Brexit Threatens Legal Uncertainty, Higher Costs For Trademarks, Lawyers Say

Two weeks after the United Kingdom voted to leave the European Union, the potential impact of “Brexit” on patents and trademarks is becoming marginally clearer, intellectual property lawyers said in interviews and a 7 July webinar. Among other things, Brexit would delay the EU unitary patent and unified patent court (UPC) and result in great uncertainty –and higher costs — for trademark owners, they said.

Britain’s exit from the EU isn’t a done deal and even if it occurs, nothing will change before 2018 or 2019, Finnegan (London) European patent lawyer Philip Cupitt said in the webinar. Nevertheless, law firms are advising clients they may need to start rethinking their IP strategies, particularly in the trademark arena.

Patent Rights Unaffected

There will be no change with regard to either UK or EU patent rights, Cupitt said. The UK will remain a member of the European Patent Convention, which predates the EU, he said. Some believe that Britain will leave the EPC, but Cupitt said he sees no political will to do so. British European patent attorney will still be able to represent clients at the European Patent Office (EPO), he said.

The EPO is not an EU institution, Lewis Silkin (London) attorneys noted in paper on the legal implications for IP rights of a Brexit.  Under the EPO system, once a European patent is granted it is “in effect converted into a bundle of separate national patents in the individual countries chosen by the patent owners.” Existing UK patents, whether granted by the EPO or the UK Intellectual Property Office, would remain in force, and applicants could still choose whether to seek UK patent protection in the future through the EPO or UKIPO, they wrote.

Nor will anything be different regarding UK patents, said Cupitt. Britain’s patent system is separate from the EU’s, and the UK will still be a member of the Patent Cooperation Treaty, the Paris Convention and the World Trade Organization, he said.

But Brexit may delay the EU unitary patent and unified patent court, which at this point can’t enter into force until the UK ratifies the UPC agreement, Cupitt said. That’s unlikely, which means the UPC will probably be on hold until around 2019, he said.

Post-Brexit, unitary patents won’t cover the UK, but UK companies could still hold a unitary patent in addition to a European patent, Cupitt said. Another fallout from Brexit may see London lose the right to host a UPC central division court, which will require amendment of the UPC agreement to change to location of that court, he said. In addition, the unified court will have no British judges or staff, but most UK patent attorneys will still be able to represent litigants at the court, he said.

Another issue is uncertainty for the pharmaceutical industry, said Cupitt. EU law underpins UK law in areas such as marketing authority, supplemental protection certificates, data exclusivity and protection of biotechnological inventions, he noted. It’s too early to predict how UK law will develop but it’s fair to say that Britain will continue to provide “strong protection” for pharmaceutical companies, he said.

Changes Ahead for Trademarks

Pulling out of the EU will affect EU trademark (EUTM) registrations, Finnegan (London) trademark and patent attorney Clare Cornell said in the webinar. She urged trademark owners to bear in mind that nothing will change until Brexit happens, so for now it’s “business as usual.”

After Brexit, however, EU trademark rights will have no legal effect in the UK, Cornell said. She expects that EU marks will have to be converted into UK national trademark registrations by some as-yet-unknown conversion procedure. That process will likely not result in the loss of any rights, she added. Cornell recommended that ahead of Brexit, trademark owners use their marks in the UK and in other EU member states as well, because use solely in Britain won’t amount to sufficient use of an EU mark after the UK leaves the EU.

Some precedent on what the future of trademarks may be can be found in the experiences with the former Soviet and Yugoslavian territories, the Lewis Silkin paper said. The logical outcome would be that the UK “component” of an existing EU trademark or registered Community design could be replaced by a national UK trademark/design, it said.

That fix “would still raise a number of issues for rights holders,” the firm said. Among these are the official and professional costs, procedural hurdles and timings of replacing EUTMs and designs.

How to enforce trademarks after Brexit raises still more questions, Morrison Foerster (San Francisco) IP attorney Jennifer Lee Taylor said in an interview. A UK entity whose rights are infringed in the UK by someone outside the country can now seek an EU-wide injunction, but once Britain leaves that complainant could only sue and get relief in the UK unless it can make its case in an EU member state, she said.

Another question is whether a company with an EUTM will have enforceable rights in the UK, Taylor said. It might be possible to end up with a trademarks registration filed in the UK years ago and then some sort of UK recognition of a mark registered in the EU, and these could turn out to be conflicting rights, she said.

Morrison Foerster has for years advised clients to seek EU rather national trademarks registrations, Taylor said. During that time, companies have begun relying on EUTMs, but now, with the UK and possibly some other member states talking about leaving, she recommends that companies file for UK trademarks as well.

And that costs money, Taylor said. Obtaining EU trademark protection in all 28 EU countries costs around $3,000, about the cost of filing for national protection in just two countries, she said. Many businesses have extremely valuable brand names which they’ve protected only in the EU and are now worried about whether to seek UK protection as well, she said.

European Court of Justice Judgments

Another vexing issue is how to disentangle the UK from the strings that tie UK law to EU legislation, said Lewis Silkin IP litigator James Sweeting. “No one’s got a clue” about how that will be sorted out, he said in an interview.

Much will depend on the type of exit the UK adopts, said Sweeting. It could remain in the European Economic Area,or enter into an agreement with the European Court of Justice to permit the court some influence in Britain (which Sweeting considered unlikely). There is a big question about whether past ECJ decisions will continue to be applied in the UK, because many English court decisions are based on fundamentals of EU law, he said.

The UK, like the other member states, is bound by the EU Enforcement Directive, which governs how parties who obtain judgments enforce them, said Sweeting. After Brexit, that directive may not have the same effect in the UK, so new laws will be needed. The UK will have greater autonomy over its legislation, but there will be a period of great uncertainty during the transition, he said.

Sweeting’s general advice to clients is to “wait and see.” Despite that, many companies now say they want to file UK trademark registrations to ensure they’re future-proof, he said.