What Sort of IP Framework do we need after Brexit and what are we likely to get?
|The UK and the remaining Member States of the EU|
There was a bad reason for voting to leave the European Union and a good one. The bad reason, which was probably the one for which most leavers voted, was that art 45 of the Treaty of the Functioning of the European Union stimulated competition in the labour market. The good reason, of which I was and remain highly sceptical but which I hope turns out to be right, is that Union law imposed a break on British enterprise and that its disappearance once art 50 (3) of the Treaty on European Union takes effect will stimulate business. I premise this article in the hope that our people and politicians genuinely seek economic expansion.
Introduction to IP
Intellectual property ("IP") is the collective name for the bundle of rights that protect investment in intellectual assets ("IA"), that is to say branding, design, technology and works or art and literature which nowadays include such things as broadcasts, computer programs, films, sound recordings and arrangements of data. IP protects such investment by conferring monopolies, such as patents and rights in registered designs, or rights to prevent certain acts, such as copying, on the person who created the IA (the inventor, author, designer or entrepreneur) or who derived title from that person. Violation of the monopoly or other right is known as an infringement. Although some infringements are criminal offences, primary responsibility for their enforcement lies with the rights holder. He or she enforces his or her rights through proceedings in the civil courts. Litigation is expensive particularly in common law countries such as England and the United States. In Commonwealth common law countries such as England it is also risky because the losing party has to contribute towards the successful party's costs. The risk and cost of enforcement in the UK is widely believed to be a reason why the UK regularly trails not just Germany and France in the number of European patent applications but also the Netherlands and Switzerland with one third and one eighth of our population respectively (see Jane Lambert Why IP Yorkshire 10 Sept 2008 IP Yorkshire).
Since the formation of the World Trade Organization ("WTO") on 1 Jan 1995, countries seeking preferential access to the world's richest markets have been required to grant minimum IP protection for IA in their territories in accordance with the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS"). Long before then, however. the world's leading economies recognized the need to protect the IP rights ("IPR") of each other's nationals and entered a series of treaties to protect brands, designs and technology known as the Paris Convention for the Protection of Industrial Property of 20 March 1883 ("Paris Convention"), literary and artistic works known as the Berne Convention for the Protection of Literary and Artistic Works of 9 Sept 1886 ("Berne Convention") and broadcasts, performances and sound recordings known as the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations of 26 Oct 1961 ("Rome Convention"). These treaties have been supplemented by a number of other international agreements including some such as the European Patent Convention ("EPC") which apply only to specific regions of the world. States such as the UK that are party to such conventions are obliged to bring their national laws into conformity with those treaties and other international agreements.
As most IPR are granted by national governments differences in national IP laws can constitute non-tariff barriers to trade. The member states and Parliament have addressed that difficulty in two ways. First, by harmonizing national IP laws by a series of directives and, secondly, by providing for new EU wide IPR by the European Trade Mark Regulation (Council Regulation (EC) No 207/2009 of 26 February 2009 on the European Union trade mark), Community Design Regulation (Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs (OJ EC No L 3 of 5.1.2002, p. 1)) and the Community Plant Variety Regulation (Council Regulation (EC) NO 2100/94 of 27 July 1994 on Community plant variety rights Official journal NO. L 227 , 01/09/1994 P. 1 - 30)). Each of those Regulations confers EU wide jurisdiction on designated courts in each of the EU member states so that a final judgment on say a Community design in one country applies throughout the whole EU (see for example Samsung Electronics (UK) Ltd v Apple Inc  EWCA Civ 1339 (18 Oct 2012)  FSR 9,  FSR 9,  ECDR 2,   EMLR 10). This has greatly reduced the cost and difficulty of enforcing EU wide IP rights.
The one area of IP law that has never been harmonized has been patents even though attempts to establish one have been made since 1975. However, all the EU member states as well as several states outside the EU are members of the EPC which establishes a European Patent Office ("EPO") to grant patents (known as European patents) for each of its contracting parties on behalf of the contracting governments as an alternative to patents granted by national patent offices,
On 19 Feb 2013, an agreement was signed by most of the member states of the EU including the UK to establish a Unified Patent Court ("UPC") (a section of the central division of which was to sit in London) to determine disputes over European patents including those to be granted for the territories of several EU member states including France, Germany and the UK to be known as unitary patents. HM government has long pressed for a pan-European patent court either within the framework of the EU or the EPC. Parliament has actually authorized the Secretary of State to ratify the UPC agreement by s.17 of the Intellectual Property Act 2014.
The British IP Framework
The British IP framework is a patchwork of law, most statutory but some, such as the obligation of confidence and the right to bring an action for passing off, are derived from common or judge made law. The main statutes are The Patents Act 1977, The Copyright, Designs and Patents Act 1988 ("the CDPA"), The Trade Marks Act 1994 ("the TMA") and The Registered Designs Act 1949 ("the RDA"). The TMA was enacted to give effect to the predecessor of the current Trade Marks Directive (Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (OJ L 299, 8.11.2008, p. 25–33) and the CDPA and the RDA have been amended substantially by other EU directives. The EU trade mark, Community design and Community plant variety rights apply as much in the UK as everywhere else in the EU. All our laws have to comply with the relevant IP treaties and our Patents Act 1977 with the EPC.
Is the Present Framework Right for the UK?
I would not be so Panglossian as to say that such framework is the best of all possible worlds but I would agree with the Minister for Intellectual Property and TaylorWessing that it is pretty good. In a speech on National and International-level concerns and developments regarding the IP landscape that she gave to the British group of the Union of European Practitioners in Intellectual Property on 29 June 2016 Baroness Neville-Rolfe said:
"I was delighted to read the latest Taylor Wessing’s Global Intellectual Property Index (GIPI5), in which the UK came out well. On patents we are ranked first in the world. The overall result - third - was a good one - but as sportsmen always rightly say you are only as good as your last performance. We will do our best to maintain our strong position."I am not sure how TaylorWessing came to their assessment but on the assumption that businesses need clarity in the definition and determination of their rights, comprehensive protection for their IA and effective enforcement of their rights at a reasonable cost I think they are probably right.
What we need after Brexit
The rest of the EU may be growing less strongly than some other parts of the world but it is still a market of several hundred million of the world's most affluent consumers and we shall wish to continue trading with, and investing in, it. It is therefore in our interests to disrupt our relations with the remaining member states as little as possible.
The most pressing issue is the unitary patent. Even though it would cease to apply to the UK after it leaves the EU, a single patent that covers France, Germany and many of the remaining EU states with a single court for the resolution of disputes over such patents would still be attractive to businesses around the world including many in this country. It is not therefore in our national interests to block it. The statutory instrument to implement s.17 of the Intellectual Property Act 2014 has been drafted and partially debated. There is no reason why we should not ratify the UPC agreement and allow our businesses to benefit from it in the two or more years that remain before art 50 takes effect.
We should also legislate to convert the EU trade mark and registered Community designs into national trade marks and registered designs. In the case of registered Community designs the commencement of the protection should be backdated to the date upon which an application for a registered Community design was filed with the EU Intellectual Property Office ("EUIPO"). In the case of applications to invalidate the registration of such rights novelty and individual character should be considered from the date of the application to the EUIPO.
As President Battistelli said in his statement on the referendum of 24 June 2016 "the outcome of the referendum has no consequence on the membership of the UK to the European Patent Organisation, nor on the effect of the European Patents in the UK." I see no reason to repeal or amend substantially any part of the Patents Act 1977 or indeed any of the other IP statutes. I would hope that UK enters an arrangement with the rest of the EU similar to the Lugano Convention to ensure continuity in jurisdiction and enforcement of judgments in civil and commercial matters. Although the continental approach to statutory construction is different from ours I would hope that judgments of the Court of Justice of the European Union and indeed the EFTA Court the to have high persuasive authority.
Looking beyond Europe I would hope that HMG would support efforts at patent harmonization with regard to our main trading partners in North America and East Asia. There is no reason why we should not ratify the Hague Agreement on industrial designs. We should seek to improve the functioning of the Patent Co-operation Treaty and Madrid Agreement. We should play an active part in the WTO and other international IP forums to promote out interests.
What we are likely to get
In her speech to the Union of European Practitioners in Intellectual Property which I mentioned above Lady Neville-Rolf said:
"You can continue to expect outstanding, professionally delivered rights granting services including design rights; and copyright owners can expect that the framework will support creativity. The UK will continue to be envied around the world for the quality of its enforcement environment. We will continue to lead in international IP discussions. We will continue our work to build an environment that allows innovative and creative businesses across the UK to develop their ideas and exploit them effectively."Fine words indeed if those promises can be delivered. Unfortunately, the Minister could not give her audience any comfort on the unitary patent or UPC. These developments are in danger of stalling the longer if they are allowed to drift.
Brexit was probably a grave disservice to British business but it need not be the end of the world. South Korea with an even smaller population, land area and GDP than ours shows that it is possible for a small country to flourish outside economic blocs by relying upon the creativity and inventiveness of its people. The next few years will be very uncomfortable for everyone in these islands but if we get our IP framework right we can recover
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NIPC Inventors’ Club