Thursday, 24 January 2013

2014 —The perfect IP storm? February guest editorial

The guest editorial for the February 2013 issue of JIPLP is written by Gill Grassie, a seasoned Scottish IP practitioner and a partner in the law firm Brodies LLP.  While much discussion is taking place in the United Kingdom about the UK withdrawing from the European Union, a contrasting debate has been running in Scotland as to the extent to which that country may continue to be part of, or benefit from, the European Union if it should withdraw from the UK.  In this context, Gill's editorial, which we reproduce below, is particularly apposite:
"2014 —The perfect IP storm? 
Much has been done over the years to achieve a globally harmonized IP system and there are many continuing initiatives with this aim. The Patent Prosecution Highway, the launch of the Cooperative Patent Office as a joint project between the European Patent Office (EPO) and United States Patent and Trademark Office (USPTO) on 1 January 2013 and the America Invents Act are just some examples of these.

Yet another is the proposed introduction of the much debated European Unitary Patent (EUP) and its central, regional and national courts on 1 January 2014. It will not displace the national patent systems in place throughout the EU but the plan is for the current European Patent system to be phased out with an initial transitional period of 7 years. The new system will exclude Spain and Italy who are challenging its legality under EU law. Given the ongoing euro-zone economic crisis there is a real question as to whether the EU will itself remain intact by 2014. Perhaps that possible break up is now more of a threat to the birth of the EUP than that legal challenge or the considerable opposition it has faced to date from representatives of the patent and legal profession and business community. Assuming that the EUP does come into being in 2014, the landscape of patent law in Europe will have changed dramatically.

Furthermore, 2014 may also herald a big change on a much smaller scale for the UK as a member state of the EU. In mid-October of 2014 (the 700th anniversary year, not by coincidence, of the Battle of Bannockburn) Scotland will vote on the issue of its political and constitutional independence from the UK. It is difficult to predict the ultimate outcome with 18 months or so still to go but it does give rise to the possibility that Scotland will separate from the UK and thus also from the EU. If so, what impact could this have on Scotland as well as on the overall UK and EU IP regimes? Would Scotland be kept out of the EUP as well as the current UK national registered IP systems? These types of issues have not so far been part of the independence debate and despite the wealth of IP rich industries in Scotland, it is unlikely that intellectual property will be a central plank in the respective for and against campaigns.

The European Commission's president Manuel Barroso's view is that an independent or separate Scotland will not warrant automatic membership of the EU and Scotland would be required to re-apply by making a request for accession. Assuming that is so, in the absence of a negotiated agreement in advance, could there be a hiatus in any IP protection by way of currently available EU IP rights? These include Community trade marks (CTMs), Community designs and existing European patents. It seems unlikely that these rights, if already existing, could be extinguished insofar as they covered Scotland. If they were, this would create a period of (temporary or even on a permanent) amnesty and make Scotland a potential haven for infringers to make hay while the sun shines. However, it will mean that current applications for these could be at risk and of course there could be no new applications made which designated Scotland until the constitutional position was sorted out.

Also irrespective of whether an independent Scotland subsequently becomes a separate member State of the EU, it would still be legally separate from the rest of the UK. Thus would the relevant UK wide legislation on IP rights such as patents, trade marks, copyright and design right still be applicable in Scotland? Again it is likely that existing rights would remain in play but future applications and possibly even those which are pending for these could be extinguished.

At a time when the trend is for globalization of economies and IP rights, the prospect of a UK divorce is ironic especially when the UK National patent system may increase in popularity as businesses may start to favour national patent systems over the EUP due to its perceived disadvantages. For example, to avoid losing entire patent coverage for the whole of the EU in one central validity attack. If this turns out to be the case for a business wishing to protect its IP in Scotland, these UK wide rights may no longer be available to it.

Of course if separation comes about, irrespective of whether Scotland then remains part of the UK (and the EU) for IP purposes or not, it will have its own ability to bring additional intellectual property rights into existence. These could well bolster its IP regime. One area giving food for thought is unfair competition. A new law on this could potentially offer a considerable advantage to businesses operating in Scotland which so often find the current UK law of registered trade marks and passing off frustratingly depriving them of any ability to prevent look-alike, copycat products and services taking advantage of their considerable investment and innovation.

All of these issues are important ones not just for Scotland and its economy/business community but also for businesses in the rest of the UK, the EU and even further afield who could all stand to lose out in the absence of an effective IP system in Scotland whether only temporary or not. Certainty about the shape of the future Scottish, UK and EU IP regimes would be beneficial well in advance of any division of constitutional ties with the rest of the UK.

In conclusion, 2014 is shaping up to be an exciting year on the IP front EU-wide and closer to home in the UK. A new pan-European patent system and the possibility of an independent Scotland with many IP questions remaining unanswered, are just two of many potential scenarios. It is worth keeping on top of the debates as they evolve and is this the calm before the perfect storm?"

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