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As everyone knows, in June, the United Kingdom passed the BREXIT referendum (driven by British voters), voting to exit the European Union.  What affect does BREXIT have on intellectual property rights in the United Kingdom and the European Union?  There is a two-year process of negotiation between the UK and the EU, provided for by law, to determine the specifics of the exit.  Until that process is completed, the UK remains an EU Member State.  There will be no immediate change in intellectual property rights, but, once the exit has been accomplished, certain intellectual property rights will be affected.

PATENTS

        European patents will not be affected by BREXIT.  The UK was and will continue to be a member of the European Patent Convention and the Patent Cooperation Treaty.  The EPC is not connected to the EU; it is a separate treaty among European nations, and the UK is a member nation.  The PCT is also not connected to the EU; it is an international treaty among countries worldwide, and the UK is a member state.  UK and non-UK patent applicants can continue to file their applications in the European Patent Office and designate the UK, so that they can obtain patents in the UK through the current EPO validation system.

However, BREXIT will significantly impact the EU’s new Unitary Patent and Unified Patent Court.  This new system provides for a single (unitary) patent in the EU and a separate court to enforce those patents.  The Unified Patent Court will handle only patent matters, including infringement and validity, and will have locations throughout Europe.  The court will have the authority to issue injunctions against infringers covering all of the EU, and can revoke patents throughout the EU.

BREXIT will delay implementation of the new Unitary Patent and Unified Patent Court system, which is set to go into effect in 2017.  The system is the subject of an EU initiative and agreement, which the UK and certain other countries must ratify.  It is unclear whether the UK will now ratify the agreement.  If the UK does not, the other EU members will have to amend the agreement or start over and draft a new agreement.

Even if the Unitary Patent and Unified Patent Court are implemented, however, the UK will not be participating, as the system is limited to members of the EU.  It is possible that the UK and the EU will negotiate a resolution to this issue by which the system moves forward, but that is unclear at this point.

TRADEMARKS

Of all of the types of intellectual property, European Union Trade Marks (“EUTMs”) will be the most affected by BREXIT.  The EUTM is a trademark that is valid and can be enforced in all member states of the EU.  Once the UK is out of the EU, the EUTM will have no effect in the UK.

The UK may adopt regulations that allow an EUTM to be automatically registered in the UK, maintaining the mark’s priority.  However, because trademark rights are based on use of the mark, the owners who want protection in the UK will have to show use of the mark in the UK, and those who want protection in the EU will have to show use in the EU.

EU trademark owners should consider where their marks are being used and will be used in the future, and plan to obtain trademark registration in both the EU and UK if necessary.  Because of this, it is expected that the UK Intellectual Property Office will be faced with a large increase in trademark applications, resulting in delays in registrations.

In addition, BREXIT will cause the enforcement of trademark rights to become significantly more complicated and costly.  Injunctions currently in place for EUTM owners will not be valid in the UK.  Owners will need to file new infringement actions in the UK courts to obtain new injunctions against infringers previously covered by an EU injunction.  In the future, trademark owners will need to file two infringement actions if their mark is registered in both the UK and the EU, one action in each court system.

Lastly, EUTM owners may face challenges to their EUTMs if their sole use was in the UK.  After the UK exits, these marks could be cancelled, revoked, or not renewed if they have not been used in the EU.

COPYRIGHTS

Copyrights will probably not be affected directly by BREXIT as copyright law in Europe is governed by the laws of each country.  The UK has its own copyright laws and is also a member of various international treaties protecting copyright.  Thus, rights of copyright owners in the UK will continue to be protected under both sets of laws.

One area that will likely be affected by BREXIT are laws governing internet service providers and information stored in the cloud.  The EU has been developing this area of law for the last several years.  At this point, however, it is uncertain whether the UK will have its own set of laws separate from the EU’s laws.

TRADE SECRETS

The EU has been working on a uniform trade secrets law, which will define trade secrets and provide uniform remedies.  If the EU adopts the law, the UK may be required to also adopt it depending on the method by which the exit is accomplished.  Again, it is uncertain how this will be resolved.

LICENSES

Licenses may be affected by BREXIT, depending on their terms.  Licensors and licensees should review existing licenses to determine whether the defined territory covers both the EU and the UK and whether the dispute resolution procedures will be applicable to the appropriate territory.  The parties may need to enter into amendments or new licenses to clarify their rights.

If you regularly follow our publication, you may remember when I discussed the Seattle Seahawks and their use of the Texas A&M trademark “12TH MAN” over a year ago. If not, that’s okay too. In short, I discussed how the Seattle Seahawks have been utilizing the Texas A&M trademark without permission and were facing legal action for infringement when the parties entered into their first licensing agreement in 2006 for $100,000 upfront and an additional $5,000 per year. This deal was subsequently renewed in 2011. I ended my previous article by acknowledging that the agreement was coming to an end and that there was likely to be a new, more lucrative deal in place due to the mark’s popularity among Seahawks fans.

Sure enough, the deal that the Seahawks and Texas A&M reached is more lucrative than the previous deal. The Seahawks have agreed to pay $140,000 to Texas A&M upfront, plus $18,000 per year as a royalty fee for using the mark in the Pacific Northwest, an additional $10,000 per year to assist Texas A&M with its efforts to protect its trademark from would be infringers, and an undisclosed yearly fee, through 2021. Moreover, Texas A&M has also narrowed the scope of the license that it is granting to the Seattle Seahawks. Although the Seahawks have never utilized “12th Man” on their merchandise, they will no longer use the mark on the Ring of Honor or the team’s social media handles. Overall, this is favorable deal for Texas A&M, which will receive more money for a more restrictive license to the Seahawks.

Interestingly, I suspect the Seahawks do not have an issue with the narrowly tailored license in light of their recent conduct. Over the past few seasons, the Seahawks have shifted away from their use of “12TH MAN” in favor of “12” and “12s,” both of which the Seahawks have registered with the United States Patent and Trademark Office. The Seahawks own several “12” related trademarks, including without limitation, “WE ARE 12s,” “THE 12s,” “THE SPIRIT OF 12,” and “12.” So, it seems that although the Seahawks still obviously value their use of the “12TH MAN” mark, they are slowly distancing themselves from the mark and creating their own set of 12 marks, which I would not be surprised to see displace their use of the “12TH MAN” entirely by 2021. Of course, only time will tell.