Following the end of the Brexit transition period UK businesses are now having to pay ‘security bonds’ of £50,000 or more to courts in the European Union in order to litigate there, legal experts told City A.M. today.
These bonds could make it more difficult and costly for UK businesses to defend their intellectual property in European countries, according to law firm Mathys & Squire.
Since 1 January of this year, UK businesses have found themselves being treated by EU civil courts in the same way as businesses from other ‘third party’ countries like China, India or Brazil.
To bring a claim protecting their patents, trade marks or registered designs in the EU will now require payment of tens of thousands of pounds up front, meaning some may choose to risk losing valuable IP rather than see such a large amount of cash tied up for the entire length of the legal action.
As EU courts now treat UK businesses as non-EU litigants, they require bonds averaging around £50,000 to hear a claim brought by a party from the UK. Higher-value, complex cases can require a bond of £100,000 or more.
Talks between UK and EU
It is believed that talks are ongoing between the UK Government and the European Union on removing the requirement for UK litigants to lodge a security bond.
However, these negotiations have not yet succeeded, with the requirement for reciprocity for EU companies litigating in the UK likely to have been a sticking point.
Andreas Wietzke, a partner in Mathys & Squire’s Munich office, said: “Brexit has meant a huge change in the status of UK businesses trying to bring claims in the EU – the costs are tens of thousands of pounds higher.”
“For British businesses, defending your intellectual property in the European Union has become a much more costly affair since Brexit. This could have a chilling effect on actions by UK litigants in Europe, particularly for startups and SMEs with limited funding,” Wietzke told City A.M.
“For those in the UK with valuable patents or trade marks that are being infringed by businesses in Europe, the decision whether to pursue litigation is not quite so simple as it was before Brexit,” he continued.
Having to put up £50,000 or £100,000 to have your case heard in Germany, France or the Netherlands will give some of them pauseAndreas Wietzke, a partner in Mathys & Squire’s Munich office
“Considering that intellectual property is one of the most important and valuable assets 21st century businesses have, the ability to protect it is vital. While the costs of defending IP in Europe have suddenly jumped for British businesses, the costs of not defending it are even higher.”
“Losing patents, trade marks and/or designs to a copycat can significantly dilute the value of a product or brand.”
“Despite these expensive ‘bonds’, with the help of a patent attorney – e.g. through creating inter-EU IP entities, moving IP, or setting up internal licence agreements – businesses still have options when it comes to protecting their intangible assets through litigation,” Wietzke concluded.