Intellectual Property in an Independent Scotland

Guest Post Author – Peter Arrowsmith, partner and (Scottish) patent attorney at Cleveland (p.arrowsmith@cleveland-ip.com).

Introduction

On 18 September 2014 the people of Scotland will vote in a referendum to decide their future: whether to continue as part of the United Kingdom, or whether to re-establish themselves as an independent country. For all Scottish people (and many British people from the remainder of the UK) this is an emotive debate, with strong opinions on both sides. As Scotland prepares for the referendum this article considers the possible impact of a ‘Yes’ vote on intellectual property.

Background: Intellectual Property in Scotland

The structure of the United Kingdom can sometimes be confusing, even for its own residents. The UK is a sovereign state that comprises four different countries: England, Northern Ireland, Scotland and Wales. It is a long and complex history that has led to the current situation, but for Scotland it was the Act of Union in 1707 which signalled the end of its independence, and a political union with England.

Today Scotland has its own parliament, which provides limited self-government. In addition Scotland has representatives in the UK parliament, which retains control over reserved matters such as defence and international relations. Scotland also has its own legal system, which is different from that of Northern Ireland and England and Wales.

UK and European Community intellectual property rights apply in Scotland, just as they would in the rest of the UK. Importantly, there is no geographic sub-division of IP rights in the UK. Thus, it is not possible, for example, to obtain a Scottish patent, a Welsh trade mark, an English registered design or Northern Irish copyright.

Issues relating to intellectual property can be dealt with in various different Courts in the UK. Often IP issues are handled in the Courts of England and Wales, which include the High Court in London. However, it is also possible for IP issues to be handled by the Courts of Scotland (and indeed the Courts of Northern Ireland). If there is a suitable connection with Scotland then the Court of Session in Edinburgh is competent to decide on issues of infringement, validity and ownership. In these cases decisions of the Scottish Courts can be made binding on the remainder of the UK.

Memberships of International Organisations Following Independence

There is significant uncertainty about the status that Scotland would have with respect to international organisations of which the UK is currently a member. The view of the UK government is that, following independence, the remainder of the UK would continue as a successor state, and that a newly independent Scotland would be a new state. This new state would then need to apply for membership of various international organisations such as the EU. There are various alternative views, however. In one scenario it is arguable that the independence of Scotland would actually create two new states, both of which would need to apply to join international organisations (a similar situation arose in the dissolution of Czechoslovakia in 1993). In another scenario, perhaps justified by the fact that Scotland was independent prior to 1707, independence could create two successor states, with equal rights to continue as members of international organisations to which the UK is a member.

The status of Scotland with respect to various international organisations is, of course, important in the case of intellectual property. For the EU the Scottish Government proposes that it will agree the terms of Scotland’s continued membership between the date of the referendum on 18 September 2014, and the proposed date of independence on 24 March 2016. However, the President of the European Commission, Jose Manuel Barroso, recently said that an independent Scotland would have to apply for EU membership and would need to secure the approval of all its current member states. The status that Scotland would have is equally unclear in respect of other international treaties such as the European Patent Convention, the Madrid Protocol, the Hague Agreement, and the new agreements involved in the establishment of the Unitary Patent and the Unitary Patent Court. It would appear that Scotland’s status in these matters will only become clear following a ‘Yes’ vote, during the 18 months in which Scotland would negotiate the terms of its independence.

Effects on existing IP rights

There are two broad categories of IP in the UK. Firstly, there are Community rights that apply across the European Union, which include Community Trade Marks, and registered and unregistered Community Designs. Secondly, there are national rights that apply only in the UK, which include national trade marks, national patents, copyright, registered and unregistered designs and European patents that are validated in the UK.

In the case of Community IP rights, these would appear to apply in an independent Scotland, only if it were to be a member of the EU. As discussed above, this remains an unresolved issue.

In the case of UK national rights, it is difficult to find clear basis regarding how and whether these would apply in an independent Scotland. In order to seek clarity on this issue we contacted both the Yes Scotland Campaign and the UK-IPO.

The UK-IPO had this to say:

In the event of a vote for independence, existing intellectual property rights, including rights registered by Scottish nationals, would remain valid in the continuing UK.

Whether existing and future intellectual property rights registered in the UK would be permitted to extend to an independent Scotland would be a matter for the Scottish Government. There would be no need for the UK Government to approve such an arrangement.

Yes Scotland said this:

“In ‘Scotland’s Future’, the Scottish Government explains that it will ensure ‘continuity of the legal framework for protecting intellectual property rights’ – so existing patents and trademarks will be protected”

Thus, it would appear that the Scottish Government intends that existing UK national rights would continue to be protected in an independent Scotland. The mechanism for this remains unclear, but it seems likely that some kind of re-registration process would be required in Scotland (at least for registered rights). One possible precedent for this comes from Montenegro’s independence from Serbia in 2007. In that case existing IP rights for the territory of Serbia and Montenegro continued to be automatically valid in Montenegro. These rights were then independently renewable in Montenegro when renewal fees became due. For pending applications there was an opportunity to re-file in Montenegro within six months of the establishment of the Montenegrin Patent Office. The Yes Scotland Campaign was unable to say whether Scotland would establish its own Patent Office, although it seems very likely that this would be required.

The Scottish Government’s White Paper on Independence

The Scottish Government has published a white paper on independence which is intended to set out the case for independence, and explain what an independent Scotland would look like. The white paper contains only a few brief comments about intellectual property. For example, the white paper states that the Scottish Government will ensure “continuity of the legal framework for protecting intellectual property rights” and that “as an EU member state, Scotland will meet European regulations and directives on IP rights protection, as well as international patent and trademark protections.”

Additionally, the white paper states that:

“Independence will also allow Scotland to offer a simpler and cheaper, more business-friendly model than the current UK system, which is bureaucratic and expensive, especially for small firms. The UK is one of the few EU countries which does not offer a scheme which covers the basics of protection. Scotland could follow, for example, the German model which protects technical innovations”.

To an IP practitioner, these statements are more than a little surprising. In particular, it is not clear how Scotland would offer a “simpler and cheaper, more business-friendly model” than the current UK system. Taking patents as an example, it would appear that the Scottish Government intends to allow patents to be granted using the European Patent Office, given its stated aim to ensure continuity of the legal framework. If this is the case then the cost of obtaining patent protection in Scotland would be at least the same as in the current system. In fact, the cost would probably be slightly higher since an additional step (and possibly additional official fees) would be required to obtain protection in Scotland as well as the remainder of the UK. The same logic would appear to apply in the case of national trade mark or registered design applications since two applications would likely be required to cover the same geographic area that would be covered by a single application at present.

In terms of enforcement, it is already possible to enforce UK national IP rights in the Scottish Courts. Therefore, Scotland already offers a forum for deciding issues relating to IP in the Courts. This forum can sometimes be cheaper than the Courts of England and Wales, but independence would not be required to realise this advantage. One possible disadvantage in the Scottish Court structure is the absence of a specialised court for small and medium sized enterprises. Such a Court exists in England and Wales: the Intellectual Property and Enterprise Court (IPEC). This could actually increase the cost of the IP system for small companies, by depriving them of access to a lower cost forum.

The suggestion regarding German-style utility models is also surprising. This author cannot comment on whether an IP system that includes utility models is a better system. Utility model systems do appear to be effective in some countries, although they also generate some problems, especially due to the existence of unexamined rights which are clearly lacking in novelty.

Reflections

There are a great many unanswered questions about what an independent Scotland would look like. The question of EU membership, in particular, is important, as well as other issues such as the currency that would be used. In this context it is perhaps unsurprising that there are outstanding questions about how IP rights would be disentangled following separation. It seems that we will need to wait and see how things develop, if a ‘Yes’ vote materialises.

From a personal perspective it feels strange to be participating in this debate. Personally, I do not have a conflict between my cultural and national identities (Scottish, British, and European in that order); although I recognise that many others feel differently. In fact, as I work and live in London I am ineligible to vote in this referendum (since eligibility is based on residency). I will therefore watch with interest from the side-lines as my national identity is decided by others.

At present the polls suggest that a ‘Yes’ vote is unlikely on 18 September (at present around 30% of the electorate are in favour). However, there is a significant number of ‘don’t knows’, and therefore it does not seem implausible that Scotland could soon become an independent country once more. In the event of a ‘Yes’ vote, IP rights holders will need to take an active interest in this issue in order to ensure that they have an appropriate protection strategy for Scotland, ready for the anticipated independence day of 24 March 2016.

26 thoughts on “Intellectual Property in an Independent Scotland

  1. How about intellectual property on the Isle of Man and the Channel Islands?
    Do “separatist” states automatically become member of the WTO if their “originator state” was, or can they ignore the TRIPS agreement for the time being?

  2. Try again:

    July 28, 2014 at 3:37 pm

    Scotland’s export strength indeed lies in lubricants of various types. As the bulk of its whisky industry is already owned by aliens, however, I suppose that’s why they are setting their hopes on haggis.

    After the oil is gone, can they not gxxerate an endless energy surplus from wind and tides? Not many places on Earth that are reliably year-round windier or wetter than Caledonia.

    1. Haggis has been banned for export for awhile for Mad Cow disease. So does an independent Scotland mean no Haggis for lowlanders – you know, the ones that loss that battle to the bastard? I live in US so I really don’t care either way but I do detect Mad Cow in my English agent’s correspondence. Maybe I should root for their independence?

  3. I am told by a leading Scott that the real issue here is when an independent Scotland runs out of North Sea oil [already declining], will they be able to export enough of their other leading product, haggis, to make up the differnce?

    1. Scotland’s export strength indeed lies in lubricants of various types. As the bulk of its whisky industry is already owned by aliens, however, I suppose that’s why they are setting their hopes on haggis.

      After the oil is gone, can they not generate an endless energy surplus from wind and tides? Not many places on Earth that are reliably year-round windier or wetter than Caledonia.

    2. I’m sure that comment was intended to be whimsical, but note that the US does not allow importation of haggis!

      1. Though the UK government is attempting to overcome that ban.
        link to bbc.co.uk

        It would of course be churlish to suggest that a UK government minister might be looking for Scotland-friendly sound-bites in the run-up to September’s referendum on Scottish independence.

  4. Long ago the government of the UK should have adopted a federal system of independent states like the US, where patents and the like would be federal. Arguably, if the UK had restructured into a federal system circa 1770, the American colonies would not have revolted.

    On the status of the UK post Scottish independence, I would think it will be the successor. Scotland would have to petition to join the UN, NATO, and the EU. Regarding treaties like the Paris and Berne conventions: ditto. Otherwise, Scotland would not actually be an independent nation, would it?

    Regarding UK IP rights, Scotland would have to pass a statute to legalize their continued enforcement. I see no other way.

    Also, without having any treaty relationship under the Paris Convention, etc., Scottish owners of IP would automatically lose their rights of priority, and other convention rights. Scottish IP rights in other countries would automatically go void, as many countries allow IP rights in their own countries only to treaty partners. Japan is one of them.

    Scotland is about to commit IP suicide.

    1. Suicide? Not if they listen to you Ned. They haven’t voted for Independence quite yet.

      I think the Scottish pols urging indepencedence are seducing the voters with the notion that the EU will bend over backwards to hang on to Scotland, if only to deter England from seceding. And if the EU will hug Scotland, they suppose, so will the Rest of the World, Paris Convention, PCT, WIPO etc. But it’s not safe to assume that, I agree.

      1. If I were Scotland, I would have my IP Treaties ratified, bilateral treaties in place, UN membership agreed to, or anything else necessary and proper for a seamless IP transition on the day of independence. This would require a government IP office before the date.

        It will be interesting if they even apply for NATO membership, or whether they would be admitted if they did. Where are those Scottish legions? How can one participate in an alliance without any military at all?

        It would be interesting to see what would happen if the day after independence armed Highlander pirates, perhaps armed an supplied by Ireland, took over Edinburgh. From the English boot to the Irish boot in one day? I suspect the English army would not be feckless and simply stand aside. And that is exactly why Scotland really cannot consider itself truly independent.

      2. “I think the Scottish pols urging indepencedence are seducing the voters with the notion that the EU will bend over backwards to hang on to Scotland, if only to deter England from seceding.”

        It has been suggested that Spain (and possibly other countries) might oppose automatic Scottish membership of the EU, since it could set a precedent favourable to their own separatist movements in Catalonia and the Basque country.

        link to bbc.co.uk
        link to bbc.co.uk

  5. Are there parts of Scotland that are more opposed to an independent Scotland than others? I assume so …. But which parts?

  6. Not to worry.

    If there are any people in Scotland who speak Russian, know someone who speaks Russian, or have ever heard someone speak Russian, then Russia will invade Scotland to protect them.

    An independent Scotland, waiting to have their application to join NATA approved, will be defenseless.

    1. Are their any ‘terrorists’ in Scotland? Then we’ll (US) invade them before the rooskies. Wait. No oil? Fugger m.

  7. A comment on the “unexamined rights” issue.

    Germany has had its 10 year unexamined utility patent called the Gebrauchsmuster since before the PCT and the EPC came into force in the 1970’s. 3 months after applying, you get your issued patent and can then begin to sue infringers. No wonder little guy Scotland thinks it a “good thing”.

    But Germany also splits infringement and validity, with validity tested at the Federal level while infringement is handled in its District Courts. When the infringement judge is not comfortable about enjoining an accused infringer, the court can (and often does) defer that relief till the validity of the asserted Claim has been examined satisfactorily. Presumably, Scotland would also baulk at enjoining on a claim of untested and manifestly dubious validity.

    Most mainland European countries have a petty patent system. But they also have civil law not ultra-adversarial English common law with ist expensive “Rolls-Royce” fact-finding processes. Perhaps Scotland, on gaining independence, will row back towards French law, like it had before it fused with England in 1701.

    It has to be noted though, that the mainland’s Gebrauchsmuster system does gives Little Engineering David a cheap and cheerful boot with which to kick Goliath’s shins. In Germany, the engineering Mittelstand is the basis of the country’s prosperity. Perhaps Scotland, with its engineering tradition, wants some of that too?

  8. Thanks for this article. I’m always confused by the different UK courts and systems. This was well organized and succinct. It really clarified some things.

  9. Not to be too flippant, but perhaps we should take the opportunity to try out the panacea so often promulgated on certain websites and have this new nation firmly reject ALL laws regarding protection of intellectual property.

    IP-Free and what not.

    (more likely, the “not”)

    1. Only Americans are dumb enough to do this.
      “We have a multi-billion dollar software industry centered here.”
      “Hey, I know, let’s make it a huge free for all so that big companies can rip off new companies; that’ll make the industry grow even faster.”

        1. So, you don’t like software patents so you harassed him with an inane post to blow smoke to make sure no substantive exchange can occur.

        2. You lack a lot of perspective and consistently demonstrate an inability to understand anyone else’s point of view. You should seriously work on that; it doesn’t make for a good attorney.

          To the point, the world DOES revolve around software patents if you’re a software startup.

          1. MM is at best an examiner. And, he works from a policy sheet. His posts are intentionally annoying. He is harassing others.

            Watch to Sir with Love. Pretty much 6, MM and Ned fit right in there with the pre-trained teens.

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