After years of delay, Brexit came into effect and the UK left the EU on 31 January 2020. Brexit will have wide-ranging implications for business, and highly regulated industries such as the life sciences industry will need to anticipate and mitigate a variety of changes. This article highlights some of the critical changes regarding IP rights and provides some guidance for future planning.
The Withdrawal Agreement
The UK and the EU have concluded a Withdrawal Agreement, under which a transition period immediately came into effect upon the UK’s withdrawal from the EU. The transition period is currently projected to extend to 31 December 2020, and is intended to provide time for adjustment to what will become the future relationship between the EU and the UK. During the transition period, the UK will continue to be treated as an EU member state, with EU laws continuing to apply in the UK, even though the UK is no longer a member state of the EU nor part of any EU political institution. The UK will therefore continue to be part of the internal market and be subject to the Court of Justice of the European Union until the end of this period.
The transition period may only be extended once by up to two years by mutual EU-UK agreement, and this must be agreed upon before 1 July 2020. UK Prime Minister Boris Johnson has previously stated that an extension of the transition period is unlikely. However, it is unclear whether the Covid-19 pandemic will trigger such an extension. If no agreement is reached by the set date, the transition period is not due to be extended and a no-deal Brexit would be the default outcome in 2021.
Fundamentally, IP rights only apply in territories where the IP is legally recognised or registered. This means that if the territory changes, so do the IP rights. The transition period will therefore give IP owners time to prepare. The arrangements for IP rights in the Withdrawal Agreement will come into effect at the end of the transition period. Below we list some of the post-Brexit implications that may affect your business, as well as further consideration of the measures concerning the life sciences industry that have been taken so far.
EU trademarks will no longer be protected in the UK after Brexit. However, there will be no changes to the filing, scope and protection of EU trademarks during the transition period. After this period, all EU trademark registrations that are already in force will be automatically converted into UK rights. In other words, registered EU trademarks will be cloned into UK trademark registrations. The UK rights will maintain the same filing date as the EU trademark. Furthermore, the original priority date will remain unchanged.
Applicants with applications pending at the end of the transition period will have nine months to apply for a national UK application in order to receive the same protection. The same filing date as the EU trademark will apply.
If you do not wish to convert your EU trademark into an equivalent UK trademark right, you may opt out. However, opting out will not be possible if the trademark has been used in the UK, or if an agreement has been assigned, licensed or entered into in relation to the trademark.
Brexit will not directly affect the application and ownership of Swedish trademarks. However, the possibility of obtaining trademark protection through use within the UK, in order to obtain the right to an EU trademark, will expire on 31 December 2020. This applies to compliance with any operational obligations, as well as matters relating to the acquisition of distinctive character through use as well as reputation.
There will be no post-Brexit change to the way patents can be filed. Since the European Patent Convention is not an EU instrument but an international convention, and because the European Patent Office is not an EU institution, the procedure for granting European Patents will remain the same for the UK.
However, there are certain aspects of patent law that do have an EU dimension, such as the granting of Supplementary Protection Certificates (SPCs) for pharmaceutical and plant protection products. SPCs will remain in effect in the UK after 31 December 2020. SPCs that are granted but not yet in force will come into force at the end of the associated patent term, and there will be no need to refile a pending SPC application with the Intellectual Property Office in the UK.
Furthermore, on 18 March 2020, the European Commission published a draft of the Agreement on the New Partnership with the UK, which contains the EU’s proposal for the post-Brexit trade agreement. The draft agreement requires the UK’s marketing authorisation regime to continue to allow patent holders of medicinal, plant protection, active-substance and biocidal products that have previously obtained marketing authorisation, to have a right of data exclusivity for a limited period. The period has not yet been defined. During this period, generic products will not obtain marketing authorisation on the basis of pre-clinical tests and clinical trials by the patent holder unless consent is provided.
The current position of the UK government, recently confirmed by IP Minister Amanda Solloway in the UK’s House of Lords, is that the UK will not be seeking continued participation in the Unitary Patent and Unified Patent Court.
Swedish patents will not be affected by Brexit.
International treaties on copyright will ensure that the scope of protection granted will remain largely unchanged.
Database rights that exist in the EU and UK at the end of the transition period will continue to be recognised in both territories for the remainder of their term through the Withdrawal Agreement. However, UK citizens, residents, and businesses will not be eligible to receive or hold database rights in the EU for databases created on or after 1 January 2021.
Parallel import and exhaustion of rights
Once the transition period ends, it will no longer be possible to parallel import goods that have been placed on the UK market into the EU.
IP rights exhausted in both the EU and in the UK before the end of the transition period under the conditions provided for by EU law will remain exhausted in both the EU and the UK.
Conclusion and recommended action
The life sciences industry will be impacted by Brexit. Businesses should prepare for the end of the transition period in different ways, depending on their current IP assets. It is not yet definite what rules will apply after the transition period, not all individual situations will be covered by the rules, and the terms negotiated between business parties will in some cases have a huge impact on IP rights. We therefore recommend that businesses review their respective essential IP agreements as soon as possible, and certainly before 31 December 2020. This is to ensure that the agreements in question provide the necessary rights beyond Brexit.
Furthermore, businesses should ensure that IP agreements currently being negotiated are in line with relevant Brexit issues. Important existing IP agreements that refer to the EU as a territory should also be reviewed.
In addition, to obtain a cloned UK trademark registration businesses should ensure that pending applications are registered before 31 December 2020.
Finally, the agreements reached and legislation passed by the UK and the EU during the transition period will have further effect on the industry. It is therefore important to stay up to date on further developments. The UK and the EU are continuing to release guidance on Brexit. We will continue to keep you updated.