14 May 2020

Brexit – don’t give up – read on…

The UK formally and finally left the EU on 31 January 2020, with a transition period to the end of 2020. The intent of the UK Government is far clearer than the previous one, and it is highly unlikely that the end of the year date will change. So from 1 January 2021 the UK will be wholly separate from the EU and on its divergent course.

Early signs of that has been the confirmation that the pan-European Unitary Patent Court, if it goes ahead at all, will not include the UK. This is not surprising, but Venner Shipley is directly engaged with the UK Government on what the future may hold for European Patent Litigation, including considering the UCP reverting to being a court for all European Patent Convention states, instead of the UPC focus on the EU.

The UK Government also changed its structure of negotiation, closing the Department for Exiting the EU and instead, the Prime Minister will personally oversee the negotiation task force with the EU. There is now a transition period until the end of 2020 while the UK and EU negotiates additional arrangements, and everything at present in regard to trade, travel and business for the UK and EU will continue as before during the transition period.

The UK has already set out its position to the EU and the main element is the request for a comprehensive free trade agreement, or FTA, covering substantially all trade. The UK has also proposed an agreement on law enforcement and judicial cooperation in criminal matters and agreements in technical areas covering aviation, energy and civil nuclear cooperation which will help ensure continuity for the UK.

The UK is seeking the type of agreement which the EU has already concluded in recent years with other nations. The UK proposal draws on previous EU agreements such as the Canadian Comprehensive Economic Trade Agreement, the EU-Japan Economic Partnership Agreement and the EU-South Korea Free Trade Agreement, and the approach is consistent with the Political Declaration agreed last October between the UK and the EU, in which both sides set the aim of concluding a ‘zero tariffs, zero quotas’ Free Trade Agreement.

What should you watch for in the coming transition period:

  1. Contractual jurisdiction and enforcement of judgments
  2. Regulatory approvals
  3. Trade mark changes with the loss of the EU mark for the UK
  4. Visa policy
  5. Other intellectual property issues.

1. Contractual jurisdiction and enforcement of judgments

Presently when you enter a contract you can elect your choice of law and have a court judgment on it recognised across Europe. The essence of this is expected to remain unchanged at least where a case commenced before the end of the transition period. This is due to Article 67 of the Withdrawal Agreement maintaining the current rules on enforcement and on jurisdiction (the Brussels Regulation), so UK judgments will continue to be enforceable in EU member states, and vice versa, in the same way as at present.

In proceedings commenced post-transition, where there is no exclusive jurisdiction clause, the enforcement of judgments will depend on the domestic rules in the UK and each EU state. This may mean slower enforcement than under the rules in the Recast Brussels Regulation (which is the system of determining which court hears a case). Proceedings commenced post-transition, i.e. 2021 onwards, with an exclusive jurisdiction clause entered into post-transition, are expected to be dealt with in the same way as at present. This is based on the UK acceding to the Hague Convention on Choice of Court Agreements 2005. Hague provides for enforcement of judgments in a similar way to the Recast Brussels Regulation, but it applies only where both:

  • there is an exclusive jurisdiction clause concluded after its entry into force for the state of the chosen court (assuming the clause is within the scope of the Convention, so, for example, it does not apply to employment and consumer contracts) and
  • proceedings were commenced after its entry into force for the state of the court hearing the matter.

The UK has been a member of Hague since October 2015 via the EU. In December 2018, the UK deposited its instrument of accession to Hague, with the intention that it join in its own right from April 2019 if it exited the EU without a deal on 29 March 2019. It has since suspended its accession to take account of the various extensions but is now expected to resume its accession process. Proceedings commenced post-transition, with an exclusive jurisdiction clause entered into before the end of transition, is more complicated.

Judgments may be enforceable under Hague where the clause was agreed after 1 October 2015 but before the end of the transition period, but there are some uncertainties. It is therefore important to consider whether, if Hague does not apply, the judgment will still be enforceable under domestic rules in the UK or the relevant EU state.

If you have an exclusive English jurisdiction clause then the guidance issued by the European Commission of April 2019 suggested that Hague would only apply when the UK re-joined Hague in its own right. In short, if you have a dispute based on a contract entered before 2021, you need to talk to your lawyers about what that might mean for you in the event of litigation.

If you have an exclusive jurisdiction clause in favour of another EU state, then generally the UK is expected to enforce any associated foreign judgment. The UK Government’s explanatory memorandum on this point suggests that for clauses agreed before the UK re-joins Hague, the UK would only apply the Hague rules where it would previously have done so; that is, where there is a judgment pursuant to an exclusive jurisdiction clause in favour of Mexico, Singapore or Montenegro. This was on the basis that Hague had been largely inapplicable between the UK and the EU member states, as jurisdiction clauses in favour of any EU member state are covered by the rules in the Recast Brussels Regulation, and separate provision would be made in a related statutory instrument dealing with the EU and the application of the Brussels regime. That related statutory instrument provided that where proceedings were commenced in an EU member state before exit, the resulting judgment would continue to be enforced in the UK under, effectively, the rules in the Recast Brussels Regulation.

It made no special provision where an exclusive jurisdiction agreement was entered into in favour of an EU member state court prior to exit, but proceedings were commenced only after exit, so that the Recast Brussels Regulation would not apply. If these matters are of concern then you need to look out for the UK Government comments on the application and effect of the Hague Exit Regulations and the Brussels statutory instrument, and make changes to your contracts to account. If Hague does not apply, it will still be possible to enforce an EU member state judgment in the English court by suing on the judgment as a debt, but this will, of course, only apply to money judgments.

2. Regulatory approvals

The main change was the moving of the European Medicines Agency (EMA) from London to Amsterdam, the Netherlands, in March 2019. This occurred under Regulation (EU) 2018/1718, which covers EMA’s location and seat. The EMA is continuing to operate in accordance with the timelines set by its rules and regulations during its relocation and throughout the Brexit process. This means there will be no other changes to the approval process until 2021. For planning purposes, the EMA is working on the scenario that the UK will become a third country after Brexit. As a consequence, the UK will no longer be able to engage as (co)-rapporteur for new marketing authorisation applications via the centralised procedure.

In preparation for Brexit, the EU27 member states and EMA redistributed the UK’s portfolio of medicines to other EU member states. This involved transferring over 370 centrally authorised products to rapporteurs and co-rapporteurs from the EU27 plus Iceland and Norway.

The EMA informed the relevant marketing authorisation holders of the new (co)-rapporteurships at the end of April 2018, and in September 2018, the new (co)-rapporteurs received a knowledge transfer package for each product. This contained background on the regulatory and evaluation history of each product, including the most recent benefit-risk assessment. The transfer package also helps each national competent authority forecast upcoming workload and support the planning of resources, particularly for complex products in the portfolio. The new rapporteurs and co-rapporteurs have been fully responsible for these medicines since 1 July 2019.

An important negotiation in 2020 therefore is how, going forward, UK medicines will be approved and the recognition process between the UK and EU on products. Post-Brexit the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA) will deal with UK approvals. The UK’s currently stated position is that transitional provision in legislation will ensure that all currently granted Centrally Authorised Products (CAPs) automatically become UK Marketing Authorisations (MAs) on exit day, although the holders will have a short period of time after exit day within which to opt out of having an MA. The MHRA will have oversight of all pharmacovigilance activities.

Currently, risk management plans, reports of suspected adverse drug reactions from the pharmaceutical industry, the majority of periodic safety update reports (PSURs) and post-authorisation safety studies (PASS) are submitted and assessed at EU-level. Post-Brexit, these will need to be submitted to and assessed by the MHRA. Therefore the UK has an important negotiation in 2020 to clarify going forward how UK and EU medicines will be approved and how the recognition process between the UK and EU on products between our respective authorisation regimes will operate.

Supplementary protection certificates

Supplementary protection certificates (SPCs) are national rights which exist separately in each EU member state, as a light form of patent extension where your patent expires not long after medical regulatory approval of a product covered by the patent. It is expected that the UK SPC regime will continue with little or no change of substance, though the link to the Court of Justice of the European Union (CJEU), currently the highest appeal court for SPC matters, will be broken for the UK. It is possible that in the future, UK law and/or jurisprudence relating to SPCs may diverge from EU law.

3. Trade mark changes with the loss of the EU mark for the UK

The big Brexit shift is the return to national UK trade marks and designs as the only recognised rights, and the end of EU trade marks (EUTMs) and designs applying to the UK. The European Union Intellectual Property Office (EUIPO) notice on the EU/UK Withdrawal Agreement confirms there will be continued application of the EUTM Regulations and the registered community design (RCD) during the transition period covering all substantive and procedural provisions as well as the rules concerning representation in proceedings before the EUIPO.

In consequence, all proceedings before that involve grounds of refusal pertaining to the territory of the UK, earlier rights originating from the UK, or parties/representatives domiciled in the UK, will run as they did previous, until the end of the transition period. Holders of EUTMs and RCDs which are granted and published before the end of the transition period will be granted equivalent UK registrations automatically. The UK IPO has agreed not to charge any official fees for this, but there may be the costs of your advisors in helping you ensure all registrations have occurred.

Applications for EUTMs or RCDs still pending and unpublished at the end of the transition period will be given a period of nine months to file corresponding UK applications for the same marks and designs. The new, equivalent UK registrations and corresponding applications will be accorded the same filing dates and priority dates as the original EUTMs and RCDs. If you are planning on seeking a new EUTM or RCD this year and protection is needed in the UK, then you should file as soon as possible to take advantage of the transition or file corresponding UK applications. After the end of the transition period, new trade mark and registered design applications must be filed separately in the UK and the EU, if protection is desired in both territories.

4. Visa policy

There is good news for science and innovation and for those concerned about the UK future approach to visas and immigration. The UK has confirmed a new visa – the Global Talent route replaces the Tier 1 (Exceptional Talent) route and for the first time UK Research and Innovation will endorse applicants from the scientific and research community. The UK’s aim is to make it easier to move talent to the UK and to no longer suppress non-European Visa numbers. The reforms to the Global Talent route coincide with ambitious Government investment of up to £300 million to fund experimental and imaginative mathematical sciences research by the very best global talent over the next five years. With around £60 million funding available per year, the investment will double funding for new PhDs. The changes are part of the initial-phase wider reforms to enable those with world class skills in science and research to come to the UK as soon as possible, and further announcements are expected in 2020.

5. Other IP issues in brief

Status of existing patents, and pending and future European patent applications

Since the European Patent Office (EPO) is not an EU institution, nothing will change for granted European patents or for pending or as yet unfiled European patent applications, whether filed directly at the EPO or as an international (PCT) application designating Europe under the EPC.

The Unitary Patent and the UPC

The Unitary Patent system is not yet operational and the agreement establishing the UPC has not yet come into force. It is unclear at this stage whether the Unitary Patent system or the UPC will come into force because of a sucessful legal challenge in Germany. Regardless, in its current format where you must be an EU member state to participate and accept the supreme jurisdiction of the Court of Justice of the EU, the UK is confirmed as not participating. If the UPC does not come into force, or if no arrangements are made to permit the UK to remain a member of it, then the UK’s national court system will continue to have sole jurisdiction over UK patent disputes as it has now (whether under direct UK patents or European patents validated in the UK). However, since these are future possibilities and not yet in force anywhere, no action is needed for the time being.

No copyright directive

The UK will not implement the Directive on Copyright in the Digital Single Market as the UK will have exited before it is due to apply in June 2021. Any future changes to the UK copyright framework will be considered as part of the usual domestic policy process.

Database rights

After the transition period UK citizens, residents and businesses will no longer qualify for database right protection in EEA member states. A new, UK-only right is expected to be made available to UK stakeholders but will not be enforceable outside the UK. The UK is expected to honour database rights existing at the end of the transition period, whoever owns them, but EEA member states will not be obliged to reciprocate.

Parallel trade

Companies trading in IP protected goods (e.g. branded goods) are likely to be affected by changes in the rules about free movement of goods after the transition period. This may depend on any trade deal the UK is able to negotiate with the EU27 during the transition period. In the absence of an agreement at the end of the transition period, rights holders may be able to prevent goods that have been put on the market in the UK being exported to the EU27.

IP licences

Licensors and licensees should review existing licences to ensure that definitions – for example, the definition of the Licensed Territory – still operate as intended. They may also wish to consider whether licensing arrangements which treat the EU/EEA as a single licensed territory remain appropriate.

So things are changing, but it is not all bad, and the future of the UK for the medical sciences and associated industry is more interesting than troubling.