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The Changing Face of International Trade – GDPR, Brexit and More

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In the latest UK200Group blog post, Liz Ward, Principal, Virtuoso Legal discusses the changing face of International Trade

Liz Ward, Virtuoso Legal
International businesses – truly, the best of us

Whether it’s building up a supply chain, establishing concrete business relationships overseas, or simply getting your products to the other side of the world on time and intact…

International trade has never been easy.

But, with great difficulty comes the potential for great rewards. Business fortunes can skyrocket after introducing successful brands and products into lucrative new markets.

Worldwide recognition and demand is something that all businesses owners dream of achieving.

However, with expansion into unfamiliar territory comes risk. Risk, which can be addressed with a steady legal hand in the form of watertight agreements with international actors, whether it’s international:

• Distributors and agents
• Licensees and franchisees
• Suppliers and supporters
• Customers and clients

In each instance, carefully crafted legal agreements come into play, which make certain what would otherwise be left up to chance. Protecting key assets like: brands, technology, trade secrets, copyright – all falls under the remit of intellectual property.

What this requires is, however, not only a finger on the pulse of the law at home – but moreover wherever the business operates.

As a result, there is an analogous relationship between how large a business grows, how much they need to address the necessary legal detail to grow internationally.

Trouble ahead?

In addition to all the above, are impending sweeping changes in the law, which further furrow brows nationwide. There are two key changes in the offing (routine blood pressure checks for in-house counsel recommended).

These are:
1. GDPR (May 2018)
2. Brexit (March 2019)

All of which, propose significant changes to how businesses operate internationally.

GDPR

GDPR, if you’ve not heard about it already, is a sweeping change to data protection law that redresses the balance between businesses and people they collect data about.

There have been thousands of pieces of guidance written about GDPR which cover every inch of the regulation. (So we’ll avoid the overall laundry list here.)

Note: GDPR is an EU regulation which means it comes into force in EU states, regardless of domestic law. Furthermore, the UK has agreed to adhere to GDPR despite Brexit (more on that later).

Broadly speaking however, the onus is now on businesses to get fully informed consent from data subjects about each separate type of data collection and processing – and enforce a range of rights in relation to this.

Of key interest for international businesses however, are two key points:

“Contracts” between the data controller and processors

Contracts are now required between businesses and partners they send personal data to.

These contracts need to make sure that any personal data that is shared is protected; outlining the “responsibilities and liabilities of both parties”.

Processors are only able to use the data upon the “documented instructions of the controller” and controllers are liable for processors’ actions.

“International Transfers”

In addition to the above, there are new strict rules determining when data can be shared outside the UK and EU. This is naturally of import to exporters (if you pardon the pun).

Any transfer to countries outside of the EU and UK requires ironclad contractual agreements between parties that ensure data protection meets the standard of GDPR.

For businesses with international partners in countries that have a less than stellar reputation for data protection – this may be a taxing task, indeed.

Brexit

In tandem with GDPR – many companies are in the thrall of preparing for Brexit (which I am reliably informed means: “Brexit”.)

The separation of British law from the EU will have an impact on the principle IP rights.

Trademarks

Before Brexit, a business could register their brand assets at the EU level and enjoy protection across Europe and the UK.

Of course, the UK is going to leave the EU. So, an EU community mark will no longer cover the UK. But don’t worry! It is planned for existing EU marks will be “matched” with a duplicate mark by the UKIPO. Though, once Brexit has occurred, a business operating in the UK and Europe will need to register both a UKTM and a EUTM.

The interesting point here is that trademarks can be revoked if they are not being used in jurisdictions that they are registered. As such, a UK company that has relied on a EUTM in the past will receive a UKTM – but if they are not operating in the EU – may lose their EU mark and protection across Europe.

As such, it is important for international businesses to be aware of their potential exposure.

Designs

There are two kinds of design rights – unregistered and registered. Broadly speaking, if you register your designs, you enjoy protection that: 1) lasts longer, 2) includes more design detail, and 3) is more easily enforceable.

EU rights are stronger than UK design rights in several ways. Broadly, they protect more detail (as well as, of course, jurisdictions). What’s more, the EU unregistered right (which is automatic) protects far more detail than the UK right at this stage. Recently, the UK has joined the Hague Agreement, which allows a single registration to be made for industrial designs, with a single set of fees, covering several countries. This includes a European mark, which covers the same scope of the EU RDR.

(There are overtures that the UK UDR will be brought up to standard – but this remains to be seen!)

As such, for companies relying on designs it is recommended that they register their designs – and after Brexit they will have to do so in the UK and EU for protection across the continent.

Copyright

Of the main IP rights, copyright differs the most between the UK and Europe. However, a large amount of countries enforce copyright internationally via the Berne Convention.

As such, there already exists (to a degree) some international cooperation – as far as copyright goes. The EU had also stated that it was seeking to institute a union wide copyright, taking the form of a modernised right across the community.

One of the UK’s key exports (both financially and culturally) is our copyrighted works. This includes things like media and televised sports. The UK will likely seek to protect these key outputs and review its capacity to protect copyright works.

Patents

Existing EU patents will remain in force in the UK, as the EPO is independent of the EU, and the European Patent Convention always included non-EU members (e.g. Norway).

Prior to the “B-Word” even being coined, Europe and the UK had for years been working toward the Unified Patent Court. This would be a court that issues a single unitary patent, effective across contacting member states across Europe.

This was ratified in May 2014 as part of the Intellectual Property Act and reiterated on the 29th of November 2016. As such, Brexit will not likely impact the overall future trajectory of patents. (So, that’s something!)

So, what does the future look like for international trade?

Whether it’s shoring up your key IP assets to ensure they’re still fit for purpose after Brexit; or, abiding by the new requirements around data protection… there has never been more on the plates of businesses operating internationally.

However, where there is good work to be done, there is an opportunity to put your best foot forward and embrace the best practices as the new legal landscape unfolds.


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