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22 April 2017Patents

Great Repeal Bill: when Brexit becomes real

Despite Britain’s vote to leave the EU in June 2016, one of the ironies is that immediately after it withdraws on March 29, 2019, much of the current European legislation will be copied and pasted into the UK statute book.

While this might be a logical step—there would otherwise be gaps in UK law on the day Britain left the EU—the subsequent unpicking of European laws will undoubtedly be a huge task. All types of businesses, including those relying on IP, will certainly be affected.

To kick start the legal separation, the government has published a White Paper containing information about legislation that will repeal the European Communities Act 1972 as soon as Britain leaves the EU.

At the same time, EU law will be converted into UK legislation wherever “practical and sensible”, before Parliament makes any changes. Secondary legislation will allow the government to correct laws that would not operate appropriately post-leaving day.

The White Paper does not talk specifically about IP (and IP owners know that their rights are probably a long way down the negotiating pecking order), but there are several IP laws that are likely to be affected.

“For IP, and particularly for trademarks and designs, there are going to be lots of gaps that need filling,” says David Stone, partner at Allen & Overy in London.

EU trademarks and registered Community designs will need to continue to apply in the UK in some form, he says, “and something will need to be done about the unregistered Community design right”.

He foresees that while some UK coverage will most probably be made for those rights owners, these rights are unlikely to be the EU rights applied up to this point and more likely to be new UK ones.

This will require secondary legislation, a longstanding instrument in the UK. It allows the government to change the law using powers conferred by an act of Parliament. In its White Paper, the government estimates that between 800 and 1,000 statutory instruments will be required just for the Brexit process. In the previous two Parliaments an average of 1,338 (2005-10) and 1,071 (2010-15) statutory instruments were made every year.

Stone says it will be important to many businesses that there be proper consultation on the statutory instruments once they are drafted.

“Clearly, with all there is to do across government, there just isn’t time for everything to be debated in Parliament. But it’s important that the government continues to talk to users of the system, to make sure that the pros and cons of each proposal are properly considered. It’s also important that businesses have certainty—so quickly resolving the current lack of clarity is key.”

In the copyright arena, the Great Repeal Bill is likely to have an impact in two major ways, says Adam Rendle, senior associate at Taylor Wessing in London.

Although EU regulations will be ‘converted’ into UK law, Rendle notes that the only EU regulations of direct relevance to copyright are still at the draft stage (dealing with content portability, online transmissions of broadcasting organisations and print disabled accessibility). This means that only if they are in force before March 29, 2019 will they become part of UK copyright legislation.

Second, in light of the secondary legislation that will be required, Rendle notes that there are frequent references to the European Economic Area in the Copyright, Designs and Patents Act 1988—one of the UK’s major pieces of IP law—which will need replacing.

“Important policy decisions will be needed to work out how UK copyright law can continue to operate ‘appropriately’. For example, in which territories will first sale of copyright works exhaust the distribution right, and in which territories will satellite broadcasts be deemed to take place?”

‘Appropriate operation’ is another complex area in relation to the portability regulation as the whole system is based on individuals resident in one EU member state being temporarily present in another state, he adds.

What happens to CJEU law?

The role of judgments from the Court of Justice of the European Union (CJEU) is also an important consideration for IP owners.

The government has said “we will bring an end to the jurisdiction of the CJEU”, in a clear sign that Britain wants to move away from the court’s jurisdiction. However, in practice, there will not be an instant rejection of its precedent.

As the White Paper notes, “the Bill will provide that any question as to the meaning of EU-derived law will be determined in the UK courts by reference to the CJEU’s case law as it exists on the day we leave the EU. Everyone will have been operating on the basis that the law means what the CJEU has already determined it does, and any other starting point would be to change the law.”

It adds: “We propose that the bill will provide that historic CJEU case law be given the same binding, or precedent, status in our courts as decisions of our own Supreme Court.”

According to Rendle, this means CJEU judgments will have substantial precedential value, given the limited circumstances in which the Supreme Court will overrule itself.

But he adds: “There is no indication in the White Paper that UK courts will be required or expected to give any particular force to CJEU judgments handed down after exit day.”

Stone says the move is sensible because removing CJEU jurisprudence overnight would “cause chaos”, but he adds that “in reality, very few trademark and design cases have been making it to the Supreme Court—because the first instance judges have been happy to send questions directly to the CJEU.”

"The government has said “we will bring an end to the jurisdiction of the CJEU”, in a clear sign that Britain wants to move away from the court’s jurisdiction."

He explains that Britain’s exit means that the Court of Appeal and the Supreme Court will both have more trademark and design cases to hear.

“But I suspect it’s going to be quite difficult to get permission to appeal from either court in order to challenge pre-Brexit CJEU jurisprudence,” he adds.

Post-Brexit CJEU judgments won’t apply in the UK, so it is inevitable that UK trademark and design law will “head off in a different direction and, in places, revert to what it was prior to harmonisation”, Stone comments.

Preparing for divorce

With the countdown to March 29, 2019 underway, IP owners have many considerations and potential challenges in relation to Brexit, including how they act if and when the UK ratifies the Unified Patent Court (see page 12).

Rendle says that given the number of policy and drafting choices that need to be made, it is difficult for copyright owners to make specific preparations at this stage until
the government makes further announcements.

“In the meantime, copyright owners should analyse their businesses to identify what areas are dependent on parts of UK copyright legislation which would not operate appropriately after exit day. They could then start to prepare contingency plans and/or their lobbying stances.”

Stone says much depends on the negotiations between the UK and the EU, but that businesses should examine their agreements now, in case any changes need to be made.

“If a licence was granted for the territory of the EU, for example, is it clear that that includes the UK post-Brexit, or clear that it doesn’t? Which way it should go will be a business decision, but agreeing clarity now between the parties is going to be preferable to sorting it out post-Brexit in the courts.”

He adds that any agreements entered into from now onwards—eg, licences or settlement agreements—should be explicit on this point.

As with many Brexit developments, the nature and extent of legal changes may depend on political discussions and late-night deals, but nevertheless IP owners should remain as vigilant as ever to ensure they are fully prepared once Britain leaves the EU.

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