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31 October 2016CopyrightGordon Harris

Does Brexit mean chaos for IP? Gordon Harris responds to backlash

On September 19 at the 2016 AIPPI World Congress in Milan, I said—and have since been widely quoted—that “Brexit means chaos”. I went on to explain my reasoning, but that has not been so widely quoted. WIPR faithfully and accurately reported the remainder of my talk and then asked its readers whether they agreed with me.

It turns out that 78% did not agree, so was I completely wrong? Was I merely seeking publicity, as some asserted? Or might I have been right, and some people are indulging in that favourite Brexit-related pastime—wishful thinking?

The Oxford English Dictionary defines chaos as “complete disorder and confusion”. Chambers Dictionary talks of “the absence of order”. Is there any evidence of order in the state of planning during this interim period between the referendum and the actual act of leaving?

I would be surprised if many people disagreed with the assertion that there is, at the very least, a lack of certainty across the whole range of IP rights. How will the question of dividing trademarks be handled? The same question applies to registered Community designs. What will happen to unregistered design rights? Will there be supplementary protection certificates in the UK and on what basis? What will become of the Unified Patent Court (UPC) and unitary patent system?

“There needs to be not only evidence of planning, but some indication of the likely contents of those plans in order to fill the information vacuum.”

At the moment there are no answers to these questions, nor is there any evidence that there is a path emerging which will lead to the early creation of something resembling order. It is hard for businesses to predict or plan, and we are seeing some kneejerk behaviour as people try to anticipate likely outcomes.

We are told that there is an upturn in UK trademark filings at the UK Intellectual Property Office. Some members of the IP profession are racing to establish bases in jurisdictions which will remain within the EU. Many lawyers are preparing their applications to get called to the Bar in Dublin.

Making it work

The UPC is a strong case in point. There seems to be a genuine will in the UK professions to try to make the system work and to maintain UK involvement. A group of firms, including my own, have jointly funded an opinion from leading constitutional counsel to test the options for remaining within the unitary patent/UPC system even if Brexit proceeds. Apparently it could be achieved, although it would involve ceding final jurisdiction for patent disputes to the Court of Justice of the European Union (CJEU).

That did not disturb the supporters of the scheme, but then a succession of speeches at the Conservative Party conference in October indicated that giving any authority to the CJEU was going to be unacceptable to the supporters of Brexit (especially the “hard” variety). So what now? Do we have to give up? Will the UK ratify the treaty while it remains a member of the EU in order to allow the UPC to proceed, or will it stay its hand, throwing the whole project into further uncertainty?

No-one knows, so no-one can make plans. What tends to happen in these circumstances is that people plan for the worst. That could be damaging to the UK economy.

IP is important—crucially important. Only last week we read that nearly 40% of people in Europe work for businesses which own significant IP. Over the years the process of economic harmonisation had been closely aligned with the move towards unitary IP systems across the range of rights. Now, at a time when it would be hard to describe the economic and financial environment as stable, huge uncertainty has been planted at the heart of a crucial part of the economy: the creation and protection of IP.

The thrust of some of the criticisms levelled at my Milan speech was that we have all got along together before and we will do so again. There was reference to the “tradition of cooperation and collaboration”, and the fact that the system has “faced and dealt with far more tumultuous events in the past hundreds of years”.

There is obviously an element of truth in that, but the current circumstances are hugely different. Most European countries are now combined in the unitary systems and can work collectively. This is not a case of a group of roughly equally-ranked countries working out a means of mutual cooperation. There is a single market of over 300 million people, and the UK is on the edge of it. The impetus for cooperation is not the same, and there will inevitably be a residue of resentment and annoyance at the trouble caused by the Brexit vote.

This makes the prediction game more difficult, leading to more uncertainty for what will probably be a considerable time.

A common theme in the comments following the report of my speech was that I had overstated the position. “Uncertainty is not the same thing as chaos” was the gist of a number of comments. I am inclined to accept that position as things stand. However, prolonged uncertainty can lead to chaos and there needs to be not only evidence of planning, but some indication of the likely contents of those plans in order to fill the information vacuum which is currently breeding a potentially chaotic environment.

Do I regret using the word “chaos”? Not really. We need action. I do not buy the idea that if we all keep our heads down everything will be fine because we are all reasonable people. Nor do I think that having many potential options helps. Order will be restored when we know what options are serious, and businesses can make plans. I have as much interest in an orderly transition as any reader of WIPR, but we will not make it happen by denying the difficulties and not addressing the uncertainty.

Gordon Harris is a partner at  Gowling WLG. He can be contacted at: gordon.harris@gowlingwlg.com

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18 September 2016   Brexit does not mean Brexit—it means “total chaos”, said one IP lawyer speaking at the 2016 AIPPI World Congress in Milan today.