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16th June 2016

The EU referendum and intellectual property

Graeme Fearon, partner and intellectual property and data protection specialist at Thrings, comments: If the UK votes to stay in the EU next week, there will of course be no immediate effect on the world of intellectual property (IP) – although Bremainers may well breathe a collective sigh of relief.

A vote to leave (Brexit) is likely to see a dramatic upheaval in UK law, especially the IP rights of UK businesses. Although most IP rights are national in scope, this area of law is heavily influenced by EU directives and regulations, and it could lead to a period of serious and expensive disruption.

The exact landscape of a post-Brexit future is far from clear. The UK could end up staying in the EEA, join the European Free Trade Association (EFTA), or even attempt to engineer a more bespoke relationship with the EU.

IP laws are very largely harmonised across the EU, and much of the UK’s legislation directly implements EU laws. Brexit would not be a simple divorce but would involve unpicking any UK laws which currently derive from EU legislation. It may be the case that, as a stop-gap measure, these EU laws are simply “cut-and-pasted” back into the UK in order to avoid any kind of legislative vacuum.  However, it is clear that a vote for Brexit would fire the starting gun on at least two years of intense negotiations, during which laws and international agreements would have to be renegotiated, replaced, re-enacted and amended.

Beyond this, the key implications in the IP field would be the exclusion of the UK from pan-European rights. The UK would no longer be able to take advantage of EU rights such as EU trade marks, Community design rights, Community plant breeders’ rights and the Unitary Patent. The result might be that the UK portion of such rights simply evaporates, with a consequent loss of value to UK businesses. Alternatively, it may be possible to engineer a “translation” of the UK portion into a UK-only right, but this will be far from simple. Post-Brexit, all businesses operating in Europe would need to consider incurring the additional expense of UK-specific IP coverage alongside their EU protection.

Other rights, such as copyrights, national patents and European Patent Office (EPO) patents, are not directly covered by EU law, but there is a strong possibility that the UK’s laws could begin to diverge from those of the EU. Added to this, the UK could come to be seen as second-class economy with no direct voice in Europe which may begin to undermine the competitiveness and market position of UK-based companies.

Looking further ahead, a post-Brexit UK would be sitting on the sidelines while the EU refreshes its data protection laws, single digital market and IP enforcement regime. We might end up having to adopt similar changes by default (or else risk finding ourselves excluded from the world’s largest marketplace) but we would have no input into their drafting.

The EU has largely had a beneficial impact on IP. Registration costs have fallen and enforcement has become simpler and more harmonised, reducing the possibility of “forum shopping” where parties seek to exploit national differences for tactical advantage. Whatever positives Brexit may offer, it will inevitably cast a cloud of uncertainty over this landscape.

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