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Brexit Planning Advice for Clients and Associates, from Forresters June 2018

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Brexit Planning Advice for clients and associates

Background In March 2017 the United Kingdom gave notice of its intention to leave the European Union. Under the terms of the relevant legislation, the UK will leave the EU on 29 March 2019. On 28 February 2018 the EU published its draft withdrawal agreement and on 19 March 2018 the UK published its response which highlighted many areas where high level agreement has been reached concerning many matters, including the future of IP rights after Brexit. Articles 50 to 57 of the draft withdrawal agreement deal with intellectual property. Under the terms of the draft withdrawal agreement a “transition period” has been agreed, to allow for the smooth implementation of the terms of the UK’s withdrawal from the EU. The transition period will run until 31 December 2020. The provisions concerning the transition period specify that, unless otherwise provided in the withdrawal agreement, EU law shall be applicable to and in the United Kingdom during the transition period. While the latest draft withdrawal agreement indicates that agreement has been reached in many areas, there are still a large number of points where agreement has not yet been reached and where negotiations in relation to the terms of the UK’s departure from the EU are still ongoing. The position is that agreement must be reached on all matters prior to the UK’s departure from the EU. We have often heard the phrase “nothing is agreed until everything is agreed”. Thus, while we now have some indication of certain terms for the UK’s withdrawal from the EU, including provisions concerning IP, we still cannot be certain precisely what provisions will be contained in any final agreement, or indeed whether it will prove possible for a final agreement dealing with all issues of the UK’s withdrawal from the EU to be reached at all.

IP Rights – effect of Brexit Against that background, IP rights holders need to know what the possible impact of the UK’s departure from the EU will be, upon those rights, either with or without a fully agreed withdrawal agreement. Until the EU/UK negotiations are concluded, no one can say with any certainty what the precise impact will be. There are numerous IP rights which will be affected by the UK’s departure from the EU. Apart from the most commonly considered EU rights, such as EU trade mark registrations and EU design registrations, the changes will also have an impact on rights such as unregistered design right, plant variety rights, geographical indications, SPCs, databases, and a number of other subsidiary “rights” and provisions.

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Brexit Planning Advice for clients and associates

Patents – no change Importantly, patents will not be affected by the UK’s departure from the EU. There are no EU level rights for patents at present. The European Patent Convention is not a piece of EU legislation. Clients are however asking what will happen in respect of the UPC if the UK leaves the EU. The UK Government has recently ratified the Unified Patent Court agreement which intends to bring the proposed EU-wide Unitary Patent into force. We must wait and see if this actually happens and it should be noted that a constitutional complaint in Germany is also holding up ratification of the new law for the time being.

EU trade marks and designs The biggest concern of most IP owners at present is what will happen to their EU registered trade marks and EU registered designs when the UK leaves the EU. The draft withdrawal agreement contains provisions under which EU registered trade marks and EU registered designs will be converted to provide an equivalent UK national right. The procedure under which this conversion will take place has not yet been agreed. The EU would like the process to be automatic, without cost and with minimum administrative burden. However, from discussions which we have had, we know that this is something which will be extremely difficult for the UKIPO to implement. For example, there are well over one million live, registered EU trade marks alone and adopting those onto the UK national register is no simple task. That is no doubt why there has not yet been agreement on how conversion of EU registered trade marks and EU registered designs will take place. It seems clear however that the position of the EU is that this is a problem which the UK must solve. The right to convert an EU registered trade mark or EU registered design to a UK national right will apply to an EU right which has been granted before the end of the transition period, assuming agreement is reached between the UK and the EU on the current terms of the draft withdrawal agreement. There should be no re-examination of any right which is to be entered on the UK national register under these conversion provisions. The lack of agreement to date on the registration procedure for any rights converted to UK national rights in this way suggests that the UK Government may wish to charge a fee for the process or that they may wish to set a deadline requiring certain actions to be taken and possibly requiring the owner of the EU right to “opt-in” to registration on the UK national register. While negotiations between the UK Government and the remaining member states of the EU are ongoing on all issues, there is a risk that even if an agreement is reached

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Brexit Planning Advice for clients and associates

on all of the details, it may only be reached very late in the day, possibly leaving little time for rights holders to take any necessary action. If the conversion process is not fully "automatic” and requires some form of opt-in or action to be taken then rights holders will clearly need to be vigilant to ensure that any deadline is not missed or that any required fee is not overlooked. The draft withdrawal agreement contains separate provisions under which an EU trade mark application or Community design application which is still pending up to the end of the transition period (31 December 2020) may be converted to a UK national right during a period of nine months from the end of the transition period. This provision is currently agreed in the draft withdrawal agreement. All of the provisions concerning intellectual property in the draft withdrawal agreement are, as mentioned, subject to agreement being reached on all issues concerning the UK’s withdrawal. What is clear at this stage is that when the UK leaves the EU, EU trade mark rights and EU registered designs will no longer be effective in the UK following any transition period and possibly earlier. If agreement is not reached between the UK and the EU on the terms of the UK’s withdrawal then there is a risk, albeit very low in our opinion, that the UK could leave the EU without agreement. In that situation EU registered trade marks and EU registered designs would cease to have effective in the United Kingdom as of the date when the UK leaves the EU on 29 March 2019.

Slow progress of EU / UK negotiations – a cause for concern With the UK’s departure from the EU fast approaching, there is concern on several fronts. Firstly there is concern at the slow progress of the negotiations between the UK Government and the remaining member states of the EU. Secondly there is concern that the UK Government is struggling to reach a unified position on what they really want from many aspects of the UK’s withdrawal from the EU. Thirdly there is concern at the lack of clarity around an agreed procedure for the conversion of EU registered trade marks and Community design registrations to UK national rights. Finally there is concern around the risk, albeit a very low risk, of the UK not being able to reach an overall withdrawal agreement with the remaining members of the EU and leaving the EU without agreement, in which case EU IP rights will cease to have effect in the UK. In light of these concerns we are advising clients to consider their position now and look at the possibility of filing UK national rights now rather than waiting (and hoping) that an appropriate withdrawal agreement is put in place.

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Brexit Planning Advice for clients and associates

Recommendations – reducing the risks In view of the overall uncertainty around the matter, we are suggesting that clients seriously consider filing UK national trade mark and design applications at the same time as filing EU trade mark and design applications. In relation to trade marks, we are also advising that clients (and associates) look at their (and their clients’) existing portfolio of EU registrations and consider filing UK national trade mark applications for those marks which are of importance to them in respect of the UK. While the additional UK filings for “doubling up” on existing EU applications and registrations may eventually turn out to be superfluous, this strategy of filing UK applications now will remove any uncertainty and reduce any worry about any “conversion” process which is eventually put in place. We are offering very discounted fees for UK national applications which mirror EU applications and existing EU registrations. If there is any interest in filing a UK national application, as a ‘safeguard’, then please let us know and we will be happy to provide full details.

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Forresters Brexit Planning  
Forresters Brexit Planning