Post-Brexit: Choice of Law in Intellectual Property Torts in the UK (Michael McParland QC)

Among the Government's proposed amendments to the Rome II Regulation set out in their 10 December 2018 draft Regulation ("The Law Applicable to Contractual Obligations and Non-Contractual Obligations (Amendment etc.) (EU Exit) Regulations 2018") are some interesting changes to the choice of law provisions in Article 8(2) relating to infringements of unitary Community intellectual property rights. These changes reflect the fact that, absent some agreement between the UK and the EU, such rights will cease to have any effect in the UK after Brexit. The Government currently intends to replace them with new, equivalent rights, as indicated in their technical notices on intellectual property published on 24 September 2018.

Unitary Community Intellectual Property Rights

A "unitary Community intellectual property right" is a right arising from, e.g:

• An EU Trade Mark (Regulation (EC) No. 207/2009 of 26 February 2009 on the Community trade mark, OJ 2009 L 78/1, as amended by Regulation (EU) No 2015/2424 of 16 December 2015, OJ 2015 L 341/21);
• A Community Design (Regulation (EC) No. 6/2002 of 12 December 2001 on Community designs, OJ 2002 L 3/1);
• A Community Plant Variety Right (Regulation (EC) No. 2100/94 of 1 September 1994 on Community plant variety rights, OJ 1994 L 227/1.

The current position is that a claim for an infringement of a unitary Community intellectual property right, the applicable law for any question is determined by reference to:

• The relevant Community Instrument which created the right, that contains choice of law rules which are found in provisions of the Trade Mark, Community Design Regulation and Plant Variety Regulation. Those provisions constitute "provisions of Community law which, in relation to particular matters, lay down conflict-of-law rules relating to non-contractual obligations", and therefore take precedence under Article 27 of other provisions in Rome II.
• For any question that is not governed by the relevant Community instrument, then the applicable law is the law of the country in which the act of infringement was committed.

Rome II and Intellectual Property Rights in the Withdrawal Agreement

Article 66 of the Withdrawal Agreement provides that in the United Kingdom the Rome II Regulation (i.e. the text as unamended as applied in the courts of the EU 27) shall continue to apply in respect of events giving rise to damage, where such events occurred before the end of the transition period. These might result in claims which arise a number of years after that period.

The Withdrawal Agreement also provides for continued protection in the UK intellectual property rights registered or granted before the end of the transition period (Article 54), including unregistered Community designs (Article 57), with a detailed registration procedure set out in Article 55.

Amendments to Article 8(2) of the Rome II Regulation

The amendments to Article 8(2) of the Rome II Regulation are intended to fulfil part of the Government's promise in their intellectual property technical notices to make provision regarding the status of legal disputes which are ongoing before UK courts when the UK exits the EU. In practice, these amendments will be relevant from 30 March 2019, if the UK leaves without any transition agreement, or to new claims that arise after the end of any transition period when the (unamended) Rome II Regulation has ceased to apply. I shall refer to that position as simply "Post-Brexit".

These Post-Brexit changes to Rome II are as follows:

• Article 8(2) will be amended to read:

2. In the case of a non-contractual obligation arising from an infringement which occurred before exit day of a unitary Community intellectual property right, the law applicable in any proceedings of which a court was seised before exit day and which are not concluded before exit day shall, for any question that is not governed by retained EU law the relevant Community instrument, be the law of the country in which the act of infringement was committed.

• A new paragraph 8(2A) is to be inserted.

"2A.    In paragraph 2, "unitary Community intellectual property rights" refers to that right as it had effect immediately before exit day".

Effect

The effect of these changes can be summarised briefly:

• Article 8 (2) will only apply to unitary Community intellectual property rights which had effect in the UK "immediately before exit day". The (current) reality of Brexit is such rights will no longer have any effect in the UK after exit day, and rights granted by the EU Intellectual Property Office on or after the exit date will not cover the UK. What the equivalent rights are remain to be seen.
• However, the proposed amendments to Article 8(2) show that where a UK court is already seised of proceedings concerning an infringement of any such right which occurred before exit day, and those proceedings have not been concluded before exit day, then a UK court will select the applicable law for such rights from either (a) what is left of retained EU law in that field (i.e. the residue of the Community Instruments insofar as they retained), or (b) if (a) provides no answer to the question, then the court will apply the law of the country in which the act of infringement was committed. Whether these changes produce any substantive difference will have to be determined.
• However, these amendments to Rome II do highlight one important fact: those existing rights will be recognised for pre-exit day infringements which have resulted in unresolved litigation or there would not be any need to make provisions in the retained Rome II Regulation for choosing the applicable law in such cases. The moral of the story for UK litigators is that if your client has a claim in respect of a unitary Community intellectual property right that they wish to pursue in the UK, then you're probably better issuing proceedings sooner rather than later.

Choice of Law for Other Intellectual Property Torts

Article 8 of the Rome II Regulation as enacted contains three specific rules for the applicable law of non-contractual obligations arising from an infringement of an "intellectual property right": a concept that Recital (26) of that Regulation made clear "… should be interpreted as meaning, for instance, copyright, related rights, the sui generis right for the protection of databases and industrial property rights".

Post Brexit, two of these three rules are being retained unchanged in English domestic law. The key provision is Article 8(1), which provides that the law applicable to a non-contractual right arising from an infringement of an intellectual property right "shall be the law of the country for which protection is claimed" and which preserved the acknowledged principle of the lex loci protectionis is naturally maintained. So too is the restriction on party autonomy that prohibits any derogation from by an agreement from the applicable law selected under Article 8 which continues unchanged in Article 8(3) of the version of Rome II that will be retained in UK domestic law.