23 June 2016Copyright

IP and ‘Brexit’: too much uncertainty and the devil you know

Britain goes to the polls today, June 23, to decide whether the UK should remain a member of the EU or leave the union. With lawyers predicting uncertainty and negativity in the event of a ‘Brexit’, WIPR provides an overview of what a vote to leave would mean for IP.

After what feels like a lifetime of number-crunching, mud-slinging and what could easily be described as scare tactics, the UK’s EU judgement day is upon us.

The referendum campaign has gone from the ridiculous—a shouting match between fishing boats on London’s River Thames—to the downright unpleasant in the form of an anti-immigration poster showing hordes of war-fleeing refugees traipsing through Europe.

But the issue of intellectual property and what will happen in the event of a ‘Brexit’ has seldom, if at all, been addressed.

When concerns including the economy, public safety and immigration top the bill, it may not be surprising that IP takes a back seat, but there is a general sense that it should be higher up the list and that its importance should not be overlooked.

Gwilym Roberts, partner at law firm Kilburn & Strode, certainly thinks so.

Explaining the impact on businesses, he says: “We have an IP system at the moment where generally everyone knows where they stand. You can get an IP right at a good price across Europe. Leaving would likely increase the price and would increase uncertainty. It’s everything that businesses don’t like.

“IP is one of the cornerstones of economic growth, and to fragment it would have a bigger impact than perhaps people realise.” He adds that leaving would “open up a can of worms”.

UPC uncertainty

One of the major areas of uncertainty will be on the UK’s place within the unitary patent and Unified Patent Court (UPC) system, on which there a “lot of conflicting views”, Robert says.

“In the event of a Brexit, at worst we will not be a part of it, at best there will be an unsatisfactory compromise,” he says, adding that the UK may yet be part of the system but would have little influence on how it develops.

“We have an IP system at the moment where generally everyone knows where they stand. You can get an IP right at a good price across Europe. Leaving would likely increase the price and would increase uncertainty.”

As Roberts explains, other EU countries who want to finalise the agreement will be keeping a close eye on events. Both the Netherlands and Italy are among the candidates to step into the UK’s shoes as the third mandatory ratifying country of the agreement.

The concerns surrounding the UPC are not limited to European shores, however.

Sanjay Pathiyal, attorney at law firm Hickman Palermo Becker Bingham in San Jose, says US practitioners are also “keeping an eye out” for a potential Brexit.

“The unitary patent and UPC is something we have been following for a while,” he explains.

“Traditionally US companies favour US venues but the arrival of a Europe-wide court and patent could make it a more attractive option—a UK exit could complicate that though.

“We’ve had some clients asking us for our advice. Really at the moment it’s just a case of wait and see,” he says.

‘Nothing positive’ about leaving

Throughout the campaign those in favour of leaving the EU have stressed the opportunity to “take back control” and make our own laws that are not governed by Brussels.

It could be, then, that there are reasons to be positive in the event of a vote to leave.

But Roberts doesn’t see it that way.

“It’s difficult to identify anything positive,” he says.

“All aspects of the IP system are against the backdrop of harmonisation and all the participants think it is to their benefit. Switching to something that may be contrary to that would be a huge backwards step.”

He adds: “I suppose a positive aspect could be that we have all been made to think about it and have realised that what we have is not so bad.”

Paul Chapman, attorney at law firm Marks & Clerk in Edinburgh, takes a slightly different approach.

“What is negative for one side has to be positive for the other,” he says.

On the subject of the UPC, he adds: “One of the things that attracts people and businesses about the UPC is that you can obtain a central EU-wide injunction. But several small companies might be concerned about that potential. In the event of a Brexit you won’t have that threat.”

He adds that laws surrounding EU-wide designs and trademarks would have to be renegotiated.

“The take home message for any company is that they would probably have to apply for two separate rights: an EU-wide registration and one in the UK. By its very nature, it has to cost more.”

Fear of the unknown

Chapman adds that other forms of protection governed by EU laws, including supplementary protection certificates, would also have to be amended.

“It’s more uncertainty,” he says, adding that it’s not an ideal place for any applicant to be in right now.

“Come June 24 and beyond at least we will be in a position to advise clients one way or another rather than give them different scenarios to think about.”

Roberts, who says UK practitioners are well placed to give advice on entering the European market, suggests that foreign practitioners and businesses may be keeping a close watch on the referendum and that the ability to offer advice would be hampered if there was a vote to leave.

Migration to Ireland

One step on from this is the inevitable forfeit of a UK practitioner’s right to argue before the European courts, most notably the Court of Justice of the European Union (CJEU).

Figures from the Law Society of Ireland published this month revealed that an unprecedented number of qualified lawyers were being admitted to practise in Ireland.

In the first six months of 2016, 186 lawyers were admitted. Throughout 2015, 101 applied and in 2014 the number was 51.

Speaking after the figures were released, Ken Murphy, director general of the Irish branch of the Law Society, said that most people were “making contingency plans” in the event of a Brexit.

“The right to argue before EU tribunals such as the CJEU is only afforded to lawyers qualified in an EU state,” he said, adding that Ireland was the “logical choice” for UK-based workers.

“Of the EU member states, Ireland is the legal jurisdiction most equivalent to the UK. We are both English-speaking, both common law jurisdictions and our legal institutions are much the same,” he added.

But John Pegram, senior principal at law firm Fish & Richardson in New York, questioned the move.

“That’s like Canadians offering US IP services. Some do, but it’s not a substantial share of the market,” he says.

He adds that his sense is that US practitioners are “not paying too much attention” to the details of a possible Brexit, but that they would deal with it if it occurs.

“I expect that it will significantly reduce the importance of the UK as a centre of European IP services,” he says.

Voters go to the polls today to decide on the UK’s future in the EU. For IP at least, it seems as though it’s better the devil you know.

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More on this story

28 September 2016   European Council will discuss the unitary patent system in a meeting tomorrow.
3 November 2016   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.
25 November 2016   Earlier this week, the UK government released its Autumn Statement, where it announced additional funding for research and development, a “positive sign” according to intellectual property lawyers.