FCA Issues Coronavirus Statement

On March 4, the UK’s Financial Conduct Authority (FCA) issued a statement on Covid-19, the novel coronavirus that originated in China in December 2019 and recently spread to Italy and Iran, among many other countries globally (the Statement).

In the Statement, the FCA explained that they are working with the Bank of England and HM Treasury to engage with firms, trade associations and industry bodies to understand the pressures they are facing. This work includes actively reviewing the contingency plans of a wide range of firms.

The FCA noted that all firms are already expected to have contingency plans in place to deal with major events such as this and that firms should be taking all reasonable steps to meet their regulatory obligations. While the FCA has no objection in principle to staff working from home or from alternative sites, firms still need to be able to, for example, use recorded lines when trading and give staff access to any compliance support they may need.

The Statement is available here.


©2020 Katten Muchin Rosenman LLP

UK Withdrawal Agreement Becomes Law

On January 23, the European Union (Withdrawal Agreement) Bill became an Act of Parliament and is now legally binding in the UK. The purpose of this legislation is to give binding force to the withdrawal agreement that was made between the UK and the EU on October 19, 2019.

The next step will be for the withdrawal agreement to be ratified by the European Parliament, which is scheduled for January 29. If this vote is passed, the UK will leave the EU on January 31, 2020. The UK will then enter an ‘implementation period,’ during which all EU laws will continue to apply in the UK, while the UK and the EU negotiate their future relationship. This implementation period is scheduled to end on December 31.


©2020 Katten Muchin Rosenman LLP

For more Brexit developments, see the Global Law section of the National Law Review.

Dealing With “Attitude” at Work, Part 3 – Helping Staff Help Themselves

In the first two posts in this series, I looked at the law around workplace attitudes which might stem from some form of disability. But what if your employee is fit and well in all respects bar being exceptionally painful to work with?

He may be relentlessly negative, make heavy weather out of every instruction, or just operate on a very short fuse, often perfectly civil but prone to detonation when colleagues overstep some clearly very important, but also absolutely invisible, line in their dealings with him. He is, in every sense, grit in the gearbox of your business. But without obvious performance or conduct concerns, what can you do?

Probably the first point is to ascertain whether the employee himself recognises the problems he is causing to his colleagues. This won’t be an easy conversation but it forces him to confront the problem head-on. He may demand to know who has complained and require detailed examples of where others have been offended. By the very nature of a poor attitude, however, individual manifestations of it seem trivial and raising them individually with the employee like a series of miniature disciplinary charges is just going to lead to a precipitous further decline in workplace relationships. So I would suggest in many cases that the attitude issue is put as a collective perception without the identification of either individual complainants or specific examples. This is the view people have on you. You don’t need details of individual complainants or examples to decide whether you recognise that as having any truth in it. If you do accept that there is something in it, you can do something about it. If you can’t/don’t do anything about it, the employer will need to do so instead.

That meeting will best take place in private and without any offer of a companion, so it is not disciplinary action and cannot be relied upon as a warning at a later stage. It is intended to be no more than a word to the wise.

This leaves the employee with some choices. Is he going to be wise or not? If secretly he recognises that this is how he might come across, then without admission and without formal disciplinary proceedings he can amend his behaviours and all will be well at minimum disruption and cost. Alternatively he may flatly deny those behaviours both to you and (more importantly) to himself. However, he will then have to address in his own head the question of why so many of his colleagues say otherwise. Or he may accept the behaviours in broad terms, but allege that they are the product of some treatment he has received from the employer or his colleagues. He withdrew from social interaction with them because they withdrew from such interaction with him, and they did it first, so there. He is being passive-aggressive because they are being aggressive-aggressive. He doesn’t trust them because they didn’t support him about something a long time ago which he has been unable to get over, and so on.

Of course, you can make such a response the subject of a formal grievance and disciplinary process, but this will have more oh yes you did and oh no I didn’t than the average Christmas panto and at the end of it you will find the same two things every time: first, that no one is completely blameless and second, that by conducting the effective artillery duel which those formal procedures encourage, you have converted a relationship which didn’t work very well into one which no longer works at all.

Therefore if you can catch your employee’s attitude issue early enough to avoid having to go through a formal process, why not try to mediate a resolution? Use the safe space created by that process to exchange some views about how each side’s conduct makes the other feel. It may be the first time your employee has heard this “from the heart”. Ideally this should be in non-aggressive terms – “You intimidate me” cries out to be whacked back over the net with added topspin, but “I feel intimidated by you” cannot so easily be argued with because it is about what someone feels, not what someone else did.

You might reasonably expect emotion and tears at such a mediation (dawning self-awareness can be very painful) so it won’t necessarily be an easy process. But at the end, if it works, you will have a newly functioning working relationship and not the cratered and smoking wreckage of what used to be the team spirit.

If it doesn’t work? More next week.

 

See Parts 1 & 2:


© Copyright 2019 Squire Patton Boggs (US) LLP

For more on workplace attitudes, see the National Law Review Labor & Employment law section.

Brexit: Turkeys Voting for Christmas?

Brexit delayed again – now it’s off to the races in a General Election

Despite having finally achieved a Parliamentary majority in favour of a way of delivering Brexit, in the Second Reading of the Withdrawal Agreement Bill on 22nd October, Prime Minister Boris Johnson decided – in the face of Parliament’s refusal to allow him to put the Bill through very rapidly so as to meet the 31st October Brexit deadline – to pursue a General Election instead of pushing the Bill through.

After some “after you, Claude” to-ing and fro-ing, the EU agreed to the request to extend the Article 50 deadline of 31st October which the Prime Minister had been forced by Parliament to send. The EU did so under condition that there should be no re-opening of withdrawal negotiations, no disruption to EU business by the UK (including the UK appointing a member of the new European Commission), and that the UK could leave earlier if the ratification process completed earlier.

A delicate game ensued in Parliament about the basis for a decision to hold the election, with opposition parties wanting to remove the Prime Minister’s discretion over the date of the election, and to make it impossible for him to try again to push the Withdrawal Agreement Bill. On 28th October Parliament rejected the Prime Minister’s attempt to secure an election on 12th December. Parliament then decided on 29th October that the election should be held on 12th December. The difference between the first 12th December and the second 12th December would take too long to explain, and would anyway test the sanity of all but the most extreme political geek.

And so the unhappy child of Theresa May’s disastrous 2017 election fades into the twilight…

The election Bill still needs to go through the House of Lords (unlikely to be problematic) and receive Royal Assent, and the House of Commons needs to tidy up some necessary business. So on current plans Parliament will dissolve on Wednesday 6th November for MPs to campaign for the General Election on Thursday 12th December. The British electorate, used to voting at national level every five years, had a General Election in 2015, the Brexit referendum in 2016, a further General Election in 2017, and now a third General Election in 2019 (the Scots also had an independence referendum in 2014).

Was the 2017-2019 Parliament a travesty of democratic accountability, or a powerful example of representative democracy grappling with issues which had split the nation in two through a binary exercise in direct democracy? Historians will judge. It was certainly a tough one for individual MPs, who regularly found themselves objects of extremely hostile, sometimes violent, social media messaging. Parliament certainly seemed to reflect accurately the division in the electorate, which the polls show has not shifted significantly throughout the period since the 52:48 result of the 2016 Brexit referendum.

“Prediction is very difficult, especially if it’s about the future” – Nils Bohr

So what’s going to happen in the 12th December election? It will be the first December election for almost a century, and the hardest to predict for many decades. Will Boris Johnson scoop the Leave vote across the country, or will Nigel Farage’s Brexit Party damage the Conservatives by arguing that Johnson’s Brexit deal is not really Brexit? Will the clarity of the Liberal Democrats’ Remain position help them and weaken Labour, or will Labour be able to sit on the fence on Brexit and focus the campaign on Tory austerity and public services?

The next six weeks will be exhilarating, confusing and passionate. They will decide the future course of the nation. Nothing more will happen on Brexit until after the election. Whether the election provides a clear way forward will depend on whether a party achieves a clear majority or the election produces another hung Parliament. Watch this space…


© Copyright 2019 Squire Patton Boggs (US) LLP

Read more about Brexit on the Global Law page on the National Law Review.

How Harmful do Gender Stereotypes Need to be?

Ads Banned in UK Following New Rule

As we reported earlier this year, a new rule dealing with the depiction of harmful gender stereotypes, was introduced into the BCAP and CAP Codes as of June 2019.

The first decisions under the new rules have been released and we have seen two separate ads by Volkswagen and Philadelphia banned by the Advertising Standards Authority (ASA) under the new rule.

Volkswagen’s advert for its eGolf electric car, with the slogan “when we learn to adapt, we can achieve anything” features a man and a woman camping on a sheer cliff face, two male astronauts floating in space, a male athlete with a prosthetic limb, and a woman sitting next to a pram.

Separately, the Philadephia ad by Mondalez depicts fathers being distracted by the cheese spread long enough for their babies to end up on a conveyor belt of Philadelphia, resulting in an embarrassed dad saying “let’s not tell mum”.

Both ads received a number of complaints from the public on the basis that they were contrary to the new rule, which aims to ban harmful gender stereotypes in ads which can

“contribute to inequality in society” and “can, over time, play a part in limiting people’s potential.”

Whilst Volkswagen argued that caring for a new born child was a life-changing experience about adaption, regardless of the gender of the parent depicted, and that a female was also engaged in the adventurous activity of camping on the mountain, the ASA ruled that “unlike her male counterpart, the female rock climber was passive, because she was asleep” and that the woman with the pram was depicted in a stereotypical care-giving role.

Mondalez told ASA that it was in a “no-win situation” having deliberately chosen two dads to avoid depicting the stereotypical image of women handling the childcare responsibilities. However the ASA banned the ad on the basis that it reinforced the stereotype that males are ineffective in care-giving roles.

Critics have said that the watchdog has gone too far and in a statement posted on the website for ISBA, the body representing the UK’s leading advertisers, Phil Smith (director-general and a member of a working group that helped develop the new rules) said the bans are “concerning, both in terms of the precedent they set and the likely impact they will have on advertisers.”

Smith further commented

“In our view, the two decisions go beyond the intent of the new rule and guidance and will likely create confusion for advertisers and the broader co-regulatory system as they seek to address the harmful gender stereotypes and outdated portrayals this rule was designed to tackle.”

The effectiveness of the new rule will be reviewed by CAP in June 2020, to determine whether it is suitable in helping the ASA meet the rule’s objective. It will be interesting to see how the ASA applies the rule in future decisions.


© Copyright 2019 Squire Patton Boggs (US) LLP

ARTICLE BY Carlton Daniel and Katie Rodgers of Squire Patton Boggs (US) LLP.
For more on advertising regulation, see the National Law Review Communications, Media & Internet law page.

Bronze, Shape, Glow: A Copyright Tale Destined For Broadway

Stores like Aldi are increasingly popular with UK consumers as a result of offering “copycat” products of well-known brands at drastically lower prices. However, with this rise in popularity, brand owners and creatives are being increasingly frustrated by finding their products and ideas at the mercy of imitation products.

One such aggrieved party was well-known makeup brand Charlotte Tilbury (Tilbury), who found their “Starburst” lid design and the “Powder Design” of their “Filmstar Bronze and Glow” set had provided the ‘inspiration’ for Aldi’s own “Broadway Shape and Glow” set. Tilbury filled a UK High Court claim for copyright infringement over the products shown below, with Aldi adamantly rejecting that any copyright had been infringed in their ‘inspired’ makeup set.

The main difficulty Tilbury faced was the fact that it is notoriously hard to claim copyright in mass produced 3D products as English Courts have historically been reticent to consider them “sculptures” or “works of artistic craftsmanship”.

However, Tilbury was successful in arguing that the “Starburst” lid design and the “Powder Design” on their product were original artistic works and as such the product was protected by copyright. Tilbury were able to establish their artistic copyright as “a work need only be ‘original’ in the limited sense that the author originated it by his efforts rather than slavishly copying it from the work produced by the efforts of another person.” Once establishing the existence of copyright in the artistic work the Court had little difficulty in finding that it had been substantially copied by Aldi for its “Broadway Shape and Glow” set and summary judgement was granted in Tilbury’s favour.

This case not only marks a success for the aggrieved brands and creatives who feel short changed by “Like brand inspiration” products but also provides some interesting learning opportunities for brand owners in the quest to protect their designs. Tilbury was successful in arguing copyright infringement due to the original artistic “starburst” element in its product design, the elements where the copyright lay. Brand owners may consider incorporating similar artistic elements into their products to act as a form of protection against imitators or at least provide ammunition for a copyright infringement claim should they need it.

Click here for the Judgement.


Copyright 2019 K & L Gates

Article by Serena Totino and  Daniel R. Cartmell of K&L Gates.
For more copyright cases see the Intellectual Property law page of the National Law Review.

Brexit – Here We Go Again

The new Prime Minister of the UK, Boris Johnson, has taken up office following his decisive (66% : 34%) victory in the contest among Conservative Party members who were presented with a choice between him and the Foreign Secretary, Jeremy Hunt. He promised during the campaign to take the UK out of the EU by 31 October (when the extension to the Article 50 Brexit process expires) “do or die”. In his first speech as PM, he again underlined his determination that the UK should leave the EU by 31 October. He said that his intention was that this should be with a new deal – “no deal” was a remote possibility which would only happen if the EU refused to negotiate. But it was right to intensify preparations for “no deal”, which could be lubricated by retaining the £39 billion financial settlement previously agreed with the EU.

So the starting gun for the next phase of Brexit has fired.

What Does the Campaign Tell Us About the Approach to Brexit?

The Conservative leadership election campaign happened in two parts. The first, among MPs, whittled the long list of candidates down to two. Perhaps conscious of the broad spread of opinion among Conservative MPs, both final candidates took a nuanced line during that phase, stressing their desire to leave the EU with a (revised) deal. In the second phase, which involved selection between the two by the broader membership of the Conservative Party (roughly 160,000 people), the tone hardened notably. Polling suggests that a majority of the Conservative Party membership puts delivering Brexit ahead of the economy, the survival of the union of the UK and even the survival of the Conservative Party itself (polling after Theresa May’s European Parliament elections suggests that two thirds of party members voted for another party in those elections, with nearly 60% voting for Nigel Farage’s Brexit Party). Only averting the prospect of a Jeremy Corbyn-led Labour Government is apparently a higher priority for Conservative Party members. Responding to this sentiment, the position of both candidates became harder through the second phase of the campaign. While both favoured leaving with a deal, both were clear that the threat of a “no deal” exit must be real in order to stimulate further negotiations with the EU. Both, therefore, also favoured ramping up “no deal” preparations. In the end, the main difference between the two candidates was that Jeremy Hunt could countenance a “short” further delay to Brexit if that was necessary to secure a deal from the EU, whereas Boris Johnson promised that the UK would leave the EU on 31 October “come what may, do or die”. Significantly, in one of the last public hustings during the campaign, Boris Johnson also ruled out making changes to the Irish border backstop in the Withdrawal Agreement. His approach to how to deliver Brexit could be summarised as: deliver on citizens’ rights straight away, have a “standstill” on trade (not clear how this differs from the transitional period in the Withdrawal Agreement – it would certainly involve zero tariffs on both sides, but unclear whether it would involve regulatory alignment (see trade negotiations section below), still less continued jurisdiction of the European Court of Justice), resolve the Irish border through a comprehensive trade agreement and create “constructive ambiguity” about whether/when the UK would accept the €39 billion exit settlement in the Withdrawal Agreement – presumably making it contingent on the trade agreement. Boris Johnson called for optimism and determination to secure this outcome.

What Do the Key Ministerial Appointments Tell Us About Brexit?

In appointing his Cabinet, Boris Johnson has made far-reaching changes which shift the profile of government decisively towards pro-Brexit. All ministers were required to subscribe to keeping the possibility of “no deal” Brexit open. The principal portfolios concerning Brexit are all held by people who are either comfortable with, or even favour, a “no deal” Brexit. This looks like – and is no doubt intended to be seen in Brussels as – a government fully committed to a “no deal” Brexit, if necessary. Perhaps the most interesting appointment was, however, not of a minister at all, but of Dominic Cummings, campaign director for Vote Leave in the 2016 referendum, as a senior adviser. Taken together, this looks like a team both strongly committed to delivering Brexit and ready for a public campaign (election or referendum), if necessary.

What Happens Next?

The new Prime Minister effectively has more than five weeks’ respite from Parliamentary scrutiny, as Parliament starts its summer recess and returns on 3 September. This gives him time to consolidate his team, articulate his strategy (including boosting preparations for a “no deal” Brexit), and explore the possibilities for further negotiation with the EU. But even within his own party, on both pro-Leave and pro-Remain sides, he is, in effect, on probation.

The Parliamentary arithmetic has not changed significantly from that faced by Theresa May, but by carrying out such a substantial eviction of Mrs May’s ministers, Boris Johnson is likely to have increased the number of opponents to his Brexit policies on the Conservative back benches. They now also have an important figurehead in former Chancellor Philip Hammond. The Prime Minister has no majority without the support of the 10 Northern Ireland Democratic Unionist Party (DUP) MPs. And, within the Conservative Party, the hard Brexit supporting European Research Group (ERG) is now balanced by an anti “no deal” faction bolstered by ministers who resigned because they could not support his approach to Brexit or were sacked by him. Technically, the government’s majority, including the 10 DUP MPs, is down to two (three including one MP under criminal investigation). A by-election on 1 August is likely to reduce that by one. If the PM tries to push through a deal based on the existing Withdrawal Agreement (with changes to the accompanying Political Declaration about the future relationship, to which the EU has said it is open), he risks losing the DUP and some ERG from his majority. If his policy becomes “no deal”, he risks losing the more pro-European faction. In either case, he lacks a majority to deliver the result. The two big questions are whether Parliament (which has a substantial anti “no deal” majority) can find a way to erect a legal barrier to a “no deal” Brexit and, if not, how many Conservative MPs would really vote against their own party in a confidence vote to force either a change of direction or a fresh election – several have already indicated that they would do so if necessary. All of which points to the same Parliamentary deadlock Theresa May faced returning in September. So, unless the PM can come up with a renegotiated deal which the DUP and ERG would accept, the only way out of the deadlock would be to go back to the people. Mr Johnson’s strong opposition to a further referendum would make that a politically difficult choice. Current polling suggests that an election before Brexit is delivered would be a high risk strategy for the Conservatives.

As one influential commentator put it, the strategy may be to try for a new deal and see if the EU blinks. If they do not, go for “no deal” and see if Parliament blinks. If it does not, hold an election or referendum – an election is probably higher risk, but can be done more quickly and does not involve going back on strongly expressed views of the Brexiteers, including Mr Johnson.

What About the Europeans?

The debate about Brexit over the Conservative Party leadership campaign has been an entirely Brit-on-Brit affair, with reference to the EU position, but no engagement with it. European leaders’ reactions to Boris Johnson becoming Prime Minister have been polite, but also uncompromising, showing no willingness to re-open the Withdrawal Agreement. Michel Barnier looked forward to working with the Johnson Government to facilitate the ratification of the Withdrawal Agreement – signalling that negotiation is possible about the accompanying Political Declaration on the future relationship, and possibly other complementary accords, but not the Withdrawal Agreement itself. If the EU sticks to this position – and the EU team follows the UK Parliamentary arithmetic closely, so they know how much resistance there will be to “no deal” – the prospects for finding an agreed way forward look slim.

So “No Deal”, Then?

In April, we assessed the possibility of a “no deal” Brexit as very low. It has clearly now increased and, with a Cabinet committed to “no deal” if there is not a new deal, there are a number of ways in which it could come about. But Parliament’s majority against “no deal” remains, and there remain a number of obstacles to “no deal” in Parliament and in the economic analysis of the impact of “no deal” Brexit if the UK and EU are not able to agree on tariff-free trade using GATT XXIV. While some form of political process – such as an election – looks more likely than moving straight to “no deal” if the EU talks fail to yield a result, companies should certainly now put in place “no deal” contingency arrangements.

Free Trade Agreements

There are three interlinked free trade agreements (FTAs) in play: EU-US, EU-UK and UK-US. During the leadership campaign Boris Johnson spoke about making very rapid progress on the UK-US FTA (at one stage suggesting having a limited agreement in place by 31 October), but also about finding the long-term solution to the Irish border issue in the UK-EU FTA. In practice, it is likely that the UK-EU FTA has to come before the UK-US FTA, not least because the more the UK aligns to US regulatory standards through a UK-US FTA, the harder the solution to the Irish border issue will be – nowhere more so than in agriculture. The UK-EU FTA also has a unique character, in that the two parties start from a position of zero tariffs and complete regulatory alignment and the negotiation will, therefore, be about how far and in what respects to diverge. Both the EU-US and UK-US FTAs will have to address some highly charged political issues (agriculture, public procurement (in particular healthcare) and climate change); it could be argued that the UK would secure a better result on these issues by allowing the EU to find a politically workable way forward with the US first.

In an illustration of the complex interaction in the trade policy approach, the UK government has not been able to roll-over the EU-Canada FTA (CETA) into a bilateral UK-Canada FTA. This is because the Canadian government has analysed the impact for Canadian businesses of the UK moving to the interim “no deal” tariff policy published by the UK earlier this year – 87% of imported goods would be tariff-free to prevent harm to consumers – and concluded that the impact would be small. UK exporters to Canada would, however, face full Canadian WTO tariffs, rendering trade in some sectors unviable.

However the order of negotiations takes place, the three FTAs are effectively interlinked, and it will be important to ensure, for example, that something desirable in the UK-US FTA is not rendered more difficult to achieve by something agreed within the UK-EU FTA.

 

© Copyright 2019 Squire Patton Boggs (US) LLP
For more Brexit developments, see the National Law Review Global page.

Brexit: Bracing for IP Changes

The United Kingdom is due to leave the European Union on March 29, 2019 (Brexit day). If the UK does leave the EU under the currently proposed terms, then the UK would enter a so-called transition period ending on December 31, 2020 and the current status quo would effectively be maintained during this period. However, the UK Parliament recently refused to ratify the current terms of withdrawal and there remains a risk that there will be a “no-deal” Brexit that would not include any transition period. From an intellectual property perspective, these uncertainties and tentative changes should be taken into consideration in the upcoming weeks when developing international filing strategies.

Trademarks

A no-deal Brexit has substantial implications for the continued protection and enforcement of EU trademarks in the UK. However, the position as it stands under the current agreement will be as follows:

  • EU trademark registrations currently on the register will have a duplicate UK registration automatically added to the UK register (no new filing required);
  • Current EU applications will have the same procedure once registered, even if the registration date is post-Brexit; and
  • For trademark applications post-Brexit, two filings will have to be made to cover the former 28 countries of the EU (one UK direct application and one EU application).

Under these prospective events moving forward, it is not anticipated that the EU Intellectual Property Office will decrease their costs for an EU application (because the territories covered decrease from 28 to 27). Accordingly, it may prove cost effective to file any anticipated EU applications before the March 29, 2019 deadline to avoid the need to file two applications.

Patents

There will be no change to the application processes for UK and European patents. Patents covering the UK are granted by two organizations: the UK Intellectual Property Office (UKIPO) and the European Patent Office (EPO). Applications for patents can be filed directly with the UKIPO or EPO, or can be made pursuant to an international patent application filed under the Patent Cooperation Treaty. Neither of these organizations are EU institutions and they will continue to function after Brexit.

Domain Names (.eu)

To register an .eu domain name, a person or entity must reside in or be established within the European Union. As a result, effective from March 30, 2019 (in the event of a no-deal Brexit) to January 1, 2021 (in the event the withdrawal agreement is ratified), entities that are established only in the UK – and natural persons who reside in the UK – will no longer be eligible to register .eu domain names, or to renew .eu domain names registered if they are .eu registrants, before Brexit day.

EURid, the registry manager of .eu domain names, has published a notice on its website which states that a no-deal Brexit will have the following consequences:

  1. UK registrants of .eu domain names will have until May 30, 2019 to update their contact details to an EU address or to transfer their domain names to an EU resident. During this period, their domain names will remain active but cannot be transferred to a UK registrant and will not be automatically renewed (but instead moved to “withdrawn” status).
  2. As of May 30, 2019 all registrants that do not demonstrate their eligibility will be deemed ineligible and their domain names will be withdrawn (that is, they can no longer support any active services such as websites or email), but they will remain in the .eu registry database and may be reactivated if the eligibility criteria are satisfied. On March 30, 2020 all the affected domain names will be revoked and will become available for general registration (which gives rise to a risk of cybersquatting).
© 2019 Varnum LLP
This post was written by Charles F. Gray and Erin Klug of © 2019 Varnum LLP.
Read more about Brexit on our National Law Review Global Page.

Getting Closer to put the UPC into Force

April 26, 2018 is a remarkable date: first it’s World IP Day celebrating IP around the world. Second, and this is unique, the British IP Minister Sam Gyimah MP announced that the UK ratified the Unified Patent Court Agreement (UPC Agreement). By doing so the UK agreed to be bound to both the UPC agreement and the UPC’s Protocol on Privileges and Immunities (PPI). The UPC will be a court common to the contracting member states within the EU having exclusive competence in respect of European Patents and European Patents with unitary effect.

In addition to Paris and Munich, London hosts a section of the Court’s central Division dealing with patents in the field of life sciences and pharmaceuticals. The way is now open for discussion about UK’s future within the UPC system after-Brexit. As of today, the UPC Agreement is ratified by 16 countries of the European Union.

To bring the Agreement into force, UK, France and Germany have to ratify the UPC Agreement and the PPI, now everyone is waiting for Germany, as France has already ratified.

Germany’s completion is currently on hold due to a constitutional complaint pending before the German Federal Constitutional Court.  According to rumours abound in the German IP community this complaint might be dismissed and the ratification will be finished during this year.

It’s time to get ready for playing with the new system!

 

Copyright 2018 K & L Gates.
This post was written by Christiane Schweizer of K & L Gates.
Read more on intellectual property on the National Law Review’s Intellectual Property Page.

Brexit: Limiting the Damage

It is one of the ironies of history that the EU as it is today, starting with the single market, was largely made in Britain, the achievement, above all, of former prime minister Margaret Thatcher and her right-hand man in Brussels, the then Commissioner (Lord) Arthur Cockfield. The single market has long been viewed by observers in countries with less of a free market tradition as a typically British liberal invention. And yet it is this market, as well as the EU itself, that another Conservative government is now seeking to leave.

Britain has also left its stamp on key EU initiatives from regional policy to development assistance and fisheries. The EU’s interest in a common foreign and security policy originally stemmed from Britain. The EU’s comparatively transparent and accountable administrative rules date from the reforms introduced by former British Labour Party leader Neil Kinnock when he was Vice-President of the European Commission from 1999 to 2004. Thus, representatives of Britain’s two major parties have helped to make the EU what it is today.

If British prime ministers had explained to public opinion earlier the extent of their country’s influence on the EU, something that other Europeans never doubted, the referendum of 23 June 2016 might never have occurred.

A “Smooth and Sensible” Brexit

Be that as it may, Europeans on both sides of the English Channel are now grappling with the consequences of that vote. If reason and economic interest prevail, a “smooth and sensible” Brexit, as evoked by the British prime minister in Florence in September, might yet emerge.

This would involve a broad agreement, in 2017, on the principal aspects of the divorce settlement. This concerns mainly Britain’s financial commitments to the EU, the residence, professional and health rights of citizens living on both sides of the Channel after Brexit, and the need to maintain the Common Travel Area between Britain and Ireland and to avoid a hard border across the island of Ireland after Brexit. While Brussels, London and Dublin have affirmed their intention of achieving these goals, there are many practical and political issues to resolve.

If sufficient confidence and trust between EU and UK negotiators is established, it should also be possible to agree to the general terms of a future political and economic agreement between London and Brussels by the end of the year and to broach the question of transitional arrangements to smooth the way for government and business. The British government wishes to ensure that business need adjust to Brexit only once, hence the need for a smooth transition to a well-defined future relationship.

If good progress is made next year, the separation agreement and transitional arrangements could be drawn up by October 2018, allowing enough time for approval by EU and British institutions ahead of Britain’s exit from the EU at midnight between 29 and 30 October 2019. Little, except Britain’s lost vote in EU institutions, would then change for the next two to three years, as the UK continued to make payments to the EU budget, respect judgements of the European Court of Justice and accept the free movement of labour.

The breathing space would be used to negotiate, sign and ratify a two-part long-term agreement. The first part would cover trade and economic issues; it could take effect provisionally relatively quickly after agreement had been reached. The second part, though, would be a wide-ranging political agreement, involving security and even aspects of defence. Both sides have an interest in cooperation on armaments production and unconventional forms of conflict, as well as police and judicial affairs. This would involve the member states’ legal responsibilities and require ratification by all twenty-eight countries concerned. It might not come into effect before the mid-late 2020s.

This relatively benign sequence of events assumes that the British government is unified behind its negotiator, David Davies, and that the political situation in Britain and the EU remains generally stable. It also assumes that the EU can move beyond its rigid two-stage sequencing of the negotiations.

However, there may well be political upsets, involving a leadership competition in the Conservative Party and, perhaps, an early general election. The opposition Labour Party may come to power bringing a change in priorities but also differences of opinion in its own ranks. The British economy will be damaged by Brexit, according to leading economists, and public opinion is likely to react when this is widely felt.[1]Until now, the main impact has been a decline in sterling and rising inflation, raising the prospect of higher interest rates.

The “Cliff Edge” Scenario

Such uncertainties, as well as the divergent political agendas of London and Brussels, may make the smooth and sensible Brexit impossible to achieve during the limited time available. This opens the way to a second scenario, widely described in Britain as the cliff edge. Under this hypothesis, the December 2017 goal for achieving a breakthrough in the separation talks is missed. This further postpones discussion of transitional arrangements and a future long-term agreement.

Negotiations continue fitfully during 2018 but the two sides are too far apart to reach agreement by October 2018, which the EU chief negotiator, Michel Barnier, has designated as the effective deadline. If October passes without an overall agreement, it will probably be too late to secure the agreement of the European Parliament before 29 March 2019, when the two-year negotiating period initiated by the British government’s notification of withdrawal expires. Nonetheless, negotiations might well go down to the wire.

Unless all twenty-eight countries “stop the clock” at midnight, an old Brussels ruse, the UK would then leave the EU without an agreement. Business leaders have warned of the chaos this will bring. There will be an unmanageable fivefold increase in work at British, Irish and mainland European ports checking consignments, the suspension of air travel between the UK and the EU, pending the conclusion of a new air transport agreement, and other major disruptions.

Health, safety, veterinary and phytosanitary inspections, as well as the assessment of customs duties, would lead to long queues of lorries at ports on both sides of the channel. Neither side can build the necessary infrastructure and linked IT systems or recruit sufficient qualified staff in time to cope with dramatically increased requirements after a hard Brexit. Supply chains would be disrupted and many foreign-owned companies, which had not already relocated to remaining EU countries, would seek to do so rapidly.

The political and economic damage of going over the cliff edge would last for years and embitter the UK’s relations with the EU and third countries. Many would question the value of Britain’s WTO commitments in the absence of appropriate trading arrangements between Britain and the EU.

This then is a sketch of the cliff edge. Those who admire Britain for its pragmatism, fairness and common sense find it hard to believe that such a scenario might become reality. Surely, they say, Britain and the EU are involved in preliminary skirmishing of the type that precedes any negotiation. They are sure to come to their senses as the decisive deadlines approach. Nothing is less than certain.

A Tale of “Downside” Risks

The outcome may well diverge from either the optimistic or the pessimistic scenarios delineated above. However, the risks are mainly “downside” as the economists put it. British negotiators have not yet grasped the fundamentally asymmetric nature of negotiations between twenty-seven countries backed by European institutions on the one side and a single country seeking to leave the club on the other. It would be better for government, business and the public, if this reality were more widely recognized, leading to realistic negotiating targets. Indeed, Brexit is not really a negotiation at all in the usual sense. It is rather an effort by the leaving country to secure some exceptions from the club’s rules at the time of its departure. This is much akin to the efforts of a candidate (joining) country to achieve some, temporary, transitional exceptions to the EU’s rules.

The Brexit talks are essentially an exercise in damage limitation, mainly through transitional arrangements. When the divorce and transitional arrangements have been agreed, Britain and the EU can concentrate on negotiating a long-term partnership which will be in their mutual interest.

This post was written by Michael Leigh of Covington & Burling LLP., © 2017
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