Trading in Europe: Are You IP Ready?

Brexit Trade

By Fiona McBride, Chair of European intellectual property firm, Withers & Rogers.

For small and medium-sized businesses focused on trading in both the UK and Europe, it is important to have the right package of intellectual property (IP) protection in place to smooth the way to market and reduce the risk of their innovations being copied by competitors.

While Brexit has affected some areas of IP protection – most notably trade marks and registered designs – the process for securing pan-European patents has not changed. However, it still makes sense for businesses to prepare for EU market entry carefully and consider all IP rights as they do so.

For SMEs the benefits of IP protection can be considerable. A study conducted by the European Patent Office (EPO) in 2019 found that SMEs that own at least one intellectual property (IP) right are 21 percent more likely to experience a growth spurt. They are also 10 percent more likely to become a high-growth firm.

For businesses seeking to scale by expanding into overseas markets, IP rights can help to protect their business model at different stages of development and support them in realising their growth potential. At concept stage for example, the business may rely on ‘trade secrets’ to protect any confidential formulas or processes. When investing in an R&D programme however, from the outset businesses should consider filing patent applications in their target markets to protect their innovations well before they are launched. Once granted, patents can give them a period of market exclusivity of up to 20 years. If the business is aiming to sell its product or service in both the UK and Europe, it makes sense to obtain protection on both sides of the channel – either via a small number of directly-filed national patent applications, or by applying via the European Patent Office (EPO) for patent protection spanning the whole European region. This can cover up to 40 states, including all 27 EU member states and the UK, along with others in the region such as Turkey and Norway.

Prior to market launch, the business should also consider whether the aesthetics of their innovation require protection to prevent rivals from copying the appearance of their product. Registered designs are generally granted more quickly than patents, so this type of IP right can help provide protection during a speedy market entry while patents progress to grant. Since Brexit took effect at the end of last year however, businesses should bear in mind that if they want to bring their product to market in both the EU and UK, they will need to register their designs in both markets.

Trade mark registration is also vitally important and should be obtained at an early stage to protect the brand name and identity of the business prior to market entry. Depending on the success of the company’s product or service offering in the years that follow, these assets could increase in value significantly. In a similar way to registered designs, trade mark registrations should be secured in the UK and the EU if the business intends to trade in both markets.

Another important consideration for businesses planning to trade overseas is to consider the risk of infringing any third-party IP rights, which may have already been secured in that territory by a competitor. This risk can be managed by having professional searches conducted and taking a strategic view bearing in mind the level of commercial risk that might be acceptable, versus the actual risk of infringement occurring. While a patent search will always need to take into account a country by country assessment, clearance searches for trade marks or registered designs can be conducted across the whole EU, but now also need to be separately assessed in the UK. European trade mark or design registrations that were pending at the end of the transition period, can be re-registered in the UK up until September 2021, so this should be checked carefully during any clearance activity in the UK as well.

Some UK businesses that are currently trading in the EU or intending to do so in the future may have obtained the rights to a .eu domain name for their website, or may wish to in future. These domain names can now only be registered by an EU person or entity, which will have to be factored into any EU expansion plans.

Regardless of their immediate plans, it is important for all businesses to think ahead and consider how obtaining registered IP rights could support them in the future. For example, even if the business is focused solely on its domestic market initially, it may be worth considering filing for protection in other territories, in case a decision is taken to license its IP to third parties overseas in the future. By taking this action now, businesses can minimise the risk that competitors step into the overseas market and launch a similar product, with a similar look or name, before them.

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