IP and the Consequences of Brexit

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2 IP and the Consequences of Brexit ECTA, Brussels, September 14, 2016 Professor Spyros Maniatis Head, Centre for Commercial Law Studies Queen Mary University of London

3 BREXIT means BREXIT but what does BREXIT mean? Contradictory arguments, claims, and strategies, e.g. the approach towards TTIP and the battle between protectionist pre BREXIT Brexiteers and libertarian post BREXIT Brexiteers Some backtracking, e.g. the NHS bus (a good TM / freedom of speech problem question actually) and the 350m a week claim. Not necessarily a full understanding / clear distinction between WTO, EU, other European, and national legal tools and obligations. Davis: "Naturally, people want to know what Brexit will mean - simply put, it means leaving the European Union

4 The Referendum June 23, 2016: 51.9% v 48.1 Not legally binding, but the current assumption is that the decision will be implemented. David Cameron resigned on June 24, 2016 and (never a dull moment) and stood down as Conservative MP on September

5 BREXIT means BREXIT but what does BREXIT mean? Johnson: supporting the Brexit means Brexit post Brexit vote campaign Davis: improbable that the UK will remain in the single market Fox: British Business has become fat and lazy May: Declines to endorse

6 BREXIT means BREXIT but what does BREXIT mean? "Mrs Cheryl Gillan (Chesham and Amersham) (Con) May I add my congratulations to my right hon. Friend; it is good to see him back in his natural habitat at the Dispatch Box. Businesses in the UK are concerned not just about access to the single market, but about other matters. A unitary patent and the proposed new Unified Patent Court has been eagerly anticipated by businesses, The UK was due to ratify that later this year alongside Germany and one other country. Will my right hon. Friend give businesses the undertaking that the UK will ratify this agreement before the end of this year and that we will continue to play a full part so that British businesses benefit from being able to be part of a larger unified patent authority?

7 BREXIT means BREXIT but what does BREXIT mean? Mr Davis For as long as we are a member of the European Union, which by the sounds of it will be at least two years, we will meet all our obligations and we will take our responsibilities extremely seriously, including the one that my right hon. Friend has outlined. Mr Speaker May I gently ask the Secretary of State to face the House? Sometimes his answers are not fully heard. They are heard by the person at whom he is looking, but not by the House. Mr Davis All I can do is plead inexperience. The reporting Kat remains (rightly so) a sceptic

8 Article 50 TFEU Constitutes the framework and mechanism for a MS withdrawing from the EU. Formal notice of withdrawal. Triggering negotiations for an exit agreement. The agreement can be concluded at any time within a two year period following notice. Negotiation can last longer, provided there is unanimous agreement. If there is no agreement, then the MS exits without a agreement.

9 Exhaustion of Rights Articles 34 / 36 TFEU & Protocol 28 of the EEA Agreement EEA wide exhaustion principle for IP rights. A fundamental principle. If the UK remains in the EEA the principle continues to apply. If the UK does not remain in the EEA, and subject to the exit agreement, it has a choice between national and international exhaustion. But from the EEA s perspective, the principle will remain the same: EEA wide exhaustion. IP rights could be used to block exports from the UK into the EEA.

10 IP Federal Rights The Unitary Rights, Federal because they apply across the EU in the same way, covering trade marks, designs, and plant varieties will cease to apply to the UK. The exit agreement could provide for the UK to give national effect to the Unitary Right. Note, the distinction between an extension of the Unitary Right (not possible) and the grant of a national right that is linked with the Unitary Right. Analogies with the concepts of seniority and conversion.

11 Other Rights Introduced by Regulations Other rights introduced by Regulations, e.g. geographical indications, will not have an effect in the UK. UK national legislation will have to deal with these types of rights. Difficulties will arise given the extent of legislation that needs to be replaced and the contrasting interests. For example, the agricultural industry will push for protection that is at least analogous to the one available today; supermarkets and regulation abolitionists for the opposite. There is potential for trade wars at different levels International agreements will become more relevant.

12 Rights Introduced by Directives In principle there should not be a need to amend national legislation covering rights introduced in the UK as the result of Directives, including national trade marks, copyright, and trade secrets. However, there will inevitably be a push for less regulation or at least tinkering with perceived Euro weaknesses. On the other hand affected industries will push for clauses that will ensure continuity post Brexit of existing national laws. The enormity of the overall process could make blanket solutions attractive but this will not satisfy hard core Brexiteers.

13 Intended timetable for UPC Slide borrowed from my colleague Duncan Mathews Preparatory Committee work completed: July Provisional Application and handover to Administrative Committee: November Sunrise Period: November 2016 February Appointment of Judges: January Germany & UK to lodge instruments of ratification: February Start date: May UK vote to leave has made the above timetable unrealistic.

14 A possible way forward UK deposits its UPC instrument of ratification as an EU Member State. Following entry into force of the UPC Agreement, the Administrative Committee of the UPC amends Article 84 UPC Agreement to state that a Contracting Member State that has ratified the UPC Agreement will not lose its status if it leaves the EU. Administrative Committee of the UPC also establishes a Protocol containing an agreement of the participating Member Sates providing for the extension of the European Patent with Unitary Effect to the UK. Both agreements are endorsed in the Article 50 exit agreement of the UK. UK continues to participate based on an amended Article 84(2) UPC Agreement. The optimistic scenario suggested by my colleague Duncan Matthews

15 BREXIT means BREXIT but what does BREXIT mean? There is also the other side There is a counter argument that the unitary patent system should be put in place without the UK Instead of delaying and negotiating with the UK negotiate without the UK. A significant competitive disadvantage for industry and the professions.

16 Consequences of Brexit for the UPC UK has Parliamentary authority to ratify but current interpretation of CJEU Opinion 1/09 is that UK must leave. UPC Agreement cannot be ratified without amendment by all Contracting Member States to replace UK as a Member State for Article 89(1) and Article 7(2) (location of section of Central Division). Also it is doubtful that Provisional Application period can happen without amendment so, in any event, significant delay. Will UPC Project continue without UK? UK influence has been extensive: Preparatory Committee has 3 UK members. Advisory Group to be chaired by Sir Robin Jacob. CMS system preparation led by UK IPO. Fees sub-group led by UK IPO.

17 Consequences of Brexit for the UPC Amendments to the UPC Agreement require unanimity. UK judges will not participate and UK lawyers will not be able to act as representatives but UK European Patent Attorneys will (Article 48 UPC Agreement). The proposed fees covering the territory of the 25 EU Member States participating in the unitary patent correspond to the sum total of the renewal fees currently paid for the four countries in which European patents are most frequently validated today (UK, DE, FR, NL). European Patent with Unitary Effect less attractive without UK (50% of European patents designate only UK, DE and FR).

18 More on Trade Marks Regarding EU TMs following Brexit there must be a process for converting existing rights into national UK applications (less appealing) or registrations maintaining the original priority. National trade mark law would not change if the UK remains in the EEA. In principle even if the UK is not a member of the EEA the registrability fundamentals will remain the same since we all have to follow TRIPs. Areas where there could be long term change include use requirements, scope of protection, and defences.

19 Trade Marks and the CJEU What happens to the jurisprudence of the CJEU? If the UK is part of the EEA it has to follow the advisory Opinions of the EFTA court that itself must take account of the CJEU jurisprudence. If it is not part of the EEA then the body of CJEU case law that has been applied by national courts could remain effective through the judgments of the national courts, but. Inevitably there will be a push to move away from CJEU principles that have often been critiqued by national courts. And unfair competition? European harmonization process could accelerate.