Clive’s view was that there was only one provision within the settlement (the benefits provision) with the rest of the settlement only relating to declarations. Clive stated that he’d had “leading counsel’s opinion” on the benefits provision to the effect that it was unlawful.

The European Union Act 2011 is still on the statute and requires further referendums to be held in the event that the EU contemplates major treaty changes. Clive felt that there was a chance there could be significant changes in the next few years and questioned whether the UK Government would repeal this Act.

European Trade Marks and Registered Community Designs

David Stone of Simmons and Simmons talked on the impact of Brexit on European Trade Marks (EUTMs) and Registered Community Designs (RCDs) admitting that there was a fair amount of guesswork in how things might pan out.

Following Brexit, EUTMs and RCDs would not extend to the UK and so there would be a need to have some kind of transitional period in which EU rights would either be automatically converted into UK rights or a refiling process would be required. Any refiling process would probably be associated with further fees for rights owners and as far as RCDs are concerned then some sort of backdated filing date would be needed to overcome the fact that the designs would have been disclosed.

David thought that following a busy transitional period, litigation would drop off and UK law would begin to diverge from Europe.

The issue of rights of audience was raised. As can be seen from the application forms to join the EUTM and Community Design lists of representatives, it is a requirement to be an EEA practitioner to join the lists. Currently, as the UK is a member of the EU, UK based practitioners enjoy this right. However, if the UK votes to leave and does not join the EEA then this right of audience would be lost.

A question was asked in the Q&A about UK representatives that are currently on these lists: would they be removed from the lists? IPcopy notes that the EUTM regulation (see Article 93) seems to require practitioners to be qualified in a member state of the EEA so potentially current UK representatives would need to come off the lists? IPcopy would be interested to hear your views on this point.

In the post Brexit world therefore it seems that all EUTM and RCD work would head away from the UK.

The idea of qualifying in Ireland was raised as a potential work around.

Wider Implications

Catriona Hammer (CIPA Past President) noted that the Association of British Pharmaceutical Industry (ABPI) and the BioIndustry Association (BIA) had issued a joint letter in favour of remaining in the EU because of regulatory issues.

Caroline Warren of Mathys & Squire touched on a number of other IP related or IP adjacent areas that could be impacted by a vote to leave.

As far as the UK’s Patent Box is concerned then a vote to leave would not enable the UK to rework the system to be more favourable. It was noted that the imminent changes to Patent Box were driven by the OECD and not the EU.

On the subject of R&D grants and funding from Europe, it was noted that the flagship programme, Horizon 2020, already includes 7 countries who are not part of the EU but who enjoy associated country status and the same rights as EU member states. Presumably, the UK would also acquire associate country status.

Mythbusting – one area that might need careful management in the event we vote to leave is the perception the rest of the world has of the UK versus the EU. Will US firms appreciate that leaving the EU does not mean leaving the EPC? Will foreign clients understand the distinction between the UPC and the EPO?

What seems likely is that, even though the UK has the fifth largest economy in the world (Wikipedia List of countries by GDP), we would assume a secondary status behind Europe that would likely limit the amount and quality of IP work in the UK. Not chaos perhaps, but certainly not ideal.

Mark Richardson 19 May 2016