Brexit: Retained EU Law Bill

One of the most significant developments in 2022 was the UK government’s introduction of the Retained EU Law Bill, which includes a sunset date of 31 December 2023 for certain retained EU law to expire. If passed in its current form, the Bill has the potential to impact the protection and enforcement of a wide range of IP rights. The UK IPO now has to actively work out which retained EU law is affected by the sunset provisions and which laws should be preserved, amended or allowed to expire. This is no mean feat, given the UK was a member of the EU for nearly 50 years. So far the UK IPO has published a list of 70 pieces of retained EU law that is IP related. However, the list is subject to revisions and additions, as the IPO continues with the exercise of identifying relevant laws, and the IPO has said that not all of the retained EU law on its list is necessarily within the scope of the sunset clause as currently drafted. The timetable is extremely challenging but nevertheless, in any areas where the IPO is considering substantial change, we would expect to see industry consulted over the first part of 2023. See our blog here. We will be tracking the progress of the Bill closely so look out for further updates on Engage.   

Copyright & Designs: Overlapping Protection

In early March 2022, the UK IPO ran a consultation on the UK designs framework, following Brexit, and whether any changes are needed now that the UK no longer needs to be harmonized with the EU. The IPO called for views on, amongst other things, whether the UK system needs simplifying and also the extent to which there should be overlapping copyright and design right protection for 3D designs, particularly considering the much longer term of protection for copyright. See our blog on the consultation here. A series of CJEU and UK case law both prior to and following Brexit, has highlighted the inconsistency between the UK approach to protecting 3D designs only if they fall within the scope of ‘works of artistic craftsmanship’ under the UK Copyright, Designs and Patents Act (which requires aesthetic appeal) and the EU approach, which provides copyright protection to any ‘work’, provided it meets the test for originality. Whilst the UK IPO has told stakeholders that its work on the design consultation is now on hold while they tackle the Retained EU Law Bill, the latest UK case on the meaning of ‘work of artistic craftsmanship’ and the overlap between copyright and designs, in relation to copyright protection for a rowing machine (Waterrower v Liking Ltd), is continuing through the UK courts this year and could provide clarity from the courts in relation to UK copyright protection for 3D designs, in particular those with a functional aspect. Whether or not the government grasps the nettle as part of its review of Retained EU Law remains to be seen but it is certainly something designers will be keeping an eye on in 2023.

Trade marks: Bad Faith

Claims that trade marks should be invalidated on the basis they have been registered in bad faith has been a key theme in UK trade mark cases in 2022, featuring in Sky v Skykick and the ongoing Lidl v Tesco dispute (see below). We expect 2023 to bring some clarity to this area of the law, however, with the much-anticipated Supreme Court decision in Sky v Skykick due in mid-2023. In its appeal to the Supreme Court, SkyKick emphasizes the function of the trade mark register to convey accurate messages about which trade marks are available and which might block plans to use.  It alleges that filing broadly leads to a cluttering of the register and makes clearance of new brands difficult.  SkyKick also alleges that it leaves it open to the trade mark owner to use those registrations to enforce widely against competitors.

SkyKick suggests that the Supreme Court needs to decide the case, as the Court of Appeal’s pragmatic judgment flies in the face of EU caselaw, but now the CJEU is unable to correct this post-Brexit. However, the Court of Appeal was very clear in its straightforward application of existing UK caselaw (and retained EU law) based upon policy considerations of “business as usual” for brand owners.  The Court of Appeal concluded that to find bad faith there must be both no intention to use the trade mark by the proprietor and also a dishonest intention or other sinister motive, involving conduct which departs from accepted standards of ethical behaviour or honest commercial, such as deliberately seeking to block a third party from entering the market.

We expect the Supreme Court will use the case as an opportunity to set the rules definitively under UK law post-Brexit, in this developing area of law, without recourse to the principles from the previous line of EU caselaw. Given its importance to UK trade mark filing strategies and infringement actions, the Supreme Court decision will be hotly anticipated by industry, not least by those involved in other UK litigation, such as Lidl and Tesco. 

Copyright: Text and data mining (TDM)

We think issues involving copyright and new technologies, such as AI, will become increasingly important in 2023. The UK government has said at the outset of a series of consultations on the topic, that fostering AI innovation is central to its plans. Following a consultation at the end of 2021, the government has, in its response of June 2022, stated that it intends to introduce a new (broader) copyright and database exception for TDM.  The UK already has an exception to copyright infringement for TDM for the purposes of non-commercial research. However, the government has said it will broaden the existing exemption to allow TDM for any purpose. Rights holders will still be afforded safeguards to protect their content (such as a requirement for lawful access). This change will impact rights’ holders significantly (especially in the field of scientific publications, medical and clinical data for biomedical discovery and computational linguistics, but also in many other fields where big data analysis is driving change).  According to its response, the Government will be identifying suitable legislation to make the required changes in due course. The proposed exception is broader than the exception in the new EU Copyright Directive, which EU member states have started to implement in 2022. The  hope of the Government is that the introduction of a broader exception for TDM for the UK will make the most of the "greater flexibilities" following Brexit and will make the UK more competitive as a location for firms carrying out TDM. Recent intelligence, however, suggests that the Government may be having second thoughts about the broader exception and may extend the consultation period. Certainly we expect businesses will be starting to test the limits of the exceptions in both the EU and the UK throughout 2023. Read our article on the Government’s response to the consultation here.

Brexit: Exhaustion of Rights

When the UK left the EU, the UK and the EU agreed that both parties are free to determine what exhaustion regime should apply to their territories. Since 1 January 2021, the UK has applied a one-way regional EEA regime, which means that once a product, such as a book, has been legitimately placed on the market in the EEA, that product can continue to be re-sold into the UK, without being prevented by the rightsholder. However, the EU may allow rightsholders to restrict the importation of certain goods from the UK into the EEA that have not previously been put on sale in the EEA. In effect, this has left the UK with a one-way exhaustion regime, until the UK decides on a future regime.

The UK government ran a consultation in 2021 on the UK’s future regime for exhaustion of intellectual property rights. Read our article on the consultation here. It considered a number of options, including: maintaining the one-way regional EEA regime; moving to an international exhaustion regime or moving to a mixed regime (where specific goods or rights may be subject to different regimes).  On 18 January 2022 the government stated that, after reviewing the responses, it had not been able to make a decision as there was not enough data to understand the economic impact of changing the current position. It said a further update would be provided in due course however no such update has materialised. If (as mentioned above) the REUL Bill is approved in its current form, the government will need to make a decision on this framework before the end of 2023. Which option the government chooses will have significant consequences for UK manufacturers importing goods (or parts) into the UK and enforcement by the rightsholder in other countries. Whilst we expect the government will opt to maintain the current one-way EEA regional regime, there is no certainty and we expect rights holders will be keeping a keen eye on the developments in 2023.

Authored by Joel Smith and Penny Thornton.