Let's talk doing business in Europe - 2. Contracts & Legal Issues
1. Let's talk... Doing business in Europe
- Contracts and legal issues
Tuesday 9th October 2018
Junction 25 Conference Centre, Brighouse
Welcome!
2. The changing relationship with
Europe: contracts and legal issues
Trudy Feaster-Gee, Partner (Barrister)
3. • A short recap and where we are now
• The remaining timeline
• White Paper
• Common rule book for goods
• A facilitated customs arrangement
• New arrangements for services
• Access to talent
• Reactions to the White Paper – technical notices for a “no
deal” scenario
Agenda
4. • Technical notices for the competition regime and state aid:
plans for a no deal scenario
• Assessing the risk for your business
• The impact of currency fluctuations and new tariffs
• Supply chain disruption
• Reviewing existing contracts
• Planning for new contracts
• Loss of free movement of workers
• Restructuring the business
• Conclusion
Agenda
5. • Referendum on 23 June 2016
• Article 50 Notice on 29 March 2017: invoking the UK’s
withdrawal from the EU
• March 2017: Florence speech
• March 2017: the UK and EU agreed the terms of the
transition period
A short recap
6. • Progress on the Withdrawal Agreement: the UK and EU have
agreed 80% of the legal text. The remaining 20% includes:
• Irish border;
• Governance and implementation;
• Data;
• Geographical indications; and
• Criminal and judicial matters.
• June 2018: the EU Withdrawal Bill received Royal Assent
• July 2018:
• British Cabinet meet at Chequers
• Publication of Government’s White Paper
Where are we now?
7. • In theory:
• October 2018: EU summit on 18-19 October
• December 2018: EU summit on 13-14 December
• January 2019: UK and EU Parliaments should have
ratified the exit treaty
• 29 March 2019: UK exits the EU
• December 2020: anticipated end of transition (on the
assumption that a deal is agreed)
The remaining timeline
8. • The White Paper sets out the UK Government’s proposed
post-Brexit relationship with the EU
• Key aspects of the White Paper:
• Common rule book for goods (i.e. the UK and EU
having many of the same regulations) but not services
• A “facilitated customs arrangement”
• New arrangements for services
• Access to talent
White Paper
9. • A common rule book for manufactured goods
• Would avoid the need for import controls and other border
checks
• Products should only need to comply with one set of rules
Common rule book for goods
10. • The UK would apply the EU tariffs and trade policy to
goods intended for the EU
• The UK would apply its own tariffs and trade policy for
goods intended for consumption in the UK
• Mirroring the EU’s customs approach at its external
border would ensure that goods entering the EU through
the UK have complied with EU custom processes and the
correct duties have been paid
• This would avoid the need for custom processes between
the UK and EU, including custom declarations, routine
requirements for rules of origin and exit and summary
declarations
A facilitated customs arrangement
11. • The services industry accounts for nearly 80% of the UK
economy
• The White Paper concedes that new arrangements will need to
be established post-Brexit:
• Provision for additional “deep” market access and
commitments such as “UK service providers to be treated
as equivalent to local providers when operating in the EU”
and vice versa
• Continued mutual recognition of qualifications
• On financial services, the White Paper acknowledges that
financial “passporting” rights will be lost. The White Paper
proposes a bilateral relationship concerning mutual market
access
New arrangements services
12. • The UK has committed to ending free movement of
people as it currently exists under the UK’s EU
membership
• The White Paper proposes a new “framework for mobility”
with reciprocal arrangements for citizens to continue
moving between the UK and EU for certain purposes:
• Visa-free travel for short term business reasons
• Allow for intra-corporate transfers between offices
• Facilitate temporary mobility of scientists and
researchers, self-employed professionals, employees
providing services, as well as investors
Access to talent
13. • The White Paper has been politely welcomed in Brussels as a
useful contribution to the debate
• However, the proposals have been met with hostility from
eurosceptics and remainers
• The prospects of a “no deal” and “no transition” remain on the
table
• In response, the Government has published three batches of
sector specific guidance notices (a total of 77) on how
businesses and individuals should prepare for a no deal Brexit
• The technical notices are available at
(https://www.gov.uk/government/collections/how-to-prepare-if-
the-uk-leaves-the-eu-with-no-deal)
Reactions to the White Paper
14. • Application of competition law to commercial agreements and conduct:
• Competition law in the UK would remain unchanged, aside from tidying-up
changes in the light of the UK’s exit (such as removing references to EU law and
institutions);
• EU block exemptions will be maintained as parallel exemptions
• Competition investigations:
• Post-Brexit, the EC would cease to have jurisdiction to review conduct within the
UK over time;
• UK companies operating abroad may find themselves being investigated by both
the UK and EU competition authorities
• Follow-on damages:
• A decision made by the EC could no longer be relied upon as a binding finding of
an infringement in follow-on claims
• Merger control:
• There will be no changes to the UK merger control regime. Merger notifications
will remain voluntary
• Businesses considering a merger that has an impact in the EU and UK markets
after exit will need to comply with both EU and UK merger rules
Technical notice for competition law in a no deal
scenario
15. • In relation to state aid, some of the key points are:
• There are no plans to diverge significantly from the EU
regime in a no deal scenario
• The CMA has acquired new powers for supervising and
enforcing the UK state aid rules. From that point onwards:
• State aid approvals already in place, including under
block exemptions would remain (carried over into UK
law by the EU Withdrawal Act)
• New notifications, and notifications made to, but not yet
approved by, the EU Commission would need to be
submitted to the CMA
• Complaints about unlawful aid or misuse of aid in the UK
should be addressed to the CMA
Technical notice for state aid rules in a no deal scenario
16. • The impact of currency fluctuations
• Introduction of new tariffs
• What is the risk of supply chain disruption
• Reviewing existing contracts
• Making new contracts as Brexit-proof as possible
• Loss of free movement of people
• Restructuring – loss of freedom of establishment
• Review your IP/trade mark portfolio
Assessing risk for your business
17. • Risk of currency volatility
• Imposition of tariffs and customs controls on trade with
the EU is likely to increase the cost of imports / exports
• Potential delays at UK/EU border – significant impact for
businesses reliant on “just in time” distribution
The impact of currency fluctuations and introduction
of new customs tariffs
18. • Serious disruptions to supply chain management in key
industries
• Consider applying for Authorised Economic Operator
(AEO) status to become a “trusted trader”
Supply chain disruption
19. • Businesses should review / seek to revise their existing
contracts
• Identify key customer and supplier contracts and consider areas
of particular risk. In particular:
• Territorial scope
• Whose responsibility is it to comply with and/or bear the
cost of any customs formalities, import duties or other
additional obligations which may be imposed as a result of
Brexit
• Currency risk
• VAT
• Incoterms
• Force majeure/material adverse change
Review existing contracts
20. • New contracts should address the potential for impact arising
from Brexit:
• The commercial impact of Brexit e.g. changes to tariffs,
exchange rates or custom procedures
• Whether references to the “EU” or EEA will include the UK
after Brexit
• If references to “EU law” include legislation succeeding that
law in the UK
• Assessing if Brexit could make enforcement of an English
judgment more difficult and, if so, whether arbitration is a
suitable alternative
• If there should be an express right to terminate on Brexit
Planning for new contracts
21. • How will Brexit affect the workforce? Consider:
• How will your business be impacted by restrictions on
free movement of workers between the EU and UK
and the potential need for visas or residence permits,
possibly even before Brexit becomes fully effective?
• Will your ability to recruit or second staff be affected?
• How might that impact your operations and costs?
• Should you consider adapting your recruitment
policies going forward?
Loss of free movement of workers
22. • Post-Brexit, freedom of establishment will be lost
• Is re-location / an additional location relevant for your business?
• Practical points to plan for include:
• Should functions transfer from the UK to another EU Member
State (or vice versa) or do they need to be replicated in both?
• What challenges would you face in implementing relocation?
E.g. legal constraints post-Brexit, costs, timelines and
regulatory consents
• Are there alternatives to replication or transfer? E.g. working in
partnership with another entity which already has the
necessary foreign presence?
• Would changing the scope / scale of your activities be a more
appropriate response?
Restructuring the business
23. • It is very hard to plan in the absence of settled rules
• Use your professional advisors and trade bodies to help
brainstorm
• The solution: One size fit does not fit all
• At the very least:
• identify the key risks for your business, and
• potential work around(s) tailored to your situation
• Take preparatory steps where possible prior to 29 March
2019
Conclusion
25. Disclaimer
The information contained in this document is confidential to you; it is not to be shown, quoted or referred to, in whole or in
part without our prior written consent. It has been prepared for the purposes of information only and is only valid as at today’s
date. It serves only to alert the reader to recent legal developments or provide general information regarding a legal topic and
to act as a guide; it is not a comprehensive or definitive statement of the law. It should therefore not be relied upon in place of
specific legal advice. We exclude all liability (in negligence or otherwise) arising from any reliance placed on the information
contained within this document by you (or any third party) for any purpose, to the maximum extent permitted by law.
28. een.ec.europa.eu
What is intellectual property?
“Intellectual property
(IP) refers to creations
of the mind, such as
inventions; literary and
artistic works;
designs; and symbols,
names and images
used in commerce.”
(source: WIPO)
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Main IP types: automatic
protection
• Copyright:
written and literary works, art,
photography, films, TV, music, web
content, sound recordings
• Design rights:
shape and configuration of objects
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Main IP types: to be applied for
• Trade marks:
Product names, logos
• Design rights:
the look of a product you’ve designed
(appearance, shape, decoration etc)
• Patents:
Inventions, new products
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What we know so far
• Whilst we continue to be a member of
the EU, all existing laws and systems
will continue to apply
• What happens once we leave will
depend on how we leave
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But, however we leave…for trade
marks
• EU Trade Marks registered by UK firms will
continue to be valid in the EU 27
• UK businesses will still be able to register EU
Trade Marks (EUTMs)
• The Madrid System (international trade mark
system for protection in up to 113 territories)
should still be available to UK firms
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But, however we leave…for
designs
• Registered Community Designs (RCDs) by UK
firms will continue to be valid in the EU 27
• UK businesses will still be able to register design
rights (RCDs) for the EU 27
• The Hague System (registration of up to 100
designs in 68 territories) should still be available
to UK firms
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But, however we leave…for patents
• Existing European patents covering the UK will
be unaffected
• UK businesses will still be able to apply to the
European Patent Office for patent protection
which will include the UK….
• ….because the European patent system is
governed by the (non-EU) European Patent
Convention
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The negotiations
“For our future relationship with the EU,
the UK looks forward to exploring
arrangements on IP cooperation that will
provide mutual benefits to UK and EU
rights holders. Such arrangements will all
require negotiation with the EU and we
look forward to discussing the possibilities
with them” (source: IPO)
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Trade marks
• existing UK system for protecting trade
mark rights will remain largely unaffected
by leaving the EU
• subject to the Withdrawal Agreement, all
existing registered European Union Trade
Marks to be protected by creating
comparable UK rights
• granted automatically & free of charge
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Trade marks – no deal
• holders of an existing EUTM will have a new
UK equivalent right granted “with minimal
administrative burden” – will be notified
• will come into force at the point of the UK’s
exit from the EU
• applicants for EUTMs which are on-going at
the point of exit will have 9 months to apply in
the UK for the same protection (& pay usual
fee) – will not be notified
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Design rights
• UK system for protecting registered and
unregistered designs will not be affected by
the decision to leave the EU
• Subject to Withdrawal Agreement,
comparable UK rights to be created for both
registered and unregistered Community
design holders, to ensure continuity of
protection
• again automatic & free
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Design rights cont.
• where UK currently does not protect
certain types of rights, it will establish
new schemes - to preserve the full
scope of the unregistered Community
design right in the UK
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Design rights – no deal
• protection of existing unregistered
Community designs in the UK will be
provided for, with no action required by the
right holder
• new unregistered design right to be created in
UK law which will mirror the characteristics of
the unregistered Community design
(“supplementary unregistered design right”)
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Design rights – no deal cont.
• Right holders with an existing registered
Community design will have a new UK
equivalent right granted – will be notified
• Those with on-going applications for
registered Community designs will have 9
months to apply in the UK for same protection
(again, usual fees will apply & will not be
notified)
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Patents
• Only a few areas of UK patent law come
from EU legislation, mainly:
patented pharmaceutical products and
agrochemicals – e.g. extra period of
protection (“supplementary protection
certificate”)
patenting of biotechnological inventions
• Will be carried over into UK law
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Patents – no deal
• existing rights and licences in force in
the UK will remain in force automatically
– no action required by licence holder
• existing & new applications as usual
• some changes in regulatory processes
for supplementary protection certificate
holders & applicants
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Unitary Patent & Unified Patent Court
• a new single patent covering a number
of European states
• backed up by international patent court
• aims to provide businesses with a
streamlined process for enforcing
patents through a single court, rather
than through multiple courts in multiple
countries
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Unitary Patent & Unified Patent Court
• UK intends to stay in the Unified Patent
Court and unitary patent system after
exit but
UPC may not come into force (Germany
still has to ratify it)
If it does, still not clear if UK can remain
part in a “no deal” scenario
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Copyright
• UK is a member of a number of international
treaties and agreements protecting copyright
• As a result, majority of works protected
around the world
• On exit, certain cross-border copyright
mechanisms will no longer work as intended
e.g. “orphan works” (works without
documented owners)
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Copyright – no deal
• the reciprocal elements of the special
cross-border copyright schemes will
cease to apply
E.g. a UK-based museum that make works
available online in the EEA under the
exception may be infringing copyright
Might need to remove them from their
website or restrict access on geographical
location basis
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Exhaustion of IP rights
• “the loss of the right to control
distribution and resale of a protected
product after it has been placed on the
market within a specified territory by, or
with the permission of, the right holder”
• UK currently part of EEA scheme, i.e.
territory = all EEA countries
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Exhaustion of IP rights – no deal
• UK will continue to recognise the EEA
regional exhaustion regime from exit day
• parallel imports of protected goods from the
EEA to the UK will be able to continue
unaffected
• BUT businesses exporting these goods from
the UK to the EEA might need the right
holder’s consent
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Conclusions
• Situation is still a “moveable feast”
• But businesses can:
review their IP
keep up to date with the changes (IPO)
consider what the impact might be for their
business
take advice and prepare
