5 Ways Brexit May Impact Your Intellectual Property Rights

James M. McCarthy, Eric R. Moran and Colin Wright, McDonnell Boehnen Hulbert & Berghoff, Legaltech News

Rights holders should still consider the possible impacts that the U.K.'s departure will have on their patents, trademarks, designs and copyrights.

On June 23, a majority of voters in the United Kingdom elected to have their country leave the European Union, a scenario commonly referred to as "Brexit." A U.K. departure from the EU will impact a great many areas of the law, including intellectual property rights. Many IP rights, however, will not be impacted, and there is no need for alarm—at least not yet.

While the result of the U.K. vote was incredibly important, the official separation process will not begin until the U.K. invokes Article 50 of the Lisbon Treaty. The U.K.'s new prime minister, Theresa May, appears to be in no rush to start the process and has indicated that it will not begin before the end of this year.

Even after the U.K. invokes Article 50, the U.K. and remaining members of the EU will need to agree on the terms of the U.K.'s exit. EU rules dictate a default departure deadline of two years, but an agreement between the parties could direct a quicker or extended exit to allow more negotiating time. Accordingly, we believe it likely that IP rights holders will have adequate time to carefully prepare for the U.K.'s official exit.

Among patents, trademarks, designs and copyrights in Europe, Brexit will impact trademarks and designs most significantly. The EU trademark (EUTM), formerly the community trademark or CTM, and community design are both tied to the EU. In their current form, neither an EUTM nor a community design would provide rights in any country outside of the EU.

In contrast, the European Patent Office (EPO) is distinct from the EU, and patents obtained through the European patent system will not be directly affected. While there have been ongoing plans for a unitary patent that covers the EU, that system is not yet in place and no unitary patents have been issued.

With respect to copyright, national laws have been harmonized to some extent by EU members, but no immediate impact of any rights is expected. Changes will only occur with newly enacted laws.

In view of the various ways intellectual property rights will be impacted by Brexit, the following are some important issues to understand and consider:

1. Existing Patents

Any patents that have issued in Europe, even those that came through the EPO, will not be directly affected by Brexit. As mentioned above, the EPO is distinct from the EU, and changes in EU membership should not impact existing patent procedures. Moreover, enforceable patents in Europe are still issued at the national level.

2. Licensing or Other IP Contracts That Cover Europe

The geographic scope of licensing agreements or other contracts covering intellectual property in Europe could be unclear once the U.K. leaves the EU. If a contract includes a specific provision stating that the agreement covers "member states of the European Union" or similar language, whether the U.K. should be included within the geographic scope of the contract may be unclear after Brexit. Accordingly, it would be prudent for companies to review any contracts covering the region and address any ambiguity resulting from the U.K.'s exit.

3. Long-Term IP Budgets for Europe

Companies that have long-term IP budgets covering Europe might need to revise their budgets for two reasons. First, anyone with trademark protection in the U.K. currently provided by EUTMs might need to pay fees to maintain those rights in the U.K. after Brexit. Although many have speculated that the parties will allow EUTM holders to extend their protection to the U.K. after Brexit, it is easy to imagine such action will require a fee payment, as would direct filing those same marks in the U,K. Thus, a large trademark portfolio could require significant costs to maintain U.K. coverage.

Second, any company that has planned its budget expecting to benefit from reduced transactional costs resulting from the unitary patent system may wish to reconsider. As an initial matter, London's selection as the location for one of the three Unitary Patent Courts of First Instance will likely change, potentially further delaying implementation. Moreover, a unitary patent, once available, will likely not provide protection in the U.K. after Brexit, and thus extending patent protection to the U.K. will require additional fees.

4. European Trademarks Used Exclusively in One Region

The EU and the U.K. both require trademark holders to use the mark in order to maintain their rights. Currently, an EUTM is considered "in use" so long as it is used anywhere in the EU (although the more use in multiple countries the better). But, if the U.K. leaves the EU, any use of the mark within that country may no longer qualify as use in the remaining members of the EU.

Accordingly, after Brexit, if use of the mark remains exclusive to the UK, a challenge to an EUTM will likely be successful after five years of nonuse. Likewise, use of a mark in mainland Europe will no longer support trademark protection in the U.K. After Brexit, maintaining trademark rights in the U.K. and the remaining members of the EU will likely require use in both regions.

5. European Trademarks or Designs

Most basically, anyone currently relying on rights in the U.K. based on an EUTM or community design will need to understand how to best secure those rights after the U.K. leaves the EU. As mentioned above, there is a fair possibility that the UK will provide some avenue for maintaining or transferring those rights. But until such a procedure has been enacted, EUTM and community design holders should continue to monitor the situation.

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