Brexit: IP owners still in the dark after High Court article 50 ruling

The English High Court ruled today that parliament must vote on whether the UK can trigger article 50 of the Lisbon Treaty, but lawyers say intellectual property owners are still uncertain about the path ahead.

The ruling means that the government cannot trigger Brexit discussions on its own.

In a summary of the R (Miller) v Secretary of State for Exiting the EU case, the court said that it did not accept the UK government’s argument that it could invoke article 50 without parliamentary approval.

In a statement, the UK government said it is “disappointed by the court’s judgment” and will appeal against it to the UK Supreme Court.

Discussing the implications for IP, Jeremy Morton, partner at Harbottle & Lewis, who believes it will still be long before “we have answers”, said: “Whatever the outcome of the appeal, we are no nearer to an understanding of what Brexit means for intellectual property owners.”

He added that along with the fate of the Unified Patent Court (UPC), a key question is whether “we will be part of a single market like the non-EU members of the European Economic Area, who adopt some aspects of EU IP laws including exhaustion of rights”.

Richard Pinckney, partner at Bristows, explained that the judgment throws Prime Minister Theresa May’s “stated intention to use prerogative powers to invoke article 50 before the end of March 2017” into doubt.

He added that, subject to a review by the Supreme Court, which is expected before early 2017, this decision potentially delays the UK’s exit from the EU and may even throw it into doubt altogether.

“Before today’s decision, IP rights holders could proceed with some level of certainty that the UK would start the exit negotiation process in March 2017. However, there is now uncertainty surrounding what will happen and when,” he said.

Pinckney advised that it would be prudent for rights holders to continue to “evaluate and prepare for a post-Brexit landscape”. However, he added that rights owners may now have more time to do this and that work may “ultimately be entirely unnecessary”.

If the Supreme Court upholds the decision, Pinckney believes that there may be further delays to the UPC project. But this may “provide an opportunity for stakeholders to work together towards a solution which provides certainty, perhaps one which allows non-EU European Patent Convention signatories to participate”.

Joel Smith, partner at Herbert Smith Freehills, added that the decision will “compel the government to outline its negotiation lines to parliament”, possibly providing a better idea of the extent to which “any IP concerns form a part of the likely active negotiations with the EU”.

He explained that clarity is needed on a number of key issues for IP owners in advance of Brexit, and that “we are currently being told by government that there will be no parliamentary time to pass any primary legislation before Brexit to address any IP concerns”.

“However, we would expect for any critical IP changes to be addressed as a section within the Great Repeal Bill. This should include creation of equivalent rights going forward in the UK for holders of existing European Union trademarks, EU design rights, geographical indications, supplementary protection certificates and EU plant variety rights,” said Smith.

Gordon Harris, partner at Gowling WLG, explained that if parliament indicates that approval (of triggering article 50) would only be forthcoming if th e UK remains within the single market, “negotiations on the terms of any such membership could be expected to take considerable time”.

“This raises the prospect of parliament refusing to trigger article 50 until agreement had been reached in case agreement was not reached and a ‘hard Brexit’ occurred, and therefore a lengthy term of debate before any Brexit occurred,” he said.

For IP, the implications of Brexit will “crystallise once the form of Brexit becomes clearer”, said Harris.

“For as long as Brexit does not occur, the status quo will, essentially, continue.”

Rowan Freeland, IP partner at Simmons & Simmons, added that the ruling was not a “surprise, given the concessions made by the government during the hearing and the nature of the case law”.

He added: “For the time being, the decision should strengthen the government’s hand vis-à-vis the EU, and the majority of ‘soft’ Brexiters in parliament may affect the balance of the debate between ‘hard’ and ‘soft’ Brexit."

This may make UK participation in the UPC "more politically possible" and will generally lead to a more "pragmatic approach in the negotiations affecting other IP rights", said Freeland.