Brexit – Deal or No Deal Intellectual Property – Action Plan for SMEs

The odds on a No Deal Brexit have increased by over 50% following Theresa May’s imminent replacement as Prime Minister according to Goldman Sachs. Brexit already presents all SMEs with immediate challenges and these will be even greater in a No Deal scenario – the need for all SMEs to have a Brexit action plan are now even more important.

WSM are helping SMEs address the challenges of Brexit – Deal or No Deal with a series of such action plans. Previous blogs have covered importing and exporting, employment and most recently contracts and pricing. Future blogs will cover VAT, financing and payments and regulations and standards. Here we focus on an action plan for SMEs for their all-important intellectual property rights.

Intellectual property covers a wide range of assets from customer lists to legal rights including:

• Patents
• Trademarks
• Registered and Unregistered Designs
• Copyright and related rights

In addition, there are a variety of regulations which must be complied with to operate and protect products and services in the EU and UK markets including Conformity Assessments (CE marking) and exhaustion rights.

All SMEs – even if those which currently do not do any business in EU or EEA countries – should review their current intellectual property and the protections available. Such a review should aim to ensure protections which currently apply in the EU will continue to be available in the UK following Brexit. It should also aim to continue those protections in the EU and EEA post Brexit to reduce the opportunities to potential competitors.

A Brexit Deal should include security for intellectual property however SMEs still need to secure their intellectual property in the UK and elsewhere in the EU and EEA at the end of any agreed transitional period.

No Deal Brexit will mean all these plans will need to be accelerated.

The good news is that the government is taking action to ensure that patents, trademarks, registered designs and unregistered designs currently in force in the EU will continue to provide the same protections to the holders in the UK and the EU after Brexit – Deal or No Deal.

For patents the continuation of rights and protections is provided by existing UK legislation and the current rules regarding registration processes and assessment of patents pending will continue. Future patents applications will need to be made to both the UK Intellectual Property Office and the European Patent Office.

Existing EU trademark or registered community design holders will be granted a new UK equivalent right that will come into force at the point of the UK’s exit from the EU. The new UK right should be provided with minimal administration and the trademark or design will then be treated as if it had been applied for and registered under UK law.

As for patents, any new applications for trademarks and registered designs will need to be made in the UK separately from the applications in the EU.

Protection afforded by unregistered design rights- used where the cost of registration or the short-expected life of the design does not justify registration – is to continue when the UK leaves the EU for the remaining period of protection of the right, usually three years. The government will also create a new unregistered design right in UK law – the supplementary unregistered design right – to mirror the current EU rights so designs disclosed after the UK exits the EU will also be protected.

For copyright and related rights, the position is more complex. Copyright for works in the UK and for UK works abroad is largely governed by international treaties and will remain largely unchanged after Brexit. However, there have been significant extensions to these rights under EU cross-border copyright mechanisms which extend only to member states of the EU or EEA. Following Brexit, the reciprocal element of these mechanisms will cease to apply to the UK and businesses which rely on database, portability and cross border transfer rights should seek advice from their intellectual property advisers.

Action is also required by UK manufacturers or businesses selling products in the EU which require CE marking to prove product conformity with EU safety, health and environmental protection. CE conformity assessments in future will need to be undertaken by EU conformity assessment bodies and the EU Commission has made clear that those assessments currently carried out by UK conformity assessment bodies will no longer be valid for EU purposes. SMEs should consider either

• applying for a new certificate from an EU-based conformity assessor; or
• arranging a transfer of the contractual arrangement from the UK to an EU conformity assessor

Intellectual property remains a key element of all SME businesses and Brexit and the increased possibility of a No Deal Brexit mean business owners should act now to ensure these key assets continue to provide their competitive advantage in a post Brexit world.