IP Protection Issues in Brexit

The United Kingdom will remain a member state of the European Patent Convention (EPC), which is completely independent of the EU. Thus, it will still be possible to obtain patent protection in the United Kingdom via the national, European and international systems currently in place. Accordingly, companies can still file a single patent application at the European Patent Office (EPO) and thus pursue European patent protection throughout 24 of the 27 countries of the EU.

Patents, Trademarks and Brexit

The impact of Brexit on the proposed Unitary Patent System (UP) and the proposed Unified Patent Court (UPC) remains to be seen. The Unitary Patent System would confer several benefits, including: 1) a reduced cost of patenting technologies across EU countries; and 2) a single forum for parties to litigate. A number of scenarios are possible to address the United Kingdom's exit from the EU, ranging from abandonment of the UP/UPC, reworking of the relevant agreements and rules to allow the United Kingdom's participation as a non-EU member, or continuation without the United Kingdom (in which case UK patent protection would, just as at present, need to be sought via a European patent application within the existing EPO system or a direct national filing). Whichever approach is adopted, this is very likely to delay the UP/UPC coming into force.

Note that European Union Trademark rights will no longer be valid in the United Kingdom. The European Union Trademark (EUTM) is a unitary right, valid in each of the 28 EU member states. With the United Kingdom's decision to exit the EU, that right will no longer be valid in the United Kingdom. What comes after that is up in the air. Thus, as the ramifications of the Brexit are currently unclear, it is imperative for entertainment companies to become aware of key changes in legislation as they occur and modify their trademark strategies accordingly.

The negotiations for the United Kingdom's post-Brexit arrangements with the EU, which will be conducted separately from negotiations on the United Kingdom's terms of exit from the EU, will include negotiations on treatment of EUTM rights in the United Kingdom. It is possible that a reciprocal agreement will be reached to treat EUTMs as they are currently treated, with full effect in the United Kingdom and the right for owners of UK national trademark rights to challenge EUTM applicants. On the other hand, it is also possible that the two systems will exist independently, and trademark owners will have a grace period in which to file new applications in the United Kingdom ' possibly retaining the same filing date and/or priority date of their original EUTM.

Entertainment companies should monitor for future policy statements and legislative proposals that could impact the filing date(s) and/or priority date(s) of their new applications, so that they can take a closer look at their interests and modify their IP strategy if needed.

Other Effects

Brexit could have additional side effects as well, such as increased administrative costs for companies filing new U.K. national trademark applications and backlogs at the UK Intellectual Property Office (IPO) as they deal with new applications.

Additionally, companies should review existing trademark licenses and agreements to determine if these licenses and agreements identify the “European Union” in their scope, to establish whether that phrase includes the United Kingdom (as it did when the agreement was signed) or not (as is currently the case). Companies with EUTM rights based on genuine use in the United Kingdom will need to be especially wary in the coming months and years, as that use in the United Kingdom may not be sufficient to support the EUTM, possibly making those registrations vulnerable to revocation. It is likely that pan-European remedies (such as pan-European injunctions) will no longer be available in the United Kingdom. This will necessitate separate applications to the English courts to obtain remedies that do cover the United Kingdom. Therefore, companies will need to reevaluate their trademark portfolios to best support their interests in view of the changing legislation and likely rising costs.

Brexit could have further substantial side effects on enforcement of patent rights. As to jurisdiction and governing law, presently the EU rules respect the parties' choice of law as regards both contractual and non-contractual liability. The EU rules also provide guidance on the appropriate forum where this has not been agreed, the default rule (subject to some exceptions) being that a defendant should be sued in the jurisdiction in which it is domiciled. The position under UK laws is governed mainly by common law rules which, like EU law, respect the parties' choice of law and determine jurisdiction on the basis of where the defendant is domiciled.

But as to injunctions, a patent owner can apply for a pan-EU injunction in one country of the EU. After Brexit, the United Kingdom courts are likely to lose their ability to grant pan-EU injunctive relief, so that a patent owner would be required to start parallel infringement actions in the United Kingdom and in a country of the EU, escalating the enforcement cost. Further, a patent owner in the United Kingdom would be prevented from utilizing customs seizure proceedings to combat the flow of infringing activity throughout the EU.

Additionally, post-Brexit a patent owner in the United Kingdom could also lose benefits of simplified court rules for the service of proceedings and the enforcement of judgments. For example, presently, the EU's harmonized rules apply for the enforcement of judgments in the United Kingdom based on the Brussels Recast Regulation that governs the enforcement of judgments within the EU. Post-Brexit, the United Kingdom may no longer abide by the Brussels Recast Regulation rules, resulting in uncertainty and a significant financial burden on companies seeking to enforce their patent rights such as a need to re-litigate the patent infringement in the United Kingdom.

Conclusion

Whatever happens with the patent and trademark systems, it will not happen overnight. The United Kingdom's exit from the EU will be a developing situation over at least the next two years. Accordingly, to guide the protection of their IP rights, entertainment companies should continue to monitor the steps the United Kingdom is taking to exit the EU and negotiate new arrangements with the EU.

Barry J. Schindler and Willie Stroever are shareholders and Paul Burnett is an associate in the Intellectual Property and Technology Practice group of Greenberg Traurig in Florham Park, NJ. Schindler also co-chairs the firm's Global Patent Prosecution Group.