Legal briefing | IP & Technology, Brexit, Commercial & Technology, Intellectual Property |

What does the UK-EU Brexit deal say about intellectual property?

Overview

With 23 pages of coverage, you'd be forgiven for thinking that the UK-EU Trade and Cooperation Agreement (TCA) does quite a lot for intellectual property.  But as we explain below, length does not always equate to substantial benefits for business.  What it does mean is that the UK's room for manoeuvre on IP issues post-Brexit is somewhat constrained – although there are some areas where it will have freedom to do things differently.

Overview

On the surface, it appears that the Trade and Co-operation Agreement  (TCA) has a lot to say about how the UK and EU intellectual property regimes will operate post-Brexit. However, on closer inspection, the TCA largely sets out minimum standards for the UK and EU regimes to meet, which are already in line with treaties and EU and UK laws that both the UK and the EU have to adhere to (and already meet). There are a limited number of exceptions to this rule, which do have the potential to curtail divergence between the UK and EU regimes, which in turn might affect (to a degree) the UK's ability to operate competitively on the global stage in respect of these areas. We set these out below. We also take a closer look at those areas in which, conversely, there is room for manoeuvre for the UK.

In terms of the more immediate practical implications of Brexit for rights holders, please see our previous briefing. Most of these practical implications in fact stem from the provisions of the Withdrawal Agreement, rather than the TCA.

Copyright and digital content

In the area of copyright, the TCA largely operates to outline the current status quo, but for the UK, there is slight expansion in the field of designs, with the TCA stating that the parties should ensure that designs are protected by copyright law. This requires the UK to extend its copyright regime to the protection of designs, both 2D and 3D, with protection arising from the date the design was first created or fixed. Copyright protection may therefore be extended to designs which would not have previously benefitted from such protection. We await further developments on this front.    

The TCA also outlines a commitment to keep the artists resale right that gives the original author of graphic or plastic art a right to receive a royalty on resale. Whilst the artist resale right is recognised by many countries across the world, key markets such as the United States and China do not recognise such a right. Therefore the commitment under the TCA to preserve the resale right may put the UK at a competitive disadvantage long term as regards auction houses, for example (although to the extent that artists are able to sell their own work, the continued availability of the resale right arguably means that the UK remains as attractive a forum for auctions as it was before 31 December 2020).

The TCA includes a commitment on the parties to promote co-operation and non-discriminatory treatment between their respective collective rights management organisations. However, whilst EEA collective management organisations are no longer required to represent UK rights holders, or the catalogues of UK collective management organisations for online licensing of musical rights, in the UK, existing obligations on UK collective management organisations have been maintained. For instance, those organisations that offer multi-territorial licensing of online rights in musical works, will continue to be required to represent, on request, the catalogue of other collective management organisations, whether UK or EEA, for multi territorial licensing purposes.

Where might there be divergence?

Cross border portability of online content services, copyright clearance for satellite broadcasts into more than one state, reciprocal protection for database rights, and the exception from copyright protection for orphan works which allows cultural heritage institutions to make orphan works available online without the permission of the copyright holder, are all arrangements that will no longer apply in the UK or benefit UK entities or citizens, largely because these were all EU specific endeavours which have fallen away as a result of Brexit, rather than the result of international treaties.    

Although the UK and the EU have agreed to maintain a duration of copyright protection equal to the duration of the author's life plus 70 years, there is some flexibility for the UK in relation to the way in which the term of protection can be calculated for musical compositions with words, works of join authorship, cinematographic works, audiovisual works, and anonymous and pseudo-anonymous works.

There is no limit on either side, on the types of work which can qualify for copyright protection. Both parties will therefore have freedom to develop their own laws in this respect.  

Trade marks

The TCA does little to change the position on trade marks, but rather provides a minimum standard of protection which is already enshrined in EU and UK law. For more information on how trade marks will be regulated in the UK after Brexit, please see our Brexit IP briefing.

Designs

Please see our Brexit IP briefing for what the practical implications which leaving the EU and the end of the transition period are for holders of Registered Community Designs and Unregistered Community Designs, including the creation of a Continuing Unregistered Design and a Supplementary Unregistered Design to protect aspects of designs in the UK. These were put in place long before the TCA was agreed.

The remaining provisions dealing with designs in the TCA largely reflect the provisions in existing treaties to which the EU and the UK are party, such as the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), so there is nothing new here.

The TCA does not (as had been hoped) address the territorial disclosure requirements for Unregistered Community Designs and the UK Supplementary Unregistered Design Right to arise. It is therefore the case that first disclosure in the EU will not establish a Supplementary Unregistered Design in the UK (only first disclosure in the UK or a qualifying country can do that), and any such disclosure could destroy the novelty of the design should someone seek to later establish UK unregistered rights. A similar situation will arise in respect of Unregistered Community Designs in the EU, and first disclosure in the UK. This means that designers will have to choose which market to disclose in first.

Design disclosure problems: Fashion

By way of example, Brexit leaves fashion designers with a dilemma about where to show their designs first.  If they exhibit at a fashion show in say, London, the design will have been disclosed in the UK – but not the EU, which means there is a risk of another business rushing out a similar design in the EU before the outfit has been disclosed there.  Designers may conclude that they are better off exhibiting in the EU first, because that will give them protection in the larger market.  Until 31 December 2020, this was not a concern because the UK was still within the EU Single Market.  As noted above, the TCA does not contain any provisions which address this problem.

Patents and supplementary protection certificates

Similarly, the TCA changes little with respect to the patent regimes in the UK and EU, in part because patent protection in Europe is achieved through the European Patent Office, which is not an EU agency. It therefore remained unaffected by the UK's exit from the EU.

However, there is room for divergence in the way in which the supplementary protection certificate (SPC) system operates, as under the TCA, the UK is free to amend its rules in this regard (see textbox below for an explanation of SPCs). The TCA simply requires the EU and the UK to have in place further protection for patent protected products, so as to compensate the holder for any reduction in protection brought about by an administrative procedure such as obtaining a marketing authorisation.

Having said this, the system of supplementary protection certification will continue in the UK, save that the UK Government has made legislation providing that SPCs for the UK will only be granted on the basis of a UK marketing authorisation. There is no change to the length of protection or fees.

What is a supplementary protection certificate?

A supplementary protection certificate (SPC) is an intellectual property right that effectively extends a patent right in relation to certain pharmaceutical and plant protection products.  SPCs can extend a patent right (which normally lasts 20 years) for up to a further 5 years.  Pharmaceutical and plant protection products are singled out for special treatment in recognition of the fact that the regulatory approval process often means that by the time a product gets to market,  a substantial portion of the normal 20 year period of protection has already elapsed (often more than 5 years).

Exhaustion of rights

IP rights are said to be "exhausted" when the goods have been placed, with the permission of the holder of the IP right, on the market in a given territory. This is important for distributors and retailers because once IP rights have been exhausted, the IP owner cannot object to any further re-sale or distribution of those goods within that territory (and possibly further afield, depending on the position in other territories on exhaustion). In an area which leaves clear room for divergence, the TCA provides for both parties to adopt their own independent (and potentially different) positions on exhaustion.

How is exhaustion of rights affected by Brexit?

Until the end of the Brexit transition period, the position in the UK and the rest of the EEA was that IP rights were regarded as exhausted when goods were placed on the market anywhere in the Single Market (which, until 31 December 2020, included the UK). For example, goods imported from say, Japan, into the UK, could then be transported to France and sold there without the Japanese rights holder (or any of its licensees in the EEA) being able to object on the basis of its IP rights. However, from 1 January 2021, so far as the EU is concerned, the Japanese firm's IP rights in the EEA will not have been exhausted by placing the goods on the market in the UK.  The Japanese firm will therefore be able to object to a UK business exporting those goods to France, on the basis that it has not given its consent to the use of its EEA trade marks (or other relevant IP rights) for the marketing or sale of those goods in the EEA. The UK, meanwhile, is taking a different approach from the EU to exhaustion. It will continue to regard IP rights as having been exhausted in respect of the UK as soon as goods are put on the market in the EEA. So, if the Japanese firm were to put its goods on the market in France, it could not then use its UK IP rights to prevent them being exported to the UK. [NOTE: to BD Systems: Please box up]

The TCA does not include any commitment from the EU on exhaustion or set out any restrictions on the UK and therefore the UK has obtained the ability to set out its own regime for the exhaustion of IP. The UK government stated that it would conduct a consultation in early 2021 to determine the most appropriate regime to govern parallel trade, although this has not taken place to date.

Protection and enforcement of geographical indications

Protection and enforcement of Geographical Indications

Geographical Indications refers to protection for products associated with a particular area, such as Melton Mowbray pork pies or Cornish pasties.  The TCA does not introduce substantive changes with respect to Geographical Indications but states that the UK and EU will use reasonable endeavours to agree such rules. For more information on how Geographical Indications will be regulated in the UK after Brexit, please see our Brexit IP briefing.

Enforcement

The TCA requires the parties to provide for the measures, procedures and remedies necessary to ensure the enforcement of IP rights, and are not dissimilar to those set out in the Enforcement Directive 2004/48.

However, even though the TCA provides for reasonably close alignment on enforcement issues, IP owners will now need to file separate 'applications for action' in respect of the EU and the UK (whereas until 31 December 2020, a single application would have been sufficient to put customs authorities on notice across the EU, not just the UK).

What is the real value of the 23 pages of intellectual property coverage in the TCA?

In conclusion, it will be apparent from the above that the 23 pages of intellectual property coverage in the TCA preserve few of the benefits of EU membership, whilst at the same time making it difficult in many areas for the UK to depart significantly from its existing approach (and the areas where the UK can diverge from the EU are often fairly narrow and technical).  Given that, one might well query what the point is of such apparently extensive coverage when the impact at a practical, day-to-day level is comparatively small.  However, it is worth noting the following points:

  • Brexit may have been about many things but few would suggest that it was about a desire to radically change the intellectual property landscape in the UK; as such, it was an area where the UK felt able to accept commitments which largely preserve the pre-Brexit position, except in areas where this was inconsistent with the UK's red lines on sovereignty/regulatory independence.  Indeed, in many of the areas where the UK has made commitments, it was already heavily constrained by its participation in other international treaties.
  • It is not uncommon for free trade agreements to contain provisions on intellectual property similar to those in the TCA. For example, both the EU and the UK's recent trade agreements with Japan also have extensive coverage of intellectual property.  It is probably fair to say that countries tend to view such provisions as a way of signalling their commitment to a high level of IP protection.
  • It may therefore be that the main value of the TCA's provisions on intellectual property is essentially symbolic. As such, their main function may be to provide comfort to businesses in both the UK and the EU as regards the parties' future intentions (since they have clearly committed themselves to maintaining a high degree of IP protection and in some areas they have agreed to go further than required under international treaties). 

For more information on the impact of Brexit on intellectual property rights at a more practical level, please see our Brexit IP briefing.

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