As brand owners begin to prepare themselves for the possibility of a “no deal” when the UK leaves the EU on 29 March 2019, one issue that should be high on the agenda is a review of IP-related agreements which may be impacted by the UK leaving the EU, whether with or without a deal. In particular, in some cases, it may be appropriate to revisit existing terms and seek to ensure that they properly reflect the desired position – this may also open up the opportunity to renegotiate certain aspects.
Key points to consider from an IP perspective are as follows:
- The territory of an agreement: many commercial agreements will have a geographical scope of the ‘EU’. In addition to agreements focused on IP rights, such as licences or co-existence agreements, this will include agency, distribution, franchising, and also provision of services or sale of goods.
It will be necessary to look at these agreements to see how ‘EU’ is defined, if at all.For example, is it defined as ‘at the date of the agreement’ (in which case, it would still extend to the UK) or is it expressed as being as ‘from time to time’ constituted (in which case, it will not extend to the UK, unless the agreement could be interpreted in such a way to provide this)? This latter form of wording was probably used in many agreements to allow for new Member States to be covered by their terms, and many most likely did not have in mind the possibility of a Member State leaving the EU.
If the agreement does not include either variant of wording, it will come down to an assessment of the agreement and its factual matrix.To avoid the uncertainty this might produce for the future relationship between contracting parties, it would make sense to revisit and clarify this term. If they have not done so, businesses should identify which of their key contracts might be affected by this uncertainty and determine whether they can deal with it and, if so, devise a plan for how and when they will do so.
- The scope of the agreement in relation to EU rights: again, many IP-focused and IP-heavy agreements will refer to an EU trade mark or design as the subject matter of the agreement. As we recently reported, the UK government has confirmed that, even in the event of a “no deal”, it will provide for such existing EU trade marks and designs to remain protectable in the UK through an equivalent right in the UK, with only ‘minimal administrative burden’ (the exact details of the process remain to be confirmed).
The issue here is that the wording of the agreement will, most likely, not specifically deal with this situation, or as a matter of interpretation of the agreement.It is possible that there may be legislation setting out what should happen to govern this situation post-Brexit once new UK rights are created.However, in practice, a one size fits all legislative approach may not deal effectively with all of the commercial and practical issues that may arise.Parties should consider now how they want any created UK rights to be dealt with under the terms of their agreements.
- Litigation or arbitration?: Where agreements have a cross-border aspect, it may be appropriate to revisit provisions relating to the resolution of any disputes arising under the agreement.
Given the terms of any Withdrawal Agreement have not been finalised, it is not clear yet exactly what arrangements will be in place between the UK and EU27 members in the event of a deal to govern substantive and procedural issues following Brexit around jurisdiction, service of legal proceedings and enforcement of judgments. The government has taken steps towards legislating for the event of a “no deal” but, ultimately, the arrangements entered into may not provide the same certainty and continuity to contracting parties in resolving disputes and conducting litigation as is provided by the current, reciprocal regime.
In the light of this uncertainty, UK businesses can be taking a number of steps now. These include enforcing any outstanding judgments in EU27 Member States before the date of Brexit and reviewing (both existing and new) contracts where counterparties are in EU27 states, or where the assets against which a judgment would be enforced are located there.In appropriate cases, this may include agreeing a clause providing for an arbitration process; arbitration agreements will not be affected by Brexit and London remains one of the world’s leading arbitration venues. Arbitral awards will remain enforceable in the EU27 as at present.