Brexit and IP: what should solicitors be doing now?

Following the Law Society of Scotland’s series of pre-Brexit articles, and ultimately the UK’s vote to leave the EU, uncertainty remains widespread in respect of the implications for UK business. Whilst the terms of the UK’s exit remain to be negotiated, it is certain that the landscape of intellectual property rights protection will change. What should solicitors be doing now in relation to IP and commercial contracts?

Trade marks and registered designs

Until the UK has negotiated its exit deal, EU trade marks (“EUTM”; formerly Community trade marks) and registered Community designs (“RCD”) will continue to include the UK in the scope of their protection. Post-Brexit, EUTM and RCD holders will only continue to benefit from protection in the UK if transitional arrangements are devised to convert the UK part of these back into national rights. For now, the UK Intellectual Property Office (“UKIPO”) has advised that it is currently “exploring various options” regarding EUTM and RCD rights long term.

What is certain is that post-Brexit, UK trade marks and registered designs will continue to provide effective brand protection in the UK and clients should be encouraged to continue to utilise these. In addition, clients will still be able to apply for EUTMs and RCDs which cover the remaining member states, and international trade marks under the “Madrid” system.

Patents

Post-Brexit, the European Patent Organisation (“EPO”) will continue to grant EPO patents to UK businesses. An EPO patent is effectively a “bundle” of individual patents granted by countries party to the European Patent Convention. Therefore, clients should be encouraged to continue to utilise this extensive form of IP protection.

However, it is unclear whether the UK will continue to be involved long term in the proposed EU-wide patent and Unitary Patent Court post-Brexit. In the interim, UKIPO has advised that the UK “remains a contracting member state of the Unified Patent Court at present”, and “will continue to attend and participate in UPC meetings”.

Data protection

If the UK remains a member of the EEA post-Brexit, the processing of personal data will continue to be regulated at both UK and EU level. The new EU General Data Protection Regulation extends to businesses that process the personal data of EU citizens, irrespective of where they are located (in certain circumstances). Due to be implemented in May 2018, the Regulation introduces important changes including: (i) the power to impose greater fines on businesses that breach data protection laws; and (ii) obligations on businesses to maintain detailed records regarding their data processing practices.

Given that any exit period from the EU could take at least two years from the serving of notice under article 50, solicitors should continue to advise clients of their obligations in respect of data processing (and the risks of non-compliance) under this new Regulation. In any event, the UK will want to ensure that its standard of compliance with data protection requirements generally is commensurate with the rest of the EU so that it is not seen as a “less safe” territory for data.

Commercial contracts

Solicitors should be encouraging clients to begin reconsidering any commercial contracts that include reference to the EU as a defined territory. Consideration should be given as to whether these EU definitions are fixed or flexible. For example, in distribution agreements, if the market is limited to the EU only, any sales in the UK market post-Brexit could be a breach of the contract. Similarly, where a contractual obligation is owed EU-wide, post-Brexit it may no longer be applied in the UK. Much will depend on the drafting of the contract in question.

Going forward, to prevent the risk of damages through unintentional contract breaches, solicitors should be advising clients to review contracts to: (i) state in clear wording the exact countries in which the contract is intended to operate (rather than simply rely on references to the “EU” or similar); and (ii) consider the economic implications of Brexit and whether it would be appropriate to include additional termination provisions.

Further, consideration should be given to the inclusion of “Brexit clauses” in future commercial contracts. Such clauses are “change” clauses, which effectively create alternative consequences should a particular event occur. In relation to Brexit, these clauses could, for example, provide for responsibility for costs to be apportioned to a particular party to the contract in the event of a particular Brexit event, or provide that if a contract is to be governed by particular EU legislation, after a particular Brexit event it will be governed by an alternative piece of domestic legislation.

The effects of Brexit on commercial contracts will vary on a contract-to-contract basis. Therefore, it is important for solicitors to advise clients to revisit any commercial contracts that govern operations in the EU, and where necessary address any issues now, rather than once issues or disputes arise.