EU-UK Post-Brexit Agreement: Digital Trade and IP Aspects

15 Feb 2021

Since 1 January 2021, the EU and the UK have provisionally applied, pending the EU’s internal ratification thereof, the Trade and Cooperation Agreement (“TCA”) that sets the terms for their future relationship after the UK’s withdrawal from the EU.  Having previously provided an overview of key trade and regulatory takeaways from the TCA in our Pierstone Newsletter of 14 January 2021, we now highlight some notable aspects of the agreement in terms of digital trade and intellectual property.

1.Digital Trade

Data protection: the TCA ensured temporary continuity by providing that until 1 May 2021 and with a possible extension until 1 July 2021, the UK is not yet considered a non-EU “third country” for purposes of data protection law and personal data transfers between the Parties will be allowed as before.  The EU hereby committed to use this stay period to secure a decision that the UK offers a level of protection that is adequate for personal data to continue to flow as intra-EU transfers (“Adequacy Decision”).  In addition, the stay period is conditioned upon the restrictions that the UK may not amend its data protection regime or exercise certain “designated powers” without the EU’s consent.

Electronic authentication: the EU and the UK agreed not to discriminate, in terms of accepting the legal effect and admitting as evidence in legal proceedings, against electronic documents or signatures on the basis of their digital form.  However, the TCA does include exceptions to the possible use of electronic authentication for sectors such as e.g. broadcasting, gambling, and legal services.

Information Society services (“ISS”):[1] the TCA did not alter the fact that EU- and UK-based ISS providers must henceforth comply with the local rules of, respectively, the UK or the EU Member States where the services are provided.  Both Parties did commit to refrain from adopting or maintaining prior authorization or similar schemes on the sole ground that the service is provided online, but it can otherwise not be excluded that providers may face such requirements under national laws.

Online consumer protection: the TCA includes a commitment of both Parties to preserve or adopt measures protecting consumer rights in e-commerce such as e.g. prohibiting fraudulent or deceptive commercial practices, protecting against spam, committing to fair commercial practices, or imposing requirements in terms of consumer information and access to remedies.

2.Intellectual Property

General: to ensure an adequate protection and enforcement of intellectual property rights (“IPRs”) as well as reduce potential barriers to trade in innovative and creative products and services, the TCA commits both Parties to certain principles.  In particular, the EU and the UK affirmed that they will comply with, and make all reasonable efforts to ratify or accede to, the applicable and certain other relevant international agreements.  Second, each Party must accord the other’s nationals, in all categories of intellectual property covered, “national treatment” with regard to IPRs protection i.e. treatment no less favorable than that accorded to their own nationals.

Exhaustion: in line with the WTO TRIPs Agreement, the TCA allows each Party to determine whether and under what conditions the exhaustion of IPRs applies.  As such, the UK has retained the EU’s system of regional exhaustion whereby goods placed on the EEA market by, or with the consent of, the IPRs holder are exhausted in the UK in that the holder is no longer able to oppose the export of such goods from the EEA to the UK.  As the EU did not reciprocate this commitment, however, goods placed on the UK market by, or with the consent of, the IPRs holder may henceforth no longer be exhausted in the EEA in that the right holder may have to agree to any export of such goods from the UK to the EEA.

Trade marks: the TCA commits both Parties to certain minimum standards in terms of e.g. signs that can constitute a trade mark or revocation grounds, but it otherwise does not address the consequences of the fact that the UK now falls outside the scope of EU trade mark (“EUTM”) law.  In this regard, we refer to our previous Pierstone Newsletter of 31 August 2020 for a more in-depth overview and recall that such consequences include, amongst other things, that EUTMs are no longer protected in the UK and that seniority claims in EUTMs based on UK trade mark rights no longer have effect in the EU.

Designs: the TCA does not address the fact that Community Designs will no longer have effect in the UK and vice versa and only clarifies certain features of registered and unregistered designs such as e.g. the rights and the duration of the protection that they provide.  For registered designs, we hereby note that the UK regime mirrors that of the EU, that equivalent registered UK designs (“UKRDs”) are created automatically for all existing registered Community designs (“RCDs”), and that there is a period of 9 months to refile registrations for RCDs that were pending on 31 December 2020.  As for unregistered designs, the UK regime differs from that of the EU and the following UK Unregistered Design Rights (“UKUDRs”) that mirror the unregistered Community designs (“UCDs”) were consequently introduced:

  • The Continuing Unregistered Design (“CUD”), which will automatically continue to protect UCDs that existed on 31 December 2020 for the duration of their original 3-year term; and
  • The Supplementary Unregistered Design (“SUD”), which will automatically protect UCDs that are first disclosed after 31 December 2020 for a 3-year term from the date of that disclosure.

Patents: the TCA contains no distinct provisions in this area, where Brexit will not bring significant changes as patents granted before 31 December 2020 are unaffected, all EU Member States and the UK remain signatories to the European Patent Convention (“EPC”), and patents granted by the European Patent Office (“EPO”) will continue to cover the UK with equivalent effect as those granted by the UK Intellectual Property Office (“UKIPO”).  One notable feature is, however, that the TCA commits each Party to guarantee additional protection, including in terms of duration, for patent-protected medicinal and plant protection products through Supplementary Protection Certificates (“SPCs”) to compensate the holder for any protection reduction caused by administrative procedures.

Other: the TCA affirms the Parties’ commitment to certain minimum copyright protection standards, but there are no significant changes in this area as UK copyright law is largely rooted in international agreements and has otherwise incorporated many aspects of EU copyright law.  An area with less continuity, however, is database rights, where the TCA provides that rights existing in the EEA or the UK before 1 January 2021 will be preserved for the remainder of their duration but that citizens, residents, and businesses from the EU and the UK will not be eligible to receive or hold such rights in the other Party for databases created on or after 1 January 2021.  Last, the TCA contains no specific provisions on geographical indications, where both Parties agreed to keep their own rules while seeking to coordinate on aspects such as enforcement and joint protection of such rules.

3.Conclusion

In terms of immediate next steps, the European Parliament must still give its consent to, and the Council of the European Union must subsequently adopt a decision on the conclusion of, the TCA in order to clear the way for its formal entry into force.  The European Parliament has thus far not scheduled a plenary vote, but the mentioned ratification procedure must – barring any extensions – be completed before the provisional application of the TCA lapses on 28 February 2021.

As for the significance of the TCA’s digital trade and intellectual property provisions, these provided more legal certainty but did not alter the fact that businesses will henceforth operate in a more complex legal environment and will have to take action to address any changes.  Moreover, the TCA commits the EU and the UK to jointly review its implementation, supplementing agreements in 2026 and every five years thereafter, and it is therefore recommended that stakeholders actively monitor any negotiations on additional items that may result from such reviews.  As Pierstone can assist all businesses with each Brexit-related legal issue in terms of digital trade, data protection and intellectual property, please do not hesitate to contact us should you have any questions on these subjects.

 

Maarten Vanderhaeghe                                   Laura Somaini

Partner                                                                          Associate

E: maarten.vanderhaeghe@pierstone.com          E: laura.somaini@pierstone.com

 

Alexandre Domken                                              Marta Pistone

Junior Associate                                                            Legal Consultant

E: alexandre.domken@pierstone.com                     E: marta.pistone@pierstone.com

[1] ISS are defined as “any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services” and include, without limitation, most online services.