EU Commission rejects the UK's Application to rejoin Lugano

Lugano

Author Sergey Prokudib-Gorsky Source Wikimedia Commons

 

Jane Lambert

Although I had predicted it in my April Brexit Briefing, the publication on 4 May 2021 of the European Commission's Communication to the European Parliament and the Council recommending the rejection of Her Majesty's Government's application to rejoin the Lugano Convention (Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 339, 21.12.2007, p. 3–41) will have disappointed many British lawyers and even more British businesses that benefited from  Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 351, 20.12.2012, p. 1–32. The member states do not have to follow the Commission's recommendation but there is no point in asking the Commission to evaluate the British application and then not following the Commission's advice.

The Commission's reasoning is that while there is no formal requirement for an acceding state to belong to the EU, EEA or EFTA every party to the Convention has been a member or prospective member of one of those blocs.  The UK has left not only the EU but also the single market and the customs union with the following consequence:

"The United Kingdom is, since 1 January 2021, a third country with an “ordinary” Free Trade Agreement facilitating trade but not including any fundamental freedoms and policies of the internal market. The Convention is based on a high level of mutual trust among the Contracting Parties and represents an essential feature of a common area of justice commensurate to the high degree of economic interconnection based on the applicability of the four freedoms."

Neither the withdrawal agreement nor the trade and cooperation agreement provides for British accession to Lugano.

In the Commission's view, an appropriate framework for cooperation with third countries in the field of civil judicial cooperation is provided by the multilateral Hague Conventions such as the Convention on Choice of Court Agreements of 30 June 2005 and the Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters.  These agreements are much more limited in scope. For instance, art 1 (1) of the Choice of Court Agreements Convention states that the Convention shall apply in international cases to exclusive choice of court agreements concluded in civil or commercial matters and art 2 (2) excludes:

"the validity of intellectual property rights other than copyright and related rights"

and

"infringement of intellectual property rights other than copyright and related rights, except where infringement proceedings are brought for breach of a contract between the parties relating to such rights, or could have been brought for breach of that contract."

The European Parliament and member states will have an opportunity to express their views before the EU responds formally to the British application.

It is not yet clear what will be the long term effect on London as a financial centre or forum for the resolution of commercial disputes but it will be seen as an opportunity for Amsterdam, Dublin, Frankfurt and Paris and their new English speaking commercial courts (see English Speaking Commercial Courts in France, Germany and the Netherlands bid for London's Work 2 April 2021).

Anyone wishing to discuss this article should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Brexit Briefing April 2021

Port of Dover

Author Raimond Spekking Licence CC BY-SA 4,0 Source Wikimedia Commons

 

Jane Lambert

The most significant events in April were the ratification of the Trade and Cooperation Agreement by the European Parliament, the Commission's recommendation that the UK should not be allowed to accede to the Lugano Convention and the fallout from the implementation of the withdrawal agreement and, in particular, the Northern Ireland Protocol. The month also marked the anniversary of British ratification of the Unified Patent Court Agreement in 2018 which was reversed by a note verbal and a written statement from Amanda Solloway MP 2 years later.

Ratification of the Trade and Cooperation Agreement

The European Parliament passed a resolution consenting to the agreement by a large majority on 28 April 2021 (see European Parliament legislative resolution of 28 April 2021 on the draft Council decision on the conclusion, on behalf of the Union, of the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, and of the Agreement between the European Union and the United Kingdom of Great Britain and Northern Ireland concerning security procedures for exchanging and protecting classified information (05022/2021 – C9‑0086/2021 – 2020/0382(NLE)). The United Kingdom Parliament ratified the Agreement by passing the European Union (Future Relationship)  Act 2020 at the end of last year.

The Trade and Cooperation Agreement has avoided tariffs on British exports which is something but not the need for customs formalities, health checks and all sorts of other non-tariff barriers to imports from third countries from which British exporters had previously been exempt. The result is that many firms have complained that it is considerably more difficult and expensive to supply customers in the EU than it had been before. It is too early to say whether those difficulties are temporary or long-term but if they are temporary there do not appear to be any solutions on the horizon.

The agreement covers goods but not services.   Before the expiry of the transition or implementation period, the British financial services enjoyed the highest level of access to the European single market known as "passporting rights".  These have now been lost but discussions have been taking place for the industry to be accorded equivalency rights that allow some access.  Those discussions have not yet resulted in an agreement.   As a result, some businesses have transferred some of their operations to one or more of the remaining EU member states.  There have been some job losses in London but not yet at a disturbingly high level.

The Lugano Convention

A sector that stands to lose even more from Brexit than financial services is the legal services industry and particularly intellectual property.  London was a convenient forum for the resolution of commercial disputes while Regulation (EU) No 1215/2012 applied to the UK. There is now uncertainty as to the ease with which English judgments can be enforced in the EU and the assistance that British courts can expect from EU courts. Many of those difficulties would cease were the UK to rejoin the Lugano Convention (Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters OJ L 339, 21.12.2007, p. 3–41).  Accession requires the consent of the existing members and according to Lord Goldsmith, the former Attorney-General. the Commission has advised EU member states to refuse such consent on the grounds that it is not a member of the EU, the EEA or even EFTA (Lord Goldsmith UK Accession to the Lugano Convention 2007—View of the EU Commission 22 April 2021 Debevoise & Plimpton).

Fallout from the Northern Ireland Protocol

I mentioned the circumstances that gave rise to a letter of formal notice in The Commission's Second Letter of Formal Notice on 29 March 2021. HM Government had a month in which to answer that letter which has now expired.  The Northern Ireland Protocol was a concession that the previous Prime Minister, Theresa May, said that no British prime minister could ever make. She had negotiated a withdrawal agreement that required the whole United Kingdom to remain in sync with the internal market until some means could be found that would enable lorries to cross the border with the Republic of Ireland without customs formalities.  Such a requirement proved unacceptable to many Conservative and all Democratic Unionist politicians with the result that the agreement that she had negotiated could not be ratified.   As a result, the UK's withdrawal from the EU was postponed until 31 Jan 2020.

The concession enabled the UK to withdraw from the UK and the consequences of such withdrawal for Northern Ireland were delayed until the implementation or transitional period expired on 31 Dec 2020.  As the Northern Ireland Protocol required additional paperwork and customs inspections on imports from Great Britain it became increasingly difficult to supply distributors in Northern Ireland from that country.  That has led to shortages of some consumer goods which in turn has led to civil unrest. The government's response to that unrest was to delay the implementation of certain aspects of the Protocol which prompted the letter of formal notice from the Commission.   In a related development, the members of the largest party in the Northern Ireland assembly have forced the Chief Minister out of office.  

Vaccine Politics

With job losses and business failures in all sorts of industries from financial services to fishing resulting from the additional paperwork and costs of exporting to the EU, the problems in Northern Ireland, the highest number of deaths from COVID 18 and the worst economic downturn of any of the large European economies, the government might be expected to struggle in public opinion polls.  So far that has not happened and that appears to result from the early success of the National Health Service in vaccinating the most vulnerable age groups of the British population.  The government has given the impression that this success is a benefit of Brexit which will probably be debunked but not in time for the local authority and Senedd and Scottish Parliament elections on 6 May 2021.

The UPC Anniversary

To celebrate World Intellectual Property Day 2018, the Foreign Secretary, Boris Johnson deposited the UK's instrument of ratification.  Less than two years later Amanda Solloway MP, the Minister of State for IP reversed that decision. I had been looking forward to appearing with the Minister at a seminar to discuss IP law and FinTech at which I would have questioned her on her volte-face butt sadly she never turned up recording a video message instead (Jane Lambert IP Strategy for FinTech Start-ups and SMEs - and Other Matters 28 April 2021 NIPC London). London was to have hosted part of the Central Division of the Court of First Instance and considerable funds were invested in fitting out courtrooms for the new tribunal in Aldgate.  Those premises are now being for remote hearings in the Trade Marks Registry.  Meanwhile, the Dutch, French and Germans are bidding for London's legal work with new English speaking courts in Amsterdam, Paris and Germany (see Jane Lambert English Speaking Commercial Courts in France, Germany and the Netherlands bid for London's Work 2 April 2021).

Doing Business after Brexit

I am currently updating my contribution to Helen Wong's Doing Business after Brexit.  The first edition of that book was a great success as I mentioned at the time My contributor's deadline is 30 My 2021.  I do not yet have a publication date for the second edition but I shall let you know.  In my update, I shall mention the provisions of the withdrawal agreement and the trade and cooperation agreement relating to IP and data protection, the implementing legislation, the continuing persuasive authority of the Court of Justice's case law and the missed opportunity of the withdrawal from the Unified Patent Court Agreement.

Further Information

Anyone wishing to discuss this article or any topic arising from it should call me on 020 7404 5252 or send me a message through my contact page. 

Has the Volte-Face on the Unified Patent Court Agreement been worth it?

Author Cédric Pusney Licence CC BY 2.0 Source Wikimedia Commons

 

Jane Lambert

Tomorrow is World Intellectual Property Day,  It is an international festival of creativity and innovation to celebrate the anniversary of the coming into force of the Convention Establishing the World Intellectual Property Organization on 26 April 1970,  Because it is a very significant anniversary, governments like to make momentous announcements about intellectual property on that day

One such announcement on World Intellectual Property Day was British ratification of the Unified Patent Court Agreement ("UPCA") made exactly 3 years ago by the then Foreign Secretary the Rt Hon Boris Johnson MP.   As British ratification was as welcome as it had been unexpected, I hailed it t as "Possibly the best thing to happen on World Intellectual Property Day", Any euphoria occasioned by that news was very short-lived.   A volte-face came less than 2 years later.  Part of the reason for that reversal. according to a parliamentary written statement by Amanda Solway MP, Parliamentary Under-Secretary of State, Minister for Science, Research and Innovation, was:

"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." (see UK Withdrawal from the UPCA 20 July 2020 Unified Patent Court website).

In other words, the UPCA was thought to be incompatible with "taking back control" and the notion of sovereignty. 

Any intervention by the CJEU would have been minimal compared to matters in which Her Majesty's government has agreed to the continued involvement of that Court. First, the agreement by which the UK withdrew from the EU and Euratom provides for disputes over the Northern Ireland Protocol to be resolved by the CJEU as the House of Lords noted in paras 256 to 258 of their  Report on the Protocol.  

Secondly, s.6 (2) of the European Union (Withdrawal) Act 2018 permits courts and tribunals in the UK to have regard to judgments of the CJEU delivered after 23:00 on 31 Dec 2020 in so far as they may be relevant to any matter before them.  In Warner Music UK Ltd and another v TuneIn Inc. [2021] EWCA Civ 441 (26 March 2021) the Court of Appeal decided to follow the CJEU's judgment in  C-392/19 VG Bild-Kunst v Stiftung Preußischer Kulturbesitz  [2021] EUECJ C-392/19, [2021] WLR(D) 157, EU:C:2021:181, ECLI:EU:C:2021:181 which was delivered months after the expiry of the implementation period provided by art 126 of the withdrawal agreement. 

Thirdly, although the case law of the CJEU delivered before 31 Dec 2020 continues to bind British courts and tribunals, the Court of Appeal does have power to depart from that case law on the same basis that the Supreme Court has power to depart from one of its own precedents or of one of the House of Lords in accordance with the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234: In TuneIn, the appellant's primary contention was that the Court of Appeal should depart from the entire body of case law of the CJEU on communication to the public, or alternatively, that the Court should depart from Case C-160/15 GS Media BV v Sanoma Media Netherlands BV [2016] WLR(D) 477, [2016] EUECJ C-160/15, [2016] Bus LR 1231, ECLI:EU:C:2016:644, EU:C:2016:644.

The Court of Appeal struck down that argument like a whack-a-mole. Lord Justice Arnold gave no less than 8 reasons why departing from the CJEU's case law would be a bad idea between paras [77[ to [88] of his judgment.  The Master of the Rolls offered two, namely that the CJEU's case law was based on international agreements and there was no immediate .need to change anything.  Lady Justice Rose agreed that this was absolutely not a case in which this court should exercise its power to depart from the EU jurisprudence.  For those who are interested in the TuneIn appeal, I wrote a case note on the Court of Appeal's judgment in The Appeal: Warner Music UK Ltd and others v Tuneii Inc in NIPC Law on 24 April 2021.  

The UPC and the unitary patent would have benefited British industry great which is why they were recommended by both Gowers and Hargreaves.  Because of the adversarial system of civil litigation and the rule that costs of litigation are paid by the losing party the United Kingdom (and in particular) England is the most expensive and riskiest jurisdiction in the world in which to enforce an intellectual property right.  It is no coincidence that the country of Newton and Berners-Lee which initiated the industrial revolution and which still has some of the strongest research universities in the world trails consistently not just Germany and France in the number of European patent applications but also the Netherlands with a third of its population and Switzerland with one eighth.   A heavy price indeed for the chimaera of sovereignty.

Anyone wishing to discuss this article may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

English Speaking Commercial Courts in France, Germany and the Netherlands bid for London's Work

Author Raimond Spekking Licence CC BY-SA 4.0 Source Wikimedia

 

Jane Lambert

At 23:00 on 31 Dec 2020, Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ceased to apply to the United Kingdom.  One of the likely consequences that Judge Marieke Witkamp noted in her article Internationalizing Domestic Courts in Europe: A Comparative Analysis on Procedure, Function, Organization is that judgments of the English courts will be more difficult to enforce in the EU a well as the means of obtaining evidence and serving process.

That has presented an opportunity for lawyers and the judicial authorities in Germany, France and the Netherlands to grab some of the international commercial litigation work (estimated at €16 billion by Orchard Reports in UK Legal Services Market Trends Report 2019 (Feb 2019))  that has been coming to the Business and Property Courts in London.  All of those countries have opened special commercial courts in which evidence may be admitted and at least some of the proceedings may be conducted in English.  In Part 4 of her article, which is a preprint of the article that is submitted to Cambridge University Press to become part of the book International Commercial Courts: The Future of Transnational Adjudication Judge Witkamp compares the French, German and Dutch courts with the Abu Dhabi Global Market, Dubai International Financial Centre and Qatar Financial Centre Courts in the Gulf. the Astana Financial Centre Court in Kazakhstan and the Singapore International Commercial Court.

The courts in France, Germany and the Netherlands differ from the courts in Asia in several respects but perhaps the most striking is that they apply their own substantive and procedural law whereas the courts in the Gulf, Singapore and Kazakhstan apply the common law and procedures based on the Civil Procedure Rules or, in the case of Singapore, Rules of the Supreme Court.  Whereas many of the judges of the Asian courts come from the leading common law jurisdictions (including Ebgabd and Wales), the judges of the French, German and Dutch courts are local judges who have a good command of English. Similarly, litigators and advocates from overseas can appear before the Asian courts but only locally qualified practitioners can appear in the French, German and Dutch courts.  In the case of the French and Grman courts that is probably because part of the written procedure and the judgment in those courts must be in French or German as the case may be.  In Part 5, the judge compares various features of the European courts and it has to be said that the Dutch court appears to be far more users friendly than its rivals. Although the judge argues that the civil law system of litigation offers advantages over the common law system it does not yet appeal to most international businesses litigators.  

There is one international commercial court that is in the EU that applies the common law and has seen an influx of lawyers from the UK and that is the Commercial Court in Ireland. This has more in common with the Singapore International Commercial Court than it does with the English speaking courts on the Continent but the author does not mention that tribunal.  That is surprising as it must be a serious contender for any European work that London loses. Later in the year, James Bridgeman SC who is a door tenant of our chambers and our French and Italian colleagues, Natasha Peter and Guido Carducci will give a webinar on enforcement of EU trade marks, Community designs and plant varieties in their respective jurisdictions. It is not clear whether the French, German and Dutch courts would have jurisdiction in those cases but the Dublin Commercial Court certainly does.

Anyone wishing to discuss this article or any topic mentioned in it can call me on +44 (0)20 7404 5252 or send me a message through my contact form.  I wish all my readers a very happy Easter.

Brexit Briefing March 2021

James Gilray The Plumb-pudding in danger; - or - State Epicures taking un Petit Souper

 

Jane Lambert

The rational argument over Brexit is summarized in this Gilray cartoon from 2 centuries ago. Is it better to be part of a large bloc with enormous bargaining power that has to take account of the interests of all its members some of which are irreconcilable or a medium-size entity with much less bargaining power but more agile in that it has only to take care of its own interests?

Up to now the disadvantages of leaving the EU have been more apparent than the advantages.  Inshore fishermen from certain waters have been unable to export their catch. Exporters of processed foods have been required to pay for health checks even on small consignments.  Hauliers from Ireland have found it more convenient to take a long sea crossing to the Continent than drive overland from Hollyhead to Dover.  British exports to the EU are said to have tailed off dramatically.  That is because The Trade and Cooperation Agreement has prevented tariffs but not non-tariff barriers that apply to all non-member states.

Now that might be a cost worth paying if the United Kingdom were to make up for more than it has lost in the fast-growing, emerging markets of Asia, Latin America and Africa.  That is, after all, the reason for the UK's application to join the Comprehensive and Progressive Trans-Pacific Partnership (see Brexit Briefing for January 2021 6 Feb 2021).  Now it has to be remembered that not all countries in the CPTPP are tiger economies.  Australia, Japan and New Zealand, for example. are mature services based economies not all that different from the member states of the European Union except in so far as they are much further away.

Far from negotiating a bilateral trade agreement with the UK in which former president Donald Trump expressed an interest, the government of the world's largest economy is contemplating the imposition of tariffs on a range of British experts unless the UK resolves its differences with the USA over digital services taxation.  Relations with the world's second-largest economy could hardly be frostier as a result of Brtish representations over the treatment of Uighurs in  Xinjiang and opposition activists in Hong Kong.

There has been one success that suggests that an agile national government can achieve more than a supranational bloc. That has been the procurement and deployment of COVID 19 vaccines.  The speed and efficiency with which the UK has vaccinated over 50% of its population with a first dose and a very large number with a second despite has made the Commission and EU member states appear flat-footed.  The government's performance has been trumpeted as a success of Brexit especially as some controls in the UK are easing just as many continental countries are re-entering lockdown.

Of course, procurement of supplies of vaccine over a very short period is not the same as negotiating trade agreements that are expected to stay in place for decades but it is an example of how agility and good organization can sometimes achieve better results than massive bargaining power.

Anyone wishing to discuss this article or any matter arising from it may call me on +44 (0)20 7404 5252 or send me a message through my contact page.

The Commission's Second Letter of Formal Notice

Author Oliver Dixon  Licence CC BY-SA 2,0 Source Brexit and the Irish Border

Jane Lambert

On 3 March 2021, the Secretary of State for Northern Ireland announced that 

"For supermarkets and their suppliers, as part of the operational plan the UK committed to at the UK-EU Joint Committee on 24 February, the current Scheme for Temporary Agri-food Movements to Northern Ireland (STAMNI) will continue until 1 October. Certification requirements will then be introduced in phases alongside the roll out of the Digital Assistance Scheme." (see the minister's written statement of 3 March 2021). 

In a letter to Lord Frost dated 15 March 2021, Mr Maroš Šefčovič, Vice-President of the Commission complained that the announcement was a breach of the Northern Ireland Protocol which is an integral part of the agreement by which the UK withdrew from the European Union.

The letter is the first step in proceedings that the Commission has threatened to bring against the British government for the infringement of the withdrawal agreement.   It indicates that the Commission has two options.  It could bring proceedings in the Court of Justice of the European Union under art 12 (4) of the Northern Ireland Protocol:

"In particular, the Court of Justice of the European Union shall have the jurisdiction provided for in the Treaties in this respect. The second and third paragraphs of Article 267 TFEU shall apply to and in the United Kingdom in this respect."

Alternatively, it can start consultations under art 169 (1) of the withdrawal agreement:

"The Union and the United Kingdom shall endeavour to resolve any dispute regarding the interpretation and application of the provisions of this Agreement by entering into consultations in the Joint Committee in good faith, with the aim of reaching a mutually agreed solution. A party wishing to commence consultations shall provide written notice to the Joint Committee."

This could lead to arbitration in accordance with the dispute resolution procedures that I discussed in Dispute Resolution under the Withdrawal Agreement on 31 Dec 2020.

Either course could have adverse consequences for the British government. A press release of 15 March 2021 hints darkly at "the possibility to impose a lump sum or penalty payment" if the Commission prevails though it does not identify the authority by which such a penalty could be imposed and I can't think of any right now. However, it could make a finding that would embarrass the British government in its dealings with countries outside the EU.  As for the alternative, the press release warns:

"This may ultimately also result in the imposition of financial sanctions by the arbitration panel. In case of non-payment or persisting non-compliance, the EU could suspend its obligations under the Withdrawal Agreement (with the exception of the citizens' rights part of the agreement) or from the Trade and Cooperation Agreement, in accordance with Article INST.24(4), e.g. by imposing tariffs on imports of goods from the UK."

That would be damaging especially as the UK and remaining member states remain party to many other multilateral agreements such as the Atlantic alliance.

Anyone wishing to discuss this article or the resolution of disputes with the EU may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page.

"Global Britain in a Competitive Age"

Author Eric Gaba Licence  CC BY-SA 4.0, Source Wikipedia Indo-Pacific

Jane Lambert

In Global Britain in a competitive age The Integrated Review of Security, Defence, Development and Foreign Policy, the government has spelt out its objective in decoupling the United Kingdom from neighbours and allies with shared interests in the world's richest trading bloc. It may not be an attainable objective or even a desirable one but at least it is ascertainable.  The review reveals the direction of travel the first time since the referendum thereby allowing businesses and individuals to plan for the medium term.

The document consists of five parts and three annexes:

• The first part is the foreword in which the Prime Minister shares his vision for the UK in 2030 (pages 3 to 9).
• The second is headed "Overview" and is effectively an executive summary (pages 11 to 22).
• Part III is the national security and international environment to 2030 (pages 24 to 32).
• The "Strategic Framework" between pages 33 and 95 is the biggest part of the review and consists of 4 topics:
• The first is headed "Sustaining strategic advantage through science and technology" which is to be achieved by growing the UK's science and technology superpower and developing a cyber warfare capability.
• Shaping the open international order of the future which includes an "Indo Pacific Tilt" over 50 tears after Harold Wilson announced the UK's withdrawal from bases east of Suez.
• Strengthening security and defence at home and overseas includes expanding the nuclear arsenal more than 60 years after the cancellation of "Blue Streak".
• Building resilience at home and overseas.
• The last part is on implementation and consists of 2 ½ pages (96 to 99).

Annex A consists of a table listing spending priorities in the latest spending review,  Annex B is headed "Evidence and Engagement" and points to some of the people the authors of this review had consulted, The last annex is a glossary.

As an intellectual property lawyer, I should love to see the UK become a science and technology superpower with vibrant creative industries attracting investment and expertise from around the world.  I just can't see how it is going to happen. China applies for 1.4 million patents every year compared to the UK's 12,000. In the number of patent applications, the UK lies 9th behind China, the USA, Japan, South Korea, Germany, Russia and France (see Knoema Number of patent applications among residents).   In the European Patent Office. it consistently trails the Netherlands and Switzerland with a third and eight of its population respectively (see European patent applications per country of origin).

Although the UK economy may well bounce back once the COVID-19 restrictions are lifted, there is no reason to suppose it will grow consistently at historically unprecedented rates over the next 9 years.  Even on the most optimistic forecasts, it will be overtaken by countries that can take advantage of economies of scale.  According to Statista the UK will slip from 5th place in 2919 to  9th by 2030 behind China with $31,731 billion, the USA with $22,920, India $7,972, Brazil $5,862, Japan $5,852, Russia $4,730, Germany $4,441, France 4,206 and the UK $3,664 (see "The 15 countries with the highest gross domestic product (GDP) in 2030 (in billion U.S. dollars)").  

The review makes only one brief reference to the Belt and Road initiative, a massive road, rail, port and pipeline building project, on page 26 but fails to consider its impact on the world's economy.  It is likely to be massive. It will create a land bridge across the Asian and European continents by lowering the cost and speeding the transit of freight.  By so doing it will integrate the economies of all countries linked to that land bridge and increase still further the economic strength of China.

For this and other reasons, this review probably understates the consequences of the rise of China.  It tacitly acknowledges China's rise by referring in several places to a "multipolar" environment. However, if China has a GDP that is 38% larger than that of the USA the world will be distinctly unipolar.  If there is to be a new international order, Washington's influence will be diminished and that of middle-ranking powers such as the United Kingdom will barely register at all.  

The review makes all sorts of assumptions that may or may not be justified such as a continued union of Scotland, Wales and Northern Ireland with England.  Surely any review of defence policy has to plan for the possibility of the closure of the nuclear facilities on the Forth and Clyde and the loss of military shipbuilding capabilities in Scotland. It should also plan for a resumption of terrorist activity in Northern Ireland if the Good Friday agreement is abandoned for any reason.

Anyone wishing to discuss this article or any of the topics mentioned in it may call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Brexit Briefing February 2021

Standard YouTube Licence

Jane Lambert

This video from the Intellectual Property Office neatly summarizes many of the changes to the law that I discussed in my articles How Brexit has changed IP Law  17 Jan 2021 NIPC Brexit and What happens to European Union IP Rights after Brexit? 21 Feb 2021 IP Yorkshire and my presentations IP After Brexit on 20 Feb 2021 and How Brexit has changed IP Law 26 Jan 2021 (slides) (handout). The rights of British and other EU trade mark and Community design and plant variety owners in the 27 remaining EU member states will be unchanged. They can be enforced, assigned, licensed or charged in the usual way.

Although the logic of brexit is to refocus British trade and investment from Europe to the wider world, the EU remains the UK's closest, largest and richest market. British companies will continue to trade and invest there for the foreseeable future.  One immediate consequence of the expiry of the implementation period is that the courts of the UK have ceased to be EU trade mark and Community design courts.  If a Britsh business wishes to enforce or defend its EU trade mark or design registration it must seek redress in the courts of one of the remaining member states.  

Until 31 Dec 2020 English lawyers had full rights of audience before the Court of Justice of the European Union and the General Court and extensive rights of representation in the individual member states as the latest issue of Brussel News (the newsletter of the Bar Council's representative in Brussels) notes.  Those rights have now been lost and although the draft Trade and Cooperation Agreement makes some provision for cross-border practice which is certainly than nothing they are more limited.  Much the same is true of patent and trade mark attorneys who must now appoint agents to prosecute trade mark and design applications in the EU Intellectual Property Ofice.  In this regard, my chambers may be able to help because my colleagues, James Bridgeman SC and Guido Carducci live and continue to practise in EU member states and retain rights of audience in the EU and their national courts as I remarked in Does Your IP Strategy Still Work 26 Feb 2021 NIPC News.

Meanwhile, the brexit experiment of refocusing British trade and investment continues with new agreements with Ghana, Albania and Mexico, a "space bridge" with Australia and further negotiations with India and New Zealand. There have been reports of delays and obstacles in exporting all sorts of goods from unprocessed seafood to cheese.   London has been overtaken by Amsterdam in the value of share trading and a decline has been reported in the volume of SWAPs and derivative transactions.  Negotiations on equivalence in financial services are understood to have progressed slowly. Lord Hill recommended the liberalization of listing conditions in his UK Listing Review to make London more competitive.  A similar recommendation was made by Roy Kalifa in his Review of UK Fintech.  The thinking behind both reports is that the EU is now a competitor in the supply of financial services. No favours can be expected from it. The remedy is to develop new products and services and find new markets.

Anyone wishing to discuss this article or brexit generally may contact me by phone on 020 7404 5252 during office hours or through my contact form at other times.

Brexit Briefing January 2021

HMS Endeavour

Artist Samuel Atkins  (1760-1910) National Library of Australia Source Wikipedia 

 

Jane Lambert

One of the arguments for brexit is that the world's fastest-growing markets lie outside Europe and membership of the European Union has hampered the United Kingdom's opportunities to supply them. The proponents of that argument counter the contention that the bargaining power of 28 nations is considerably greater than that of one with the assertion that the need of EU negotiators to take account of the interests of all member states and not just those of one means that British interests are compromised before negotiations with third countries even start.  Such compromise, they say, more than offsets the advantage of being part of a large bloc.

That thinking was apparent in Liz Truss's announcement that HMG had applied to join the Comprehensive and Progressive Trans-Pacific Partnership on 30 Jan 2021:

“Joining CPTPP will create enormous opportunities for UK businesses that simply weren’t there as part of the EU and deepen our ties with some of the fastest-growing markets in the world.

“It will mean lower tariffs for car manufacturers and whisky producers, and better access for our brilliant services providers, delivering quality jobs and greater prosperity for people here at home."

This may possibly be true of financial and other services and some high-value luxury goods like whisky but it is hard to see the attraction of the CPTPP for car manufacturers most of which are foreign-owned who invested in the UK purely for access to the EU car market.

The price of this freedom to apply for membership of trading blocs on the other side of the world and the other measures that the government may have in store quickly became apparent when customs officers impounded the sandwiches of British lorry drivers, inshore fisheries encountered difficulties in supplying continental customers and supermarket chains delays and obstacles in stocking branches in Northern Ireland. A dispute between the European Commission and AstraZeneca Plc over the performance of a contract to supply vaccine prompted the Commission unilaterally to take measures to restrict transit of vaccines across the border between the Irish Republic and Northern Ireland under art 16 of the Protocol on Ireland/Northern Ireland to the withdrawal agreement. 

Such disruption was a foreseeable - possibly even deliberate - consequence of decoupling the British economy from the European single market in order to open it up to the world. It is the start of an economic and social experiment pf which many of those who voted for brexit on order to limit immigration are unaware and would not otherwise have approved.  It is a gamble and it may take many years before it can be known whether it has paid off.

The focus of this blog is, of course, intellectual property and not polemics.  As I noted in the January Brexit Briefing  EU legislation including regulations establishing the EU trade mark, Community designs, Community plant varieties and other intellectual property rights ceased to apply to the UK from 23:00 on 31 Dec 2020. They have been replaced by a thicket of secondary legislation which I did my best to untangle in How Brexit has changed IP Law on 17 Dec 2021 and in my presentations on the subject on 26 Jan 2021 (see my slides and handout.

The CPTPP agreement contains provisions on intellectual property as I noted in British Intellectual Asset Owners' Rights after Brexit: IP Provisions of Bilateral Investment Treaties and Free Trade Agreements on 17 Aug 2020,  So, too, do the bilateral agreements that have been agreed with countries like Japan which I discussed in An Introduction to and Overview of the Comprehensive Economic Partnership Agreement with Japan on 28 Oct 2020.  Progress on negotiations with Australia, the CPTPP, Japan, New Zealand and the USA is being monitored in the "Trade Negotiations" pages of this blog.

Anyone wishing to discuss this article or any topic in it may call me on +44 (0)20 7404 5252 or send me a message through my contact form.

How Brexit has changed IP Law

 

EU Intellectual Property Office, Alicante

Author Kristof Roomp Licence CC BY 2.0

Jane Lambert

In Were we to go - what would Brexit mean for IP? (26 Feb 2016 NIPC Law) I first considered the consequences of Britsh withdrawal from the European Union.  It was obvious that EU trade marks, Community designs and Community plant varieties would cease to apply to the UK.  Also, I could not see how the UK could remain a party to the Unified Patent Court Agreement as the agreement was open only to EU member states. I considered the topic further in IP Planning for Brexit on 7 Dec 2016 in Implications of Brexit on Intellectual Property Law: What can be salvaged from the UPC Agreement on 17 Feb 2017 and in my contribution on IP to Helen Wong's Doing Business After Brexit.  As the UK has withdrawn from the EU and the transitional period is over, it is now possible to take stock. 

Art 50 Treaty on European Union ("TEU")

A timetable for the UK's departure was set by art 50 of the TEU.   Art 50 (2) requires the EU to negotiate and conclude an agreement with that departing state, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the EU.  Art 50 (3) adds:

"The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."

The former Prime Minister, Mrs Theresa May MP, served notification of the UK's intended departure under art 50 (2) on 29 March 2017.  Subject only to the possibility of an agreed extension to the notification period, the British government had to try to negotiate a withdrawal agreement and legislate for the UK's departure before 29 March 2019.

European Union (Withdrawal) Act 2018

The statute that effected the UK's departure from the EU was the European Union (Withdrawal) Act 2018.  As EU law would cease to apply to the UK from the expiry of the notification period or the entry into force of a withdrawal agreement, s.3 (1) of the Act preserved Council regulations by incorporating them into the laws of the UK.  These included the Council Regulations establishing EU trade marks,  Community designs, Community plant varieties and supplementary protection certificates.   S.8 (1) and Sched. 1 of the Act enabled Ministers to amend such Regulations by statutory instrument.   

The 2019 Statutory Instruments

Since it was not certain that a withdrawal agreement could be made and ratified by the 29 March 2019, the following statutory instruments were made in case the UK left the EU without such an agreement:

• The Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019 (SI 2019 No 605),
• The Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 (SI 2019 No. 265),
• The Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019 No 269), 
• The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019 No 638),  and
• The Plant Breeders’ Rights (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019 No 204).

The Patents (Amendment) (EU Exit) Regulations 2019 (SI 2019 No 801) were made on 4 April 2019 after an extension had been agreed in accordance with art 50 (3) TEU.   The Agricultural Products, Food and Drink (Amendment) (EU Exit) Regulations 2019 (SI 2019 No 1366) were made on 21 Oct 2019.

The Withdrawal Agreement

Following further extensions in accordance with art 50 (3) TEU, the appointment of a new prime minister and more negotiations with the EU  the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community ("the withdrawal agreement") was concluded on 19 Oct 2019.  That agreement was ratified by the European Union (Withdrawal Agreement) Act 2020 on 23 Jan 2020.

Title IV of Part Three of the withdrawal agreement included the following provisions on IP:

• Art 54 provided for continued protection in the UK of intellectual assets that had previously been protected as EU trade marks, registered Community designs, Community plant varieties and geographical indications;
• Art 55 established a procedure for registering trade marks, designs and plant breeders' rights to protect such assets in the UK;
• Art 56 provided for continued protection in the UK of international trade marks designating the EU under the Madrid system and international designs designating the EU under the Hague Agreement;
• Art 57 provided for continued protection in the UK of unregistered Community designs that would have come into being before 23:00 on 31 Dec 2020 for the remainder of their term and the creation of a similar UK intellectual property right to protect such designs that might come into being afterwards;
• Art 58 required continued protection of databases;
• Art 59 provided for pending applications for EU trade marks, RCD and Community plant variety rights;
• Art 60 provided for supplementary protection certificates' and
• Art 61 for the exhaustion of rights.

Although the UK left the EU on 31 Jan 2020 pursuant to the withdrawal agreement, art 126 provided for a transition or implementation period until 23:00 on 31 Dec 2020 during which time EU law would continue to apply to the UK.

The Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020

Because of the extensions under art 50 (3) and the conclusion of a withdrawal agreement, the 2019 statutory instruments were not required until the end of the transition period.  As they had been drafted before the withdrawal agreement was concluded, they had to be modified to give effect to Title IV of that agreement.  The Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020 (SI 2020 No 1050) amended the 2019 statutory instruments as follows:

• Part 2 amended the Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019, 
• Part 3 amended the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019, 
• Part 4 amended the Trade Marks (Amendment etc.) (EU Exit) Regulations 2019, 
• Part 5 amended the Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019, and  
• Part 6 amended the Patents (Amendment) (EU Exit) Regulations 2019.

Part 7 amended the Patents Act 1977 and Part 8 and the Schedule Council Regulation (EC) No 469/2009, Regulation EU) No 2019/933 and the Patent Rules 2007.

Implementation of Title IV

Title IV of the withdrawal agreement is implemented as follows:

EU Trade Marks: Reg 2 and Sched 1 of The Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 as amended by The Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020  implement the provisions of arts 54 and 55 of the withdrawal agreement relating to EU trade marks.  Sched. 1 of the Regulations inserts a new s.52A and Sched 2A into the Trade Marks Act 1994.  They require an existing EU trade mark to be treated as registered under the Act.  Para 2 provides an opt-out for those who do not want a national trade mark. Part 3 governs applications for European Union trade marks which are pending on 31 Dec 2018.  

International Trade Marks Designating the EU: Reg 6 of The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 as amended implements art 56 of the withdrawal agreement by inserting a new s.54A and Sched 2B into the Act.  S. 54A provides for international trade marks designating the EU to be treated as though they had been registered under the Trade Marks Act 1994.  Sched 2B establishes a procedure for the registration of such marks as UK trade marks as well as certain other matters including an opt-out. 

Registered Community Designs:  Reg 5 and Sched. 3 of The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 implement the provisions of arts 54 and 55 of the withdrawal agreement relating to registered Community designs.  Para 2 of Sched. 3 inserts a new s.12A and a new s.12B into the Registered Designs Act 1949.  Para 3 inserts a new Sched 1A and a new Sched 1B into the Act.  S.12A and Sched 1A provide for existing registered Community designs to be treated as designs registered under the 1949 Act. S.12B and Sched 1B provide for international designs designating the EU are to be treated as though they had been registered under the 1949 Act. 

Continuing Unregistered Community Designs:  Reg 4 (3) and Sched 2, of The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019 transpose into the laws of the UK the requirement in art 57 of the withdrawal agreement that designs that had been protected as UCD before the 31 Dec 2020 will continue to be protected afterwards. Any UCD that came into being before 23:00 on 31 Dec 2020 will continue to be protected in the UK for the remainder of its term as a “continuing unregistered Community design”.  Reg 4 (3) (a) and Part 1 of Sched. 2 of the 2019 Regulations anend the provisions of the Community Design Regulation that relate to unregistered Community designs.  Reg 4 (3) (b) and Part 2 of Sched. 2 further amend  The Community Design Regulations 2005 (SI 2005 No 2339).

Supplementary Unregistered Designs:  The obligation in art 57 of the withdrawal agreement to protect new designs having individual character that come into being after 23:00 on 31 Dec 2020 by a new UK intellectual property right to be known as the "supplementary unregistered design" is implemented by reg 3 and Sched. 1 of The Designs and International Trade Marks (Amendment etc.) (EU Exit) Regulations 2019.  Part 1 of Sched. 1 amends the Community Design Directive and Part 2 The Community Design Regulations.

Databases:  No new legislation was required to preserve The Copyright and Rights in Databases Regulations 1997 (SI 1997 No 3032) in accordance with art 58 of the withdrawal agreement, but that statutory instrument has been amended by reg 28 of The Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2019.

Plant Varieties:  The requirement in art 54 (1) (c) of the withdrawal agreement that the holder of a Community plant variety right granted pursuant to Council Regulation (EC) No 2100/942 shall become the holder of a plant variety right in the United Kingdom for the same plant variety is implemented by reg 3 (2) of The Plant Breeders’ Rights (Amendment etc.) (EU Exit) Regulations 2019.  The Regulations revoke Regulation 2100/942 and provide for the registration of Community plant variety rights as UK plant breeders' rights and the processing of pending applications for Community rights. The statutory instrument also amends the Plant Varieties Act 1997 and regulations made under that Act.

Geographical Indications:  Art 54 (2) of the withdrawal agreement requires the UK to continue to protect protected designations of origin, protected geographical indications and traditional specialities guaranteed which are protected throughout the EU by Regulation (EU) No 1151/2012 of the European Parliament and of the Council of 21 November 2012 on quality schemes for agricultural products and foodstuffs (OJ L 343, 14.12.2012, p. 1–29).  That requirement is implemented by The Agricultural Products, Food and Drink (Amendment) (EU Exit) Regulations 2019 (SI 2009 No 1366).  The regulations amend Regulation 1151/2012.  I discussed the UK scheme in Geographical Indications in the UK after 31 Dec 2020 in NIPC Law on 30 Sept 2020 and in The New Protected Food Names Scheme as it will apply in Wales on 26 Oct 2020 in NIPC Wales.

Supplementary Protection Certificates:   Such certificates protect the active ingredients of patented pharmaceutical or plant protection products. for up to 5 years (and in the case of products used to treat children's diseases an extra 6 months)  from the expiry of a patent for such a product. Art 60 (1) of the withdrawal agreement provides for Regulation (EC) No 1610/96 and Regulation (EC) 469/2009 to continue to apply to applications for SPCs lodged before 23:00 on 31 Dec 2020.  That provision is implemented by the incorporation of those regulations into the laws of the UK and their amendment by Part 6 and Part 8 of The Patents (Amendment) (EU Exit) Regulations 2019 as amended.   Further amendments have been made by The Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020.

Exhaustion of Rights:  Art 61 of the withdrawal agreement is implemented by the Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 as amended by The Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020.

The Intellectual Property Office's news story Intellectual property after 1 January 2021 summarize the changes brought about by this legislation.

Unitary Patent and Unified Patent Court

No provision was made for the unitary patent or the Unified Patent Court in the withdrawal agreement even though such a patent and court had been longstanding objectives of British diplomacy and London was to have hosted part of the Central Division of the Court of First Instance and had fitted out the accommodation for such a court at some expenses. For several years after the referendum, the government argued that it should be possible for the UK to participate in the project as the Unified Patent Court Agreement was an international treaty outside the scope of the European Union.   Mr Boris Johnson MP in his role as Foreign Secretary actually deposited an instrument of ratification of the Agreement on 26 April 2018 (see British Ratification of the UPC Agreement - Possibly the best thing to happen on World Intellectual Property Day  26 April 2018 NIPC News).  Less than 2 years afterwards the government changed its mind and withdrew from the project on 20 July 2020 (see Volte Face on the Unified Patent Court 29 Feb 2020 NIPC News and Unified Patent Court Ratification Bill clears Lower House of the German Federal Parliament  30 Nov 2020).

Trade and Cooperation Agreement

On 24 Dec 2020, negotiators for the European Commission and the British government concluded a Trade and Cooperation Agreement to govern the UK's future relationship with the EU.  The Agreement was ratified by the European Union (Future Relationship) Act 2020 on 30 Dec 2020.   Title V of Part Two of the Trade and Cooperation Agreement contained a large number of provisions relating to IP which I discussed in The IP Provisions of the EU-UK Trade and Cooperation Agreement on 30 Dec 2020.  However, none of those provisions appears to require implementing legislation for the time being and there was no mention of intellectual property in the Future Relationship Act.

Further Information

I intend to give a talk on these provisions over Zoom between 16:30 and 18:00 on Tuesday 26 Jan 2021.  This talk will be free but attendees should register in advance here.  Anyone wishing to discuss this article or any of its contents may call me on +44 (0)20 7404 5252 during normal office hours or send me a message through my contact form.

Brexit Briefing December 2020

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Jane Lambert

Much to the surprise of many commentators, the UK concluded a Trade and Cooperation Agreement with the European Union on Christmas eve to govern the parties' future relationship from 31 Dec 2020. I discussed it in outline in The Draft EU-UK Trade and Cooperation Agreement: What We Know So Far on 26 Dec 2020. It was a great deal better than nothing but it would not have satisfied anybody who might have been hoping for a licence to undercut manufacturers and farmers on the Continent by abandoning EU product safety, environmental and employment safeguards. Her Majesty's government is, of course, free to do any of those things but if it does it will face tariffs or other countermeasures from the EU.  A lot of people in the UK from fishermen to financial services providers have expressed dismay at the deal.

The agreement required primary legislation for implementation and the 40 clause European Union (Future Relationship) Bill with its 6 schedules amounting to 80 pages cleared all its parliamentary stages in a single day.  The other important piece of primary legislation was the United Kingdom Internal Market Act 2020.  The provisions to which the EU and parliamentarians of all parties objected which I mentioned in The United Kingdom Internal Market Bill 19 Sept 2020 were dropped.

So now the legislative framework is in place in international and national law.  The terms of the UK's withdrawal from the European Union are set out in the Withdrawal Agreement (Agreement on the withdrawal of theUnited Kingdom of Great Britain and Nothern Ireland from the European Union and the European AtomicEnergy Community).   The provisions relating to the transition or implementation period lapsed at 23:00 on 31 Dec 2020 but the others remain in force.

These include the continued legal protection of intellectual assets that were protected by EU law such as registered Community designs and EU trade mark by UK intellectual property rights.  The Withdrawal Agreement was ratified and implemented by the European Union (Withdrawal Agreement) Act 2020 though the legislation amending the Registered Designs Act 1949, the Patents Act 1977, Thw. Copyright, Designs and Patents Act 1988 and the Trade Marks Act 1994 had already been made in anticipation of the withdrawal of the UK from the EU without agreement. The Trade and Cooperation Agreement contained a number of provisions relating to intellectual property which I discussed in The IP Provisions of the EU-UK Trade and Cooperation Agreement on 30 Dec 2020 but these will not require legislation in the immediate future.

New provisions for the resolution of disputes between the UK and the EU over the interpretation and application of the Withdrawal Agreement came into force at 23:00 on 31 Dec 2020 which I discussed in Dispute Resolution under the Withdrawal Agreement  31 Dec 2020.  Some matters will be reserved to the Court of Justice of the European Union notwithstanding the UK's departure from the EU but most will be resolved through consultation and cooperations with arbitration as a last resort.

Finally, the Department for International Trade has reported trade agreements with Canada, Keneffeya, Singapore, Turkey and Vietnam which appear to roll over agreements that those countries have made with the EU in December.

Anyone wishing to discuss this article or the UK's new trading environment generally should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact page.