Double trouble

The UK’s departure from the European Union had an immediate impact on UK intellectual property (IP) law, much of which was derived from EU law and harmonised across the EU. On 1 January 2021 (the end of the Brexit transition period), EU-wide rights were replaced by parallel UK rights administered by the UK Intellectual Property Office (IPO). There were changes to judicial enforcement as UK lawyers lost the right of representation before the EU Intellectual Property Office (EUIPO) and the Court of Justice of the European Union (CJEU). Furthermore, enforcement proceedings brought in a UK court no longer applied in the EU and proceedings in the EU were no longer effective in the UK.

This year there are further sources of divergence between the way IP rights are managed in the UK and across the EU. These come in the form of the UK government’s Retained EU Law (Revocation and Reform) Bill 2022-2023 (REUL) and the launch of the Unitary Patent and the Unified Patent Court (UPC) whose remit will cover EU-wide patent protection and enforcement.

In theory, REUL jettisons the majority of IP law, which is derived from EU law, but as Iain Connor, IP partner at Michelmores, observes, the realistic prospect is that most EU law will be assimilated, as the bill gives the government powers to save some retained law indefinitely, delay its removal or rewrite its provisions. However, there may be differences in how assimilated laws are interpreted because UK courts are no longer bound by CJEU precedents.

An important ongoing case that reflects this change is Sky v Skykick, in which the Court of Appeal overturned a pre-Brexit High Court ruling that Sky’s trade marks were partially invalid for bad faith (reflecting a previous CJEU ruling) and confirmed that SkyKick infringed Sky’s trade marks. The next instalment of this long-running case will be an appeal to the Supreme Court in June. As Connor explains, the question will be whether what the Supreme Court decides on is in accordance with the CJEU or the Court of Appeal and this will set a post-Brexit precedent.

Parallel trade marks

The most obvious change for businesses seeking to protect their IP is the need to secure separate trade mark protection in the UK and the EU. Peter Brownlow, international IP partner at Bird & Bird, explains: ‘Previously businesses could register a trade mark which covered the EU including the UK. Now they have to file one in the EU and one at the IPO. Brexit has created two systems, where there could have been just one. That means UK and international businesses who require trade mark protection in the UK and the EU have to pay registration fees and associated costs for two separate trade marks and when it comes to enforcement, they have to pay for two enforcement actions, assuming that an infringement is happening in the EU and the UK, where previously it was possible to file enforcement actions in the EU court that would also cover the UK.’

However, this is not having a huge impact as international businesses generally register trade marks territory by territory in multiple jurisdictions, so they are simply adding the UK to their list.

Having focused immediately post-Brexit on helping clients assert their rights in the UK under the new ‘cloned’ arrangements, ensuring they had a UK agent and a UK address – following the IPO’s requirement of a UK address for service – lawyers are now focusing on technical considerations. ‘The conversion work has been done and we are now looking at issues that have come out of separating the rights. For example, to keep a trade mark alive you have to prove use, and now use in the UK cannot be cited to keep an EU trade mark alive, and vice versa,’ says Joel Smith, IP partner at Hogan Lovells

More concerning to businesses are the potential implications of REUL for trade marks. Brownlow explains that because UK trade mark law developed out of European case law and CJEU decisions, it is completely harmonised with EU law, but if the legislation is scrapped, it will create uncertainty for companies doing business in the UK. ‘There’s a slight tension between making it easier to change the law and maintaining stability and precedent,’ he says. ‘However, there is a possibility of codifying some of the major precedent cases from Europe in legislation.’

‘It’s a political choice to sunset EU retained law, even though some of it may have been part of English law for 40-plus years,’ observes Smith, speculating on whether REUL is a distraction from creating new laws to address new problems around IP and technology. ‘There is a whole section of IP rights that protect databases, which we didn’t have much of prior to EU law, so at the moment it is not clear whether it will be retained, or whether those rights will be removed and replaced with something different,’ he says, adding that most businesses would want UK laws to remain aligned with Europe.

William Miles, partner at specialist intellectual property firm Briffa, reports that some UK businesses ‘now tend to file in the UK first and are more reluctant to consider an EU trade mark (covering 27 member states, and not the UK). In fact, we have seen the EU slip from the number one or number two spot in terms of filings, as businesses tend to go for the UK and then the US, over the EU. Clients tend to say that this is because of the cost and uncertainty of trading with the EU in a post-Brexit world.’

This uncertainty is being played out in the courts. ‘We are seeing a significant impact on brand protection strategies at the EUIPO – as UK rights holders seek to enforce their rights,’ says Osborne Clarke partner Richard May. ‘Post-Brexit, the EUIPO said that after Brexit no one could rely on UK prior rights at the EUIPO. Then we had several judgments from the General Court contradicting this and saying that if a trade mark was filed or decided before Brexit, it could rely on UK rights. It now looks like several of those cases will be determined by the CJEU so there should be more clarity on this by the summer.’

Louise Popple, senior counsel, knowledge in Taylor Wessing’s IP group agrees, adding that a lot of the post-Brexit uncertainty came from the fact that although the UK made detailed commitments around IP in the withdrawal agreement and legislation, the EU didn’t legislate for Brexit. ‘So we knew what the UK was doing, but we didn’t know what the EU was going to do, for example about the application of prior rights in trade mark enforcement.’

Copyrights and wrongs

While most UK IP law still tracks its EU equivalent, differences are already emerging, notably around copyright law in England and Wales. Connor highlights the CJEU ruling in the 2019 Cofemel case, that original intellectual creations in any media – in this case it was fashion design – were capable of being protected by copyright.

'We are interested to see whether the UK will continue to reflect the EU’s approach to works of artistic craftsmanship or whether we will diverge on this issue'

William Miles, Briffa

However, the UK’s Copyright, Designs and Patents Act 1988, which was not based on EU law, is less generous, assigning copyright protection only to works that fall into a closed list of categories. Last year, this was applied to Shazam Productions Ltd v Only Fools The Dining Experience Ltd [2022] when the Intellectual Property Enterprise Court (IPEC) ruled that the dining experience quiz show infringed copyright by replicating characters from the Only Fools and Horses TV programme. Miles references another IPEC case, WaterRower (UK) Ltd v Liking Ltd (T/A Topiom) [2022] which allowed a copyright infringement claim to go ahead in relation to a rowing machine. ‘We are interested to see whether the UK will continue to reflect the EU’s approach to works of artistic craftsmanship or whether we will diverge on this issue and retreat to a less claimant-friendly position,’ he says.

Patents pending

Some still find it disappointing that after being heavily involved for many years in preparations for the UPC, the UK is now not participating. The fact that a small number of UPC decisions would have been referred to the CJEU was a red line for the UK government. But there are disadvantages of regional rather than national patent protection and enforcement. Bird & Bird IP partner Sally Shorthose reports that clients whose patent portfolios are of fundamental importance to the business are looking at opting out of the UPC, at least for now. ‘There are upsides and downsides of the UPC. You can get coverage everywhere, but if you’re challenged you can lose that protection,’ she says. Furthermore, because it is a new system, the outcomes are uncertain.

Osborne Clarke partner and pharma/biotech lawyer Tim Harris agrees. ‘Nobody knows how the UPC will operate in practice and that brings challenges and risks. Obviously, we hope that people will continue to litigate patents in the UK, perhaps to gain a strategic advantage in relation to the UPC if they can get a quick well-reasoned decision. While the original plan was for the UPC to replace patent litigation, it is not replacing the systems in Germany, Italy or France, certainly for the first seven years. A lot of pharmaceutical companies are planning to keep their most important patents outside the UPC.’

During the three months before the UPC launches in June, companies can remove existing patents from the UPC, in other words opt out, so that they continue to be litigated in national courts, and they need to decide on this course of action now. Osborne Clarke knowledge lawyer Robyn Trigg adds that any opt-outs made now can be withdrawn later if businesses like what they see when the UPC is up and running.

Another area of uncertainty is IP rights in relation to life sciences, where companies have to get a separate marketing authorisation for the sale of pharmaceutical and biomedical devices.

‘It could go either way,’ says Shorthose. ‘[The UK] could get left out if companies feel it is too much effort to get another marketing authorisation, which can take years to obtain. On the other hand, it could be that our independence means that we will be used as a test market, as the MHRA [Medicines and Healthcare products Regulatory Agency] has always been a pragmatic organisation and we may not be following some of the new European regimes.’

Dr Paul England, senior counsel, knowledge, at Taylor Wessing, points out that patent law has been insulated from legislative changes because it is based on the European Patent Convention (EPC) which is a multinational treaty covering 39 countries, rather than EU law – so it reaches well beyond the EU. However, there are exceptions. One is in relation to the pharmaceutical sector where there is an additional right of the supplementary protection certificate (SPC) which extends patent protection between filing a patent and obtaining a marketing authorisation. SPCs are territorial, so immediately after Brexit, there were separate SPCs for Great Britain and Northern Ireland, which was an additional administrative burden. This has now been amended so that there is a single SPC extension covering the UK.

Territorial strategy

Apart from duplicating processes, and therefore increasing costs, Brexit has not had a significant impact on international businesses which have always taken a territorial approach to IP protection. From a law firm perspective, this produces more work for international offices and EU-qualified lawyers who can advise clients operating in the UK and Europe as well as other territories. Shorthose envisages challenges for UK firms who do not have representation in European jurisdictions: ‘We have a big footprint throughout Europe, and our new Dublin office also handles patent litigation.’

Briffa’s Miles agrees that smaller firms advising on IP now require a European presence. Briffa opened a new office in Ireland just before Brexit. ‘We felt this was necessary in order for us to legitimately practice in the EU but it has been a hugely expensive undertaking for a small firm and something that only became necessary as a result of Brexit,’ he explains.

London disputes

Is Brexit eroding London’s position as a centre for IP disputes? Opinions are divided. Miles believes it is. ‘The excellence of our court system hasn’t necessarily changed, although the government’s ability to fund it probably has. However the relevance of our court system is in danger of reducing. Essentially, if the rules of commerce become less favourable to businesses, commercial disputes are less likely to be dealt with in this jurisdiction.’

However, the UK has not seen a downturn in litigation. On the contrary, Hogan Lovells’ Smith points out that this year will see four or five IP cases going to the Supreme Court. This may be due to Brexit, because ‘in all these cases the court sees a need to assert what the UK’s future law is in a particular area. For example, Sky v Skykick tackles a big policy question – whether the UK follows the EU position or finds a new UK position, which might be a bit closer to the US. Another case, Lifestyle Equities v Amazon, will be the first Supreme Court case about whether the UK courts have jurisdiction over overseas websites and online marketplaces targeting advertising to UK consumers, raising questions on whether a website somewhere else in the world can infringe a UK trade mark.’ These precedents will clarify the UK’s position and are likely to influence EU decisions too.

Despite concerns that it would be more difficult to serve and enforce judgments in London, and that it is no longer possible to get a pan-European injunction in the UK courts, Taylor Wessing has not seen any reduction in litigation in the UK. Popple is bullish about the future. ‘The UK is the world’s sixth biggest economy and if you want a remedy in a jurisdiction, you have to fight in that jurisdiction,’ she says.

‘The UK will always be a good place to litigate IP disputes because we have specialist IP judges and lawyers, and fully reasoned decisions,’ she adds, articulating the general impression is that despite the duplication of processes and fees, UK IP law is pretty much business as usual.

Looking ahead, it is likely that rather than being excluded from Europe, the UK will be seen as a bridge to Europe for asserting and defending IP rights. Taylor Wessing’s England argues that while the UPC is new and untested, the UK Patents Court has highly specialised judges, most of whom have scientific backgrounds, well-reasoned judgments and detailed evidential analysis. These attributes coupled with the UK reputation for justice and fast decisions, make the UK an ideal testing jurisdiction for multinational firms before embarking on regional territorial coverage at the UPC.

‘We could find that the UK patents profession is busier than ever,’ he says. ‘US clients have always treated UK as a bridge to the European continent, asking us to work out European strategies starting with the UK, and that often means starting with a good quality judgment in the UK that, although it is not binding in Europe, is influential. Patent holders know their businesses and they will work out the strategic possibilities however the system is set up.’

 

Joanna Goodman is a freelance journalist