Will a Cornish pasty still be Cornish if we leave the EU? article banner image

Ben Travers, partner and head of the intellectual property and IT team at Stephens Scown, looks at the effect Brexit could have on Cornish businesses.

 

With the EU referendum drawing steadily closer, the arguments are flying thick and fast between politicians and campaigners on either side.

With all the noise around, clients often ask me and my colleagues what the effect of Brexit would actually be on UK businesses.

The simple fact is, we’ve never been here before. A country has never joined the European Union and then left it so there is no precedent (something much beloved of lawyers of course!) to draw comparisons with.

One thing that is clear however is that if we do vote to leave the EU, the story will not end there. In fact, it will only be the beginning. Complex and detailed negotiations would then begin with Brussels around the terms of our exit – which would be likely to last for two years or even more.

So in fact the earliest Britain would officially leave the EU would probably be some time in 2018.

Pro-Brexit campaigners argue that these negotiations would give us the chance to get the best possible deal for Britain, with the EU keen not to lose us as a market. They say that it should be possible to negotiate terms that give our businesses excellent trade access to Europe.

Anti-Brexit campaigners argue that it’s very unlikely we could negotiate the same free access to the European market as we have now. The deal would certainly be worse, they say, which would make it harder for our businesses to be competitive.

It’s difficult for the neutral observer without a crystal ball to know who is right.

But one thing that is inevitable, I think, is that there would be a period of uncertainty that businesses would just have to live through.

Take my specialist area, intellectual property. It has become increasingly important for businesses of all kinds to protect their intellectual property and register trade marks to prevent competitors simply copying them and stealing their ideas. Under the current system – which has been in place since 1996 – we have a harmonised regime which means that intellectual property rights can be registered and enforced across the whole EU. One registration of a trade mark can cover all 28 countries.

But what if we leave the EU? That would mean that we then fell out of the EU IP regime. So what would happen if a French company started selling ‘Cornish pasties’ which are currently protected under EU ‘Protected designation of geographic origin’ legislation?

It seems highly likely that some kind of reciprocity arrangement would be created so that our IP regime and the EU regime would be harmonised once more. Bridging legislation may be needed on an interim basis while this was negotiated.

I do have a fear, however, around enforcement. It seems probable that it would become more difficult to enforce or prosecute IP breaches if we were outside the UK. It would almost certainly become more costly for businesses.

Registering trademarks could also become harder and more expensive. Where now one registration covers the whole EU, if we left then companies may need to go back to a pre-1996 to register their trade marks in each EU country one by one. This would be time consuming and involve considerably more cost.

If Brexit comes to pass, will companies in Europe then be able to sell ‘Cornish pasties’ willy-nilly or infringe on UK companies’ IP with careless abandon? No, I don’t think so.

But, in IP and many other areas of doing business as well, we would need a new system, which would take some time to be negotiated, and which would inevitably have some differences compared to what we have now.