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BREXIP Part 2: Conduct an IP agreement and IP Licence Agreement Review Ahead of Brexit

Author Rachel Nicholls

Brexit will impact on various aspects of your Intellectual Property (IP), many of which relate to future considerations and our series of BREXIP (Brexit and Intellectual Property) blogs are here to guide you towards a proactive approach. IP owners shouldn’t ignore the current exploitation and use of  IP rights, and how these may be affected by Brexit.  In this article, we look at your current position in the light of third parties, in particular existing third-party arrangements and IP licensing agreements, and how Brexit may have an impact.

The UK and the EU – Key dates

Since 2013 up until 31st January 2020, the EU consisted of 28 member states, including the UK.  The UK left the EU on 31st January 2020, and whilst the UK is still currently in a transition period which is set to expire on 31st December 2020, the UK is now no longer a member of the EU. 

The current position of IP agreements and IP licensing agreements

As many IP rights in Europe are unitary in character, many written documents, agreements and license agreements in respect of IP will relate to the whole of the EU rather than individual member states.

As the UK has now left the EU, the way that your existing licensing agreements and other IP agreements were drafted may have a direct impact on your rights and freedom to operate in the UK post-Brexit.

What are IP Agreements?

There are a number of different IP agreements, all of which could be affected by the UK’s departure from the EU.  We concentrate here on co-existence agreements and licence agreements, however the hints and tips are likely to be relevant to other broader agreements that you may already have in place.

A co-existence agreement is typically drafted to settle an IP dispute.  For example, where one party has a claim to a prior right and another party wishes to use and register its own trade mark in a potentially conflicting geographical and/or commercial area.  The parties will enter into a co-existence agreement which typically sets out the rights of each party and sets out the manner in which each party is able to use or exploit their rights in order to avoid a conflict.

An IP licence agreement is a document setting out the way in which one party (a licensee) is authorised to use and exploit the IP rights of another party (the licensor) in a particular commercial sector or a particular geographical area.  A licensing agreement will stipulate all terms relating to the scope of the agreement and will set out the permitted activities of the licensee including the IP rights covered, the commercial sector concerned, and the geographical reach of the agreement.

5 considerations for IP licence agreements and other IP agreements

It’s time to plan ahead and ensure your IP licences and agreements will protect your IP rights post Brexit. Below are five considerations from our team of IP specialists which you can explore now to identify where your existing agreements may need to be amended. Lookout for our practical BREXIP tips designed to steer you further in the right direction.

Consideration 1 – Definition of “the EU”

How the EU is defined within your existing IP licensing agreements is key to your ability to continue placing reliance on that agreement in the UK in the future.

A well drafted agreement or intellectual property licence should either stipulate clearly that the EU is defined as the EU “at the date of the agreement”, or alternatively, should stipulate the EU with a subsequent clarification on the countries concerned i.e. a list of all 28 member states at the time of the agreement.

An IP license agreement which has been drafted to refer only to “the EU” without any context or subsequent clarification could potentially be construed to no longer include the UK following Brexit.  This could of course have a severe impact on your freedom to operate under your trade mark in the UK where co-existence agreements are in place, your ability as a licensee to enjoy the rights granted under the licence, or in the case of a licensor, the ability of your licensees to operate in the UK.

  • BREXIP TIP 1: Check all existing co-existence agreements for their definition of the EU, and consider whether a fresh agreement or an addendum to the agreement is required
  • BREXIP TIP 2: Where you are the licensor, check all IP licensing agreements covering the EU. If your intention was for your licensees to be able to operate in the UK, consider whether the licence agreement will require amendment
  • BREXIP TIP 3: Where you are the licensee, check all license agreements covering the EU. Consider whether you are active in the UK under this licence, and if so, you may need to approach your licensee to obtain an amended licence agreement

Consideration 2 – Schedules

Many IP agreements will contain a specific list of the rights to which the agreement relates, for example, the specific registered rights that are being licensed in a license agreement.

Prior to 31st January 2020, all EU Trade Mark and Design Registrations covered the UK.  Post-Brexit, those registered rights no longer include the UK, but in most cases will still be deemed to extend to the UK by way of transitioned rights – see our previous BREXIP blog for further context.

It is entirely likely that any existing schedules/appendices to agreements will include specific reference to EU-wide registered rights, for example specific EU Trade Mark Registrations and EU Design Registrations, which post-Brexit will actually become separate transitioned UK rights.

Depending upon the drafting of the particular agreement concerned, if your schedules refer to specific EU registered rights which no longer cover the UK, this could have an impact on your ability to operate in the UK, or your licensees’ ability to operate in the UK.

  • BREXIP TIP 4: Review all schedules or specific references to EU registered rights in any agreements, and consider whether an addendum to the schedules is required in order to refer to transitioned UK registered rights

Consideration 3 – Scope of Agreement

Where an intellectual property licence agreement relates specifically to Trade Marks, which can be registered in respect of a wide range of goods and services, there is a possibility that the rights granted or obtained by way of a co-existence or licence agreement may relate solely to specific goods and services rather than the entire scope of the registered right.

There may also have been an intention for different goods/services to be made available in different territories.

  • BREXIP TIP 5: Review all IP licence agreements in terms of specific goods/services which should have been available for use in the UK, and consider whether any amendments to the agreement are required post-Brexit.

Consideration 4 – Payments

Where relevant, IP agreements will commonly incorporate reference to customs duties payable, and will detail which party will be responsible for those duty payments.

Whilst we may not yet have complete clarity on all trade agreements with the EU post-Brexit, it is worth taking the time now to consider the changes that Brexit may impose on payment of customs duties.  For example, it is possible that customs duties may become payable where they were previously not due.  Will customs duties now become payable for you or your licensees where they were not previously payable?  Will certain goods or services be more susceptible to changes in duty payments, and who may that impact on?

In addition, IP licence agreements incorporate licence fee payments which may be impacted by Brexit.  For example, where you are a licensee, will the geographical scope of your licence be affected by Brexit, and does this mean that your licence payments will decrease or increase?  Likewise, where you are the licensor, will the payments that you receive from your licence agreements be affected by Brexit?

  • BREXIP TIP 6: Review all current IP licence agreements to assess whether amendments may be required in terms of customs payments, and consider the action that you could take now in anticipation of these changes
  • BREXIP TIP 7: Review all current licence agreements to assess whether you or any other party subject to the agreement are likely to be affected by changes in licence fee payments

Consideration 5 – The Future

Now that the UK has left the EU, any IP license agreements which are intended to cover the UK must now make express reference to the UK, and may not rely on reference to the EU as a whole.  Take care to ensure that any relevant clauses now clearly state the EU and the UK where relevant to ensure that you are preserving your freedom to operate now and in the future.

Your IP advisors will be able to advise you fully on the impact of Brexit on your IP and your IP agreements.  If you haven’t already recommend that you start the BREXIP conversation with an IP specialist, now is a good time to start collecting together all existing agreements, and to assess them for suitability in the post-Brexit era.

How to manage the Brexit transition period to your IP advantage

To enable you to use the current transition period to your IP advantage we have created a Sonder IP Brexit and IP (BREXIP) timetable.

Download your Sonder IP – BREXIP (Brexit and IP) timetable

Our timetable shares key dates and tasks during the Brexit transition period for any IP rights owner. Each task is supported by an article detailing our strategic advice and rationale behind our IP recommendations. Each article will be shared in a timely manner on our blog, and the following topics will be covered from an IP and Brexit perspective:

Read our other BREXIP articles:

BREXIP All you need to know about Brexit and Intellectual Property

BREXIP Part 3: Dual filing trade marks in the UK and EU ahead of Brexit

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