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"Brexit": What would it mean for UK IP rights?

Steve Jones, Chairman and Patent Attorney at AdamsonJones, considers the implications of a possible "Brexit" from the EU for UK IP rights.

The UK’s May 2015 General Election saw Conservative Prime Minister David Cameron returned to office with an overall majority. One of the key pledges made in the Conservatives’ election manifesto was that they would hold a referendum on the UK’s continued membership of the European Union. That referendum was one of the first things mentioned by the Prime Minister after his victory in the election, and although a firm date has not been fixed, the referendum now seems set to take place some time in 2017.  If a majority vote “no”, the referendum will lead to British exit from the EU (so-called “Brexit”). 

The battle lines are now being drawn up, with the recent announcement that Lord Rose, former head of retail giant Marks & Spencer, will lead the pro-EU Britain Stronger in Europe campaign, while two anti-EU groups, Leave.EU and Vote Leave, are jockeying for position on the other side. 

What will the outcome of the referendum be?

It is impossible to say. Most informed commentators expect that the pro-EU campaign will win the day and the UK will remain part of the EU. However, the outcome is far from certain, and a lot could change between now and 2017. The Prime Minister has promised to negotiate reforms to the EU, to address the public’s concerns about the perceived cost of EU membership and the influence of EU institutions on UK policy and law. If he succeeds, the balance may be tipped in favour of the pro-EU campaign; if he fails, on the other hand, a “no” vote could well result. Popular concerns about unrestricted immigration from other EU countries – a very hot topic at present - could have a similar effect.

What would be the practical effect of Brexit on UK IP rights?

Brexit would have no effect at all on UK national patents, registered trade marks or registered designs, ie IP rights obtained through the United Kingdom Intellectual Property Office (UKIPO). These rights would continue in force as before, and the process of obtaining protection for future rights would be exactly as it is now.

The position is more complex for European IP rights that have effect in the UK, ie patents obtained through the European Patent Office (EPO), and Community Trade Marks and Community Registered Designs obtained through the Office for Harmonisation in the Internal Market (OHIM).

Community Trade Marks and Designs

The existing EU trade mark and design registration systems, which are cost-effective and very widely used, give rise to truly unitary rights that take effect throughout the whole of the EU. 

If the UK were to leave the EU, it is hard to see how these registrations as such could continue to have legal effect in the UK. Presumably, a mechanism would be established by which Community Trade Marks and Community Registered Designs would be converted, either automatically or at the request of their owner, into UK national trade mark and design registrations. Those converted registrations would then be subject to renewal separately for the UK, alongside the annual renewal of the unitary rights for the remainder of the EU. In effect, these rights would most likely be treated as if they had always been national registrations. 

For future cases, the Community systems would of course still be available to applicants in the UK and elsewhere, but the resulting registrations would cover only the remaining countries of the EU. Separate applications through the UKIPO would be necessary in order to obtain UK protection. Inevitably, this would lead to increased costs.

European Patents – No change for now

Contrary to a common misconception, the EPO is not an EU institution. There are several countries that are not EU member states but are parties to the European Patent Convention (Switzerland, for instance). Moreover, under the current EPO system, once a patent is granted by the EPO it is in effect converted into a bundle of separate patents in individual countries chosen by the patent owner. An EP patent that takes effect in the UK is essentially equivalent to a national UK patent.

For these reasons, Brexit would make no difference to patents effective in the UK. Existing UK patents, whether obtained through the UKIPO or the EPO, would remain in force, and applicants would still have a choice as to whether to obtain UK patent protection for future cases through the UKIPO or the EPO.

This could change, though. If the long-awaited unitary EU patent system comes into effect at a time when the UK is still an EU member state, then those patents will take effect in the UK. Should the UK subsequently leave the EU, it is hard to see how those unitary patents could continue to have any legal effect in the UK. Again, a mechanism would presumably be established by which unitary patents could be converted into UK national patents that would be subject to annual renewal separately for the UK, alongside the annual renewal of the unitary patent for the remainder of the EU.

Delay to the unitary patent? 

We have commented before on the fact that the unitary EU patent can only come into effect if the agreement is ratified by the UK (as well as France and Germany – those being the three countries in which the greatest number of European patents are validated - and a minimum of ten other EU countries). We have previously speculated on whether the uncertainty over the UK’s continued EU membership will delay ratification, and hence implementation of the unitary patent. We think it highly likely that it will. For that reason, the most direct impact of the forthcoming referendum will be to delay implementation of the unitary patent.

If the outcome of the referendum is that the UK stays in the EU, then we would expect ratification of the unitary patent agreement to follow promptly. If the vote goes the other way, then the need for UK ratification would fall away and would be replaced by ratification by the Netherlands (that being the country in which the fourth highest number of European patents are currently validated). Again, we would then expect the unitary patent to come into effect, though whether this could happen until the UK has actually left the EU is not clear (it would presumably take a considerable time for the UK to extricate itself from the EU following a decision to leave).

Overall …

At the very least, the forthcoming referendum may delay the implementation of the unitary EU patent. Once the result of the referendum is known, we would expect the unitary patent system to come into effect, whether the outcome is a “yes” or a “no”.

From the point of view of IP rights holders, a “yes” vote (ie that the UK should stay in the EU) is probably preferable. Brexit would create a need for separate national trade mark and design registrations, at additional cost, and in the UK being excluded from the unitary patent system. The patent options available to applicants seeking patent protection in the UK and the rest of the EU would thereby be reduced.

For now, this is all speculation. Perhaps the UK will go ahead and ratify the unitary patent agreement, despite the risk of possible future Brexit. Perhaps the “no” campaign will falter and the outcome will be a “yes” landslide.  We await developments with interest.

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