Is your Business Prepared for the Implications of Brexit?

The Brexit transition period will end on 31 December 2020. In this article we highlight some of the implications this may have for companies’ intellectual property (IP) rights. The question is – are your EU IP rights protected?

Introduction
We have previously reported on the implications Brexit may have for highly regulated industries such as the life sciences industry. However, as Brexit will take effect in less than two months’ time, from 1 January 2021, it is important to evaluate the implications for your business as soon as possible to ensure it remains stable in the new year.

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 in January 2020. During this period the UK has been treated as an EU member state, with EU laws continuing to apply in the UK. Since no mutual EU-UK agreement on an extension of the period was reached before 1 July 2020, it is no longer possible to extend this period. So, on 1 January 2021 the transition period will come to an end and the UK will no longer be treated as an EU member state.

As IP rights only apply in territories where the IP is legally recognised or registered, IP rights naturally change when the territory changes. 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.

Trademarks
After 31 December 2020 EU trademarks will no longer be protected in the UK. However, their protection in the remaining 27 EU countries (EU27) stays the same. All EU trademark registrations in force prior to 31 December 2020 will be automatically converted into UK rights. In other words, registered EU trademarks will be cloned into UK trademark registrations, at no cost. The UK rights will maintain the same filing date as the EU trademark. Furthermore, the original priority date will remain unchanged. This means that the holder of one EU trademark registration will be the holder of two trademark registrations on 1 January 2021: one for the EU and one for the UK.

Applicants with applications pending on 31 December 2020 will have nine months to apply for a national UK application to receive the same protection. The same filing date as the EU trademark will apply.

Any renewal of trademark registrations made prior to 31 December 2020 will result in the comparable UK right also being renewed. However, from 1 January 2021, both the EU trademark and the UK trademark will have to be renewed.
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.

Designs
Community designs and International designs will no longer be valid in the UK after the transition period. However, as with the arrangement for EU trademarks, design rights will immediately and automatically be replaced by UK rights.

Patents
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 be-cause 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 associat-ed 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 UK government has confirmed that it will not be seeking continued participation in the Unitary Patent and Unified Patent Court.

Copyright
International treaties on copyright will ensure that the scope of protection granted will remain largely unchanged. Furthermore, the EU directives and regulations on copyright will be preserved in UK law until the UK has made any new legislation on this subject, if at all. Thus, protection for copyright works in the UK will remain largely unchanged.

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. However, the UK Parliament has created a statutory instrument providing UK citizens, residents, and businesses with new UK database rights after 31 December 2020.

Parallel import and exhaustion of rights
After 1 January 2021 it will no longer be possible to parallel-import goods into the EU that have been placed on the UK market.

However, the UK will continue to find that goods placed in any of the remaining 27 countries of the EU will be considered exhausted in the UK. It remains to be negotiated between the UK and the EU 27 whether IP rights put on the UK market will be considered exhausted in the EU. This is, therefore, a pending question, but as of 1 January 2021 goods put on the market in the UK will not be exhausted in the EU.

Recommended action
It is clear that Brexit will affect many businesses, not least in the life sciences industry. We therefore recommend businesses review all existing IP assets from a Brexit perspective well before 31 December 2020.

Not all situations are covered by the existing and new rules, but businesses should bear in mind that terms could be negotiated between business parties that could have an impact on IP rights. For example, important existing IP agreements that refer to the EU as a territory should be reviewed in order to ensure that the agreements provide the necessary rights beyond Brexit.

Furthermore, businesses should ensure that IP agreements currently being negotiated are in line with relevant Brexit issues. In addition, to obtain a cloned UK trademark registration, businesses should ensure that pending applications are registered before the end of the transition period.

Finally, governments are constantly updating and releasing guidelines on Brexit. To ensure your business is prepared for the changes, it is important to keep up to date, including after 1 January 2021. We will continue to monitor developments closely.