Brexit: Considerations for IP agreements

EU-flagPatricia Collis from Bird & Bird is speaking about Brexit and IP agreements at ITMA’s Autumn Seminar on 6th October in Birmingham.

Patricia gave us a short preview of some of the issues she will be covering in the talk:

Intellectual property is just one area that is set to be impacted by the UK’s decision to leave the EU.

The areas of trade mark and design protection are particularly relevant as both provide for unitary EU-wide rights. Such rights are popular as they are cost-effective and bring with them the ability to obtain EU-wide injunctive relief.

Holders of such rights in the form of EU Trade Marks (EUTMs), Registered Community Designs (RCDs) and Unregistered Community Designs (UCDs) must wait to see what mechanism (if any) is implemented to ensure these rights continue to provide them with protection in the UK after the EU withdrawal process is complete.

Some steps can be contemplated now – for example, a review of current EUTM portfolios and the filing of new UK trade mark applications for key brands, or those that have only been used in EU territories other than the UK (such that any UK rights separated out from the EUTM rights could potentially be vulnerable to non-use revocation). Any decisions and actions taken in this regard will be influenced by commercial interests and strategies, and ultimately a desire to achieve some level of certainty at a time of great uncertainty.

In addition to providing holders with the ability to prevent others using similar branding, these IP rights are themselves pieces of commercial property. As such, they are often the subject of various contractual arrangements. Two key types of contracts involving such rights, in particular EUTMs, are co-existence and licensing agreements.

The UK’s decision to leave the EU is something that should be borne in mind both when seeking to rely on existing agreements and when drafting new agreements. For any existing agreement the effect of the decision to leave the EU will in large part depend on the governing law of that agreement, as well as the particular wording used in that agreement. Ultimately, such agreements are contracts between two (or more) parties, so the normal national rules of contractual construction will apply, including consideration of the intentions of the parties at the time of execution.

One issue which could pose potential problems is where the territory of an agreement is simply “the European Union”. Even before the Brexit decision, this wording was potentially problematic as it left room for argument in the case of EU expansion. If the wording "the European Union" was chosen as shorthand for the territories that were EU Member States at the time of execution of the agreement, there is a clear argument that the agreement would continue to cover the UK even after the process of EU withdrawal is complete. However, even in this case, there will still be issues to consider, particularly where the rights the subject of the agreement are all EUTM rights.

Taking the case of licensing agreements, one potential scenario is that new UK rights will be derived from the EUTM rights, and that the territory of a given licence will be deemed to cover the UK after Brexit takes place. As regards the new UK rights, such licences will be governed by the provisions of the Trade Marks Act 1994, which differ in some respects from the related provisions in the EUTM Regulation (EUTMR). One key difference is that, unless the licence agreement provides otherwise, UK law allows any licensee (exclusive, non-exclusive or sole) to bring infringement proceedings in their own name if certain conditions are met, whereas the EUTMR only affords such a right to exclusive licensees.

As with most Brexit-related issues, the full effect on IP agreements is far from clear and will remain so for some time. In the meantime, the Brexit decision should not be ignored when concluding new agreements or reviewing existing agreements.

Patricia Collis, Bird & Bird