Brexit and IP law: working hard not to fall off a cliff

Brexit has presented challenges for all areas of law, including intellectual property law. It is too soon to tell whether the most pressing challenges in intellectual property law will successfully be met by the UK and EU negotiators. But, as of Spring 2018, the latest drafts of a proposed UK Withdrawal Agreement give some cause for optimism that a truly cataclysmic upending of settled expectations is likely to be avoided. For example, it appears as though agreement will be reached to ensure that unitary EU Trade Marks (EUTMs) presently covering the current twenty-eight member states of the Union will, after Brexit, automatically carry the same territorial coverage without the instigation of new procedures or the payment of new filing fees. Formally, this will occur by the pre-Brexit EUTMs giving birth on Brexit Day to a counterpart UK Trade Mark registration to accompanying the post-Brexit EU(27)TM, with the same priority date. A similar mechanism will operate regarding unitary Registered Community Designs (RCDs).

Of course, going forward, this environment might be tested on any number of fronts. From the perspective of the UK Intellectual Property Office (UKIPO), the administrative burden and cost of superintending another 1.2 million registrations is not negligible, even if those registrations will not require immediate examination. Moreover, from a substantive point of view, UK registrations will exist for a large number of marks which the owner has no intent to use in the United Kingdom (or, even, possibly the European Union, given different intent to use requirements in the UK and EU). In light of studies commissioned by the UKIPO over the last few years to address the phenomenon of trademark clutter, this is an unwelcome prospect. From the trade mark owner’s perspective maintenance of rights will once again be rendered more complex and more expensive. And this speaks not at all to the complexities that cannot reasonably be worked out in the compressed period for negotiating the bare-bones Withdrawal Agreement. Who knows precisely the minefield of doctrinal issues that will arise when litigation occurs in the UK or EU courts concerning commercial activity that straddles both the English Channel and the date of Brexit. What we do know is that they will arise, with all the attendant unnecessary uncertainties and costs.

And it is not clear for how long UK law will provide equivalent protection. The current EU (Withdrawal) Bill before the UK Parliament certainly has a preference for regulatory alignment (this is the post-Brexit “happy phrase” for all the despised “harmonisation” against which the voters supposedly revolted). Section 6(5) provides that the decisions of the Court of Justice before Brexit will have the precedential weight of the UK Supreme Court, and it is very rare for the UK Supreme Court (or its predecessor House of Lords) to overturn its own precedents. And although EU Regulations as such will not have any effect after Brexit, Section 3 of the Bill provides that direct EU legislation operative on Brexit Day will form part of domestic law on or after Brexit Day. This so-called “converted” EU law will, along with “preserved domestic law,” be called “retained EU law.”

How should the UK courts interpret “retained EU law”?

But because a lot of retained EU law will not operate properly (or make any sense) after the UK leaves the EU, in Section 7, the Bill gives delegated powers to correct problems by statutory instrument (“Henry VIII powers”) for a period of two years. This superficially technical mechanism masks substantial policy questions: what should be the scope of exhaustion, for example, in UK law? And, even without such interventions, how are the UK courts to interpret this EU-inspired law, and what weight should they accord EU decisions after Brexit interpreting the same law? Both the current President of the Supreme Court, Baroness Hale of Richmond, and her predecessor, Lord Neuberger, have raised concerns about the lack of guidance currently being provided to the courts.

Thus, even this “optimistic” assessment of the likely transition from a pre- to post-Brexit world is to a large extent premised on a baseline prediction of utter chaos; from that baseline, almost anything arguably could look like a relative success. And that “success”, if it arrives, will be to ensure that, after several years consuming vast time, effort, money and talent on both sides of the English Channel, the United Kingdom and the European Union will manage to ensure a legal environment only mildly worse than that existing on 23 June 2016.

Getting back to something approaching zero will have been costly; all that time, effort, money and talent has been diverted from other important tasks (both in intellectual property law and beyond). The UK political and governmental process has for the last two years been consumed by applying tourniquets to stem the bleeding from the wound inflicted by a narrow majority of UK citizens voting on a fateful (rainswept) day in 2016. The opportunity costs are huge.

Moreover, all this reassurance flowing from the current draft IP provisions in the Withdrawal Agreements depends entirely on a broader political agreement being reached between the EU and the UK. Nothing is agreed until everything is agreed, as both EU and UK leaders are wont to recite as they struggle to invent a rational outcome to Brexit. There is no guarantee that such an agreement will be struck, especially given the complex political and constitutional gyrations that will have to be performed on both the UK and EU sides of the deal to secure domestic approval.