The Prime Minister, Theresa May, triggered Article 50 on 29 March 2017 and the following day the government followed up with its White Paper on the Great Repeal Bill ("GRB"), the piece of legislation which is intended will provide a "smooth and orderly exit" from the European Union. In this blog we look at the implications for intellectual property rights.
The White Paper sets out the three main focuses of the GRB:
to repeal the European Communities Act 1972, the law which brought the UK into the European Economic Community, gives effect to EU law in the UK, and makes EU supreme law;
to convert existing EU law into UK law at the moment of exit; and
to create delegated powers to enact secondary legislation.
In practice, achieving these aims is not straightforward and the 38-page paper is light on detail. Disappointingly, while the White Paper provides specific examples of how employment, immigration and environmental law will work in practice, IP law is not mentioned at all. This may be due to the brevity of the paper and the fact that IP may be considered a 'niche' interest. However, considering the complexities involved in IP law, which is highly integrated at an EU level, it is also possible that the government has deliberately avoided mentioning IP. IP is one area of law which will clearly requires additional legislation, which may potentially be enacted under the delegated powers from the GRB.
Conversion of EU law - Legislation
The White Paper states that "unless and until domestic law is changed by UK legislators, legal rights and obligations in the UK should where possible be the same after we have left the EU as they were immediately before we left".
The GRB will:
- automatically convert directly applicable EU Law (EU Regulations and certain rights granted by EU Treaties) into UK Law before the UK leaves the EU; and
- preserve the laws that have been made in the UK to implement EU obligations from other types of law (e.g. EU Directives). This will include preserving both primary and secondary legislation.
The number of laws involved is vast: there are an estimated 12,000 EU Regulations in force and around 7,900 statutory instruments which implement EU legislation, including many dealing with IP.
In some areas of IP law, most notably trade mark and registered design law, the overwhelming majority of domestic UK law has already been framed as a result of EU Directives. It is good news that this domestic body of law will be preserved intact and that rights created under this law, such as registered UK trade marks will be unaffected.
However, serious questions will arise in relation to directly applicable EU law, which has also created a wealth of business critical IP rights. This will include the regulatory frameworks creating and governing European Union Trade Marks (EUTMs), Community Designs, Supplementary Protection Certificates in the patent arena, Database Rights, and a variety of different Geographical Indications.
In principle, if directly applicable EU law is imported wholesale into UK law upon Brexit then the rights created by these regulatory frameworks, such as the EUTM, will continue to be enforceable within the UK. This might be similar to the way that national law in Jersey allows for enforcement of an EUTM, despite the fact that Jersey does not form part of the EU.
However, many of the rights mentioned above are governed by EU institutions, such as the European Union Intellectual Property Office, and the UK will have no power to dictate how decisions are made at these institutions, which are bound only to follow the EU Regulations. The White Paper acknowledges that situations where EU institutions are involved will be tricky to manage and this issue will be acute in the case of IP rights. For example, even if an EUTM owner is able to enforce in the UK, owners of earlier UK rights will not be able to challenge the validity of an EUTM since the UK legislature has no power to mandate the terms on which EU IP rights are created or held to be valid. The checks and balances built into EU Trade Mark law would cease to function effectively where UK businesses are concerned.
Despite the "smooth and orderly exit" promised by the White Paper, the IP position of businesses in the UK will be radically impacted by Brexit and the approach outlined of importing directly effective EU law into UK law will only partially address issues arising in relation to IP rights.
Conversion of EU law – Case Law
The GRB will provide that any question as to the meaning of laws derived from EU law (i.e. UK laws created by the conversion of EU Regulations under the GRB or created prior to Brexit as a result of implementing EU Directives) will be determined by the UK courts by reference to the Court of Justice of the European Union's decisions as they exist on the day that the UK leaves the EU. Historic CJEU case law will be given the same binding, or precedent, status in the UK courts as the decisions of the UK Supreme Court. This means that the UK courts will be able to depart from a CJEU decision but only at the highest level of appeal.
From an IP perspective, this is good news. The great majority of IP case law over the last thirty years has been driven by rulings from the CJEU. Analysis of key concepts such as likelihood of confusion for trade mark infringement purposes is grounded in well-known CJEU judgments. By preserving the binding status of this case law, IP owners will at least be assured that key legal tests will remain consistent for the time being.
However, given that the UK judiciary have often been at odds with the CJEU over aspects of IP law in the past, it is also likely that we will see a surge in appeals asking the Supreme Court to depart from historical decisions by the CJEU on IP matters. If this occurs, we would expect to see a swing away from the (relatively) claimant-friendly approach typical of the CJEU towards the more defendant-friendly approach that has often characterised UK judicial thinking on IP matters.
The starting point of the White Paper is that existing rights will be preserved under UK law, which will include any rights which arise through directly applicable EU legislation. This will at least smooth the way for owners of EU IP rights whose ability to enforce in the UK should, in principle, continue under the GRB.
However, while that may avoid a 'cliff-edge' loss of enforceable rights for IP owners, the government's proposal is not a complete solution for IP and many unwelcome outcomes would still arise. For example, while it appears that a party would still be able to bring an EUTM infringement claim in the UK, the defendant would not be able to launch a defence and counterclaim on invalidity grounds. Genuine use of the trade mark in the UK would also not support the EUTM registration, which could still be revoked at the EUIPO. We will have to wait and see whether issues like this will be addressed in the GRB, or will be left for primary/secondary legislation.
Similarly, the decision to apply binding precedent status for existing CJEU case law will give stability in the medium-term where IP dispute resolution is concerned. However, in the longer term, it is likely that we will see a significant increase in IP cases going up to the highest level of appeal in the UK as parties encourage the Supreme Court to effectively overturn existing CJEU decisions that are unpopular with certain UK businesses or industries.
We will be monitoring IP developments during the Brexit process and reporting regularly. Please do not hesitate to contact us if your business or clients face specific IP concerns in relation to Brexit.
The White Paper is available here:
With thanks to Richard Lawne and Sam Woodley for assistance in researching and writing this blog post.