Across the Atlantic: Strategic Considerations for Holders of IP Rights

April 12, 2019

The news cycle is filled with the raucous activity of the UK Parliament with regard to Brexit, the "exit" of the UK from the European Union.

On March 29, even Theresa May's offer to resign did not persuade Parliament to approve of the Withdrawal Agreement. As of yesterday, Brexit Day has moved to October 31, 2019, but the EU's extension obligates the UK to vote in parliamentary elections in May (or Brexit Day will be June 1). The EU will convene a summit in June to review the UK's progress towards Brexit.

What Happens in a No-Deal Brexit?

Patents: No Changes
From an IP perspective, patent rights are unaffected since the UK is party to a separate patent treaty.

Trademarks and Community Design Registrations
On Brexit Day, the EU trademark registrations, unregistered Community designs and registered Community designs will no longer be considered valid by the UK.

In anticipation of a no-deal Brexit, the UK Intellectual Property Office has said that registered trademarks and Community designs will be "immediately and automatically replaced by UK rights. If you own an existing right, you do not need to do anything at this stage." However, a company which owns pending EU trademark or Community design applications as of Brexit Day will have nine months to apply for a UK application bearing the same date as the original EU application. There will be a fee associated with the new filing.

If your company used the Madrid Protocol to register an EU trademark, and the UK was not separately designated, then given the uncertainty surrounding Brexit, your company may wish to designate the UK now. Unregistered Community designs (UCDs), which are valid from three years from the disclosure date, will continue to be protected through the end of the term, and in a no-deal Brexit, the UK will create a supplementary unregistered design right. UK copyright holders will require individual advice to determine whether new licenses are needed, for instance, for satellite broadcasting and databases.

EU Copyright Directive

The Copyright Directive, which was approved by the EU Parliament, had three goals:

1. improve the portability of online content across the EU
2. expand online access for the disabled and clarify the rules relating to research and education
3. construct an online marketplace which is "fairer and sustainable" for creators and the press

The third goal was the focus of intense lobbying before the vote and remains highly controversial. Article 17 provides that when users upload content to an online platform, it is the obligation of the platform to acquire authorization to use the content. If no copyright license exists, then the platforms must use their "best efforts" to obtain one. If the platform receives a valid complaint about unauthorized content, the platform must act swiftly to take the unlicensed content down. So, the platform is liable for copyright infringement -- this approach is the complete opposite of the laws in the United States, where the platform is almost always shielded from liability.

By making the platforms negotiate for licenses, the idea is that content creators (writers, artists, musicians) will receive more revenue. By enabling takedowns, the idea is that content creators won't lose revenue to unauthorized sources. The Directive also provided for more bargaining power for the press in sharing in the monetization of their provided content.

The platform is not required to take down user content which is used "for purposes of quotation, criticism, review, caricature, parody and pastiche." Sharing small portions of news articles, which is a common news aggregation site feature, remains permissible. More guidance from the EU authorities is expected regarding the liability of the platforms.

The Directive isn't in force until the Council of the EU formally endorses it; action is expected in the next few weeks. After the Directive is published, each of the EU members will have 24 months to enact national legislation incorporating the Directive. So, the opportunity to modify the Directive exists, and the lobbying to do so has already begun. More than 100,000 protestors and five million online petition participants objected to Article 17. Over the next two years, we will see how each of the EU member nations reacts to pressure from the public as well as from the tech giants running the online platforms.

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