US Treasury guidance sets out sanctions compliance duties for virtual currency industry
Out-Law Analysis | 13 Jan 2021 | 2:46 pm | 6 min. read
Intellectual property (IP) rights holders should use the finalisation of the new EU-UK trade agreement as a spur to review whether their IP protection is in line with their business strategy even though the agreement changes little in practice in the short term in relation to their rights.
Trade between EU member states and the UK is now governed by the EU-UK Trade and Cooperation Agreement, which took effect after the Brexit transition period expired on 31 December 2020. The agreement includes a number of provisions relating to copyright, trade marks, design rights and trade secrets.
The Withdrawal Agreement, previously agreed between the UK and EU27 in 2019, settled the immediate consequences for IP rights after the end of the Brexit transition period, and was implemented in the UK by a number of statutory instruments (SIs). In contrast, the focus of the Trade and Cooperation Agreement (TCA) is the longer term, big picture around the protection of IP rights in the UK and EU. For that reason, the TCA itself does not require IP rights holders to take any immediate action. However, rights holders may want to take steps to ensure their rights have transitioned correctly, as envisaged by the Withdrawal Agreement, and that their IP protection remains in line with current business strategy.
The scheme adopted by the TCA is to ensure that the parties keep to their existing international treaty obligations, such as the TRIPS Agreement, which ensure an adequate and effective level of protection and enforcement of IP rights. While the TCA does not prevent a party introducing enhanced levels of protection, the basic position adopted in the agreement, which reflects more generally the UK's position with third countries under its wider treaty obligations, is one based on "national treatment" whereby "each party shall accord to the nationals of the other party treatment no less favourable than the treatment it accords to its own nationals with regard to the protection of intellectual property".
Some IP rights, such as EU trade marks or Community design rights, which were harmonised across the EU, including in the UK, prior to Brexit. The UK's European Union (Withdrawal) Act 2018 provided for the incorporation of EU laws providing for those rights into UK domestic laws as well as the retention of relevant case law established before the EU courts prior to exit day. This meant that, in respect of IP rights derived from EU law, the "national treatment" meant identical treatment as at 1 January 2020 at least in so far as the law applied as at 31 December 2020.
However, to give a welcome degree of certainty, the TCA goes further by setting out some of the now familiar basic principles of the previously harmonised laws in the areas of copyright, trade marks, design rights, trade secrets and plant varieties. The UK and EU agree, as a minimum, to maintain these specific principles within their IP protection regimes. To a large extent, this position was enshrined in UK law by the SIs implementing the Withdrawal Agreement. These SIs contain comprehensive and distinct mechanisms for the fate of harmonised IP rights.
For example, the scope of protection provided by an EU trade mark, and international registrations (IR) designating the EU, changed on 1 January 2021. All EU trade marks and IR designated to the EU registered before 31 December 2020 have been cloned on to the UK trade mark register as national UK rights, with the EU trade mark continuing to apply in the EU27. The cloned rights are called “comparable trade mark (EU)” and “comparable trade mark (IR)” and are equivalent UK national rights with the same application date, priority or UK seniority for the same goods and services. The evidence so far is that the automated cloning process has gone smoothly overall.
Pending EU trade mark applications have not been cloned and applicants have until 30 September 2021 to file an application for a UK national mark in order to take advantage of the same filing and priority dates as the original EU trade mark application.
Rights holders may want to take steps to ensure their rights have transitioned correctly, as envisaged by the Withdrawal Agreement, and that their IP protection remains in line with current business strategy
The UK has also provided equivalent UK rights for Community designs and international designs designating the EU. However, one quirk of the TCA is that each "party shall ensure that designs, including unregistered designs, shall also be eligible for protection under the copyright law of that party as from the date on which the design was created or fixed in any form" – this appears to extend UK copyright to designs which previously would not benefit from copyright protection, which designers will welcome.
The expiration of the Brexit transition period does not affect the current patent system, which is governed by the European Patent Convention, a non-EU related international treaty. However, prior to Brexit, the UK government formally withdrew from the proposed new European unitary patent system because it refused to participate in the associated Unitary Patent Court (UPC), on the basis that participating "in a court that applies EU law and is bound by the CJEU would be inconsistent with the government’s aims of becoming an independent self-governing nation".
While the TCA provides continuity, it does leave scope for divergence between the UK and EU IP regimes. Where divergence is anticipated the parties have agreed that any measures which are introduced should not amount to a disguised restriction on trade or be inconsistent with what has been agreed.
The TCA does not affect the freedom of the parties to determine whether and under what conditions IP rights will be exhausted. However, there is an imbalance to the current position in this regard.
The UK has initially elected to recognise that the first placing of products on the market in the European Economic Area (EEA), and not just within the UK market, will exhaust the IP rights in those products. This means that those IP rights cannot then prevent the subsequent sale of those products in the UK. However, the EU position does not mirror this, meaning that businesses that place their products on the UK market will not be considered to have exhausted the IP rights for those products and will be able to rely on those IP rights to prevent the resale of those goods on the EU market. The UK is due to consult on what the UK permanent position should be concerning exhaustion of rights in early 2021, with the current position expected to change.
Until the government adopts a new exhaustion regime, the UK will operate both a hybrid exhaustion regime with the EEA, and a system of national exhaustion with non-EEA countries as there will be no change to international exhaustion or, in the case of patents, to a concept of implied licence.
With Britain now being outside the EU Customs Union, EU customs authorities will no longer enforce UK IP rights at their borders, but provision is made under the TCA for both sides to develop cooperation to enforce "intellectual property rights by customs authorities, including exchanging information and best practices in customs operations focusing in particular on intellectual property rights enforcement". Therefore, rights holders should ensure that they continue to lodge their applications for action with the EU customs authorities and apply for a new UK application for action to ensure that the UK Border Force will take action at the border to stop the importation of infringing goods.
Relevant to how IP laws will develop, the UK and EU27 have agreed to set up the Trade Specialised Committee on Intellectual Property to address the rights and obligations of each party under the TRIPS Agreement and other international treaties in the field of IP. As to how things will work in practice at the border, the parties have also agreed to set up the Trade Specialised Committee on Customs Cooperation and Rules of Origin, which will address matters including customs enforcement of IP rights.
The TCA is completely silent on the protection of databases and so the UK will continue to offer protection to UK databases by applying the now national database right; a right based on the harmonised EU Database Right Directive.
The new IP landscape in the UK and EU was determined by the Withdrawal Agreement some time before the TCA was reached. Rights holders should take steps now to check that their cloned rights appear correctly on the UK register, or to opt-out of the cloning process if they wish. Rights holders should ask themselves whether they still need both EU and comparable UK trade mark or design protection and, if they are a predominantly UK based business, whether they have plans in place to ensure adequate use of EU trade marks in the EU. EU trade mark applicants must also make a fresh application for a UK national mark by the September 2021 deadline.
11 Jan 2021
08 Jan 2021
US Treasury guidance sets out sanctions compliance duties for virtual currency industry