What exit from the EU means for British intellectual rights holders

As I wrote this column, Britain was holding a referendum as to whether or not it should remain a member of the European Union (EU) — a regional bloc comprising of many European countries.

There are obviously issues of conflict of laws between a member state’s national laws and the bloc’s laws.

In this article I want to analyse what Brexit means for intellectual property (IP) rights holders in Britain who seek regional enforcement of rights, now that they have voted to leave the EU.

One of the main principles of the EU Treaty is free movement of goods and people such that there is even one common currency — the euro.

There are several reasons why most people supported Brexit and that is, the influx of foreigners within the EU into Britain and also the perceived “barriers” to trade as a consequence of some of the EU provisions.

The perception is that some of the EU rules are very tough and actually are deemed to be unattractive by traders.

Since one of the main tenets of the EU Treaty is free movement of goods in the region, then this brings about a clash with national intellectual property rights.

Some of the rights granted at a national level (that is the UK) include the right to control distribution, re-sale, importation and exploitation of protected goods.

However, there is a clash between the national IP rights and this EU principle. If a British trader exercises some of the national rights on a regional level, for example, the right to control distribution of protected works, then that is contrary to the EU principle of free movement of goods. Therefore, due to this clash, the national law is overridden by the EU provisions in some instances.

In other words, a trader in Britain might be forced to relinquish the exercise of IP right within the EU in some cases. This is what is commonly called the doctrine of exhaustion of rights and that is where under the EU a resident in a member state cannot exercise IP rights at a regional level in certain instances.

In my view as an IP practitioner, I would understand why a British trader resident in the EU voted to leave the bloc. A yes vote for a Brexit by a British IP holder means that one is free to exercise IP rights in the region without any limitations.

Some of the limitations imposed under EU include a situation where the IP holder has consented to the sale or distribution of protected material in a third country. The case of Deutsche Grammophone versus Metro illustrates this.

The plaintiff was a German copyright holder who sought to exercise its IP right of stopping the defendant, a French company, from distributing the works in France at a less price than what the plaintiff was selling the works for.

The plaintiff had, however, through its French subsidiary began distributing the works in France. Therefore, under the EU principle of exhaustion the German firm was barred against exercising its national IP right of preventing distribution.

However, despite the limitations placed on national IP enforcement in the region, there are still some benefits that might have encouraged a British trader to vote against a Brexit as far as IP is concerned.

The EU has an IP office that allows persons to protect their trademarks in all member states of the EU by one single registration.

This means that an EU trademark allows a business to protect its brand and goodwill in all member states, making it easier to enforce a regional trademark than a national one.

Ms Mputhia is the founder of C Mputhia Advocates. Email: [email protected].