Understand Your Rights. Solve Your Legal Problems
A white paper on Brexit was published last week, setting out Theresa May's vision for the UK's future relationship with the EU. Here Malcolm Dowden, Legal Director at Womble Bond Dickinson comments on the creation of a free trade area for goods.
The government's white paper proposes the creation of a "free trade area for goods", coupled with a "facilitated customs arrangement" to allow cross-border trade to be as "frictionless" as possible. Central to those proposals is the concept of "trusted traders". For example, it suggests that: "where a good reaches the UK border, and the destination can be robustly demonstrated by a trusted trader, it will pay the UK tariff if it is destined for the UK and the EU tariff if it is destined for the EU.
The "trusted trader" concept has its roots in the World Customs Organisation (WCO). In Europe, "trusted traders" are referred to as Authorised Economic Operators. To qualify, businesses must be able to demonstrate that they have both the policies and physical arrangements required to guarantee that goods have been transported securely and are properly accounted for. To qualify for the linked status of Authorised Economic Operators (customs) or "AEOC" businesses must currently be able to show at least three years' experience of meeting customs obligations. That test cannot be met by the estimated 131,000 businesses who, according to HMRC estimates, will be brought into customs procedures for the first time. It is possible to buy-in expertise or to use intermediaries such as freight forwarders or distribution companies. However, the UK currently has only 630 businesses with AEO status (compared with 6226 in Germany and 1563 in the Netherlands). Consequently, third party AEO status and expertise is likely to be in short supply, potentially increasing the cost of accessing those services.
Attaining AEO status is not straightforward. The applications forms are relatively short, but they require a significant body of detailed evidence. Applying for (and then maintaining) AEO status therefore represents a significant investment of cash and management time. Further, the approval process leads to an assessment carried out by HMRC, which can be a significant bottleneck as HMRC resources are very limited. The AEO application process theoretically takes up to 120 days. However, experience in practice suggests that the process often takes much longer – in some cases extending from 18 months to two years. AEO status cannot be regarded as an easy route, or as a quick fix.
The usefulness of any AEO scheme depends on mutual recognition. Any end-to-end process for the import or export of goods works only if it works at both ends. The government's white paper cannot guarantee that AEO status granted in the UK would be recognised by the EU27. Consequently, it merely expresses the hope that the UK will be able to "agree mutual recognition of Authorised Economic Operators (AEOs)". Without mutual recognition, AEO status would be of little value – and mutual recognition can only be achieved through a full political agreement with the EU. In the event of a "no deal" Brexit, or of a deal that did not include mutual recognition, the "trusted trader" concept that underpins the white paper suggestions would not provide "frictionless" trade.
Geoff Hussey, Nick South and Varuni Paranavitane, of AA Thornton, write on behalf of the Chartered Institute of Patent Attorneys.
It is now around two years since the UK voted to leave the EU in a referendum, and around 9 months until it does in fact leave. Precisely how the UK will exit the EU and what arrangements will be put in place between the UK and the EU is very much still to be decided.
However, a provisional agreement has been made between the UK and EU in relation to a proposed transitional period after the UK’s exit, during which the UK will comply with all current arrangements it has with the EU and adhere to EU regulations and directives, etc. This proposed transitional agreement addresses many aspects of intellectual property law that are currently harmonised across the EU, and particularly trade mark law in relation to which the UK is currently part of the EU-wide EU trade mark system operated by the European Union Intellectual Property Office under various pieces of EU legislation.
From an intellectual property perspective, one noticeable absence from the provisional agreement on the transitional period is any reference to patents or patent law. This is, of course, not unexpected since patents and patent law across Europe have no connection with the EU. Patents are either national rights granted on a national level under national law by national patent offices; or they are national rights granted on a centralised European level under the European Patent Convention (EPC) by the European Patent Office (EPO) and governed by national law after grant. In the context of Brexit, it is important to note that neither the EPC nor the EPO are connected to the EU. The EPC is an international treaty and not a piece of EU legislation, and the EPO is an international governmental organisation and not an EU institution. Therefore, Brexit cannot have any impact on existing European patent law, nor on the effect of European Patents in the UK. This important fact was recently recognised by the President of the EPO, Benoît Battistelli, who has confirmed that “Brexit will have no impact on UK membership of the EPO. For a very simple reason - the EPO is not an EU agency but an independent international organisation, of which the UK is a founding member”. Accordingly, European patent attorneys based in the UK will continue to be able to represent applicants before the EPO, even after Brexit.
One issue that has been the subject of much discussion since the Brexit referendum is its impact on the forthcoming Unified Patent Court (UPC) system, which is a proposed new international court intended to hear cases relating to European patents, including the proposed European Unitary Patent (UP). In particular, the debate has focussed on whether or not the UK can and will remain part of the UPC and UP system. Very soon after the referendum, in November 2016, the UK government confirmed that it was proceeding with preparations to ratify the UPC Agreement (UPCA), sending a positive signal to users of the patent system during the uncertainty following the Brexit referendum. More recently, and more importantly, the UK has, as of 26 April 2018, ratified the UPCA, which leaves us waiting for only Germany to do likewise before the UPC system can start operating. As the UK is one of three states that are required to ratify in order for the UPCA to come into force, this is a significant sign that the UK intends to continue to be a part of the UPC system; after all, this gave the UK an effective veto on the currently proposed UPC system.
In some ways the UPC is similar to the EPO in that it is not an EU institution and therefore it may seem that Brexit could have no impact on the UK membership of the UPC. This is only partly true. It is correct that the UPCA is an international treaty, which is technically unrelated to the EU, but the contracting states to the UPCA are all EU member states and the UPCA contains a series of references to EU regulations and EU law, including the ultimate jurisdiction of the CJEU for certain matters. In fact, there are many provisions of the UPCA that currently require the contracting states to be EU members. In addition, the Unitary Patent itself is a patent that will exist by virtue of an EU Regulation (Regulation EU1257/2012) and there are other aspects of the UP system that are put in place via EU Regulations, such as translation requirements (Regulation EU1260/2012).
The effect of this interrelation between the UPC and the EU is that certain amendments to the UPCA would be required for the UK to continue to be a contracting state to it once it leaves the EU. Also, to the extent that the UK intends to be a part of the UP, arrangements would need to be agreed between the UK and EU to facilitate the UK’s adherence to the EU Regulations that are necessary for the UP.
As for the UPCA, the necessary amendments have already been identified. These primarily relate to uncoupling the contracting states from a requirement to be EU member states. This may sound straightforward, and indeed Alexander Ramsay, Chair of the UPC Preparatory Committee was recently quoted as saying: “Some of the wording [of the UPCA] will have to be amended after the UK leaves the EU but I would very much like Britain to participate in the UPC in the long term.” However, the prospect of such amendments is likely to re-raise concerns that initially led to the UPCA being restricted to EU member states. In 2009, when both EU and non-EU Member States such as Switzerland and Turkey were potential parties to the UPCA, the European Commission requested the CJEU to give an opinion on whether such a UPCA would be compatible with EU law. The CJEU, in Opinion 1/09, held that it would not. In 2011, the European Commission stated that “as a result of Opinion 1/09 of the CJEU it appears that the participation of third countries must be excluded.” The UPCA was then amended to limit participation to EU Member States only and the European Council concluded in 2011 that the removal of non-EU Member States facilitates “the respect by the UPC of Union law”. The result was that Switzerland and Turkey were excluded from the UPCA when it was signed on 19 February 2013.
The UK has to date been a major player in putting in place everything necessary for the UPC system. The UK has been responsible for the UPC IT systems, and UK law has contributed significantly to the legal principles being adopted in the UPC Rules of Procedure, which themselves have been contributed to significantly by UK lawyers. UK patent law and patent judgments are well respected across Europe and the experience of the UK judges who will form part of the UPC judiciary is seen as an important factor in lending the UPC credibility from day one. As a result, there is an apparent desire across Europe for the UK to remain a part of the UPC after Brexit and an apparent desire also from the UK to do so.
Whether or not the UK can remain part of the UPC system after Brexit then becomes a political question. Despite the encouraging sounds from the UPC Preparatory Committee, is there the political will from the UPCA contracting states to amend the UPCA to enable the UK to continue its part without being an EU member state? Is the UK willing to form an agreement with the EU in respect of the relevant EU Regulations?
Intermixed with these questions is whether the UK’s publicly stated Brexit stance of ending the jurisdiction of the CJEU in the UK is compatible with the UPC system, which will presumably always be subject to CJEU jurisdiction. There is one school of thought that tried to draw a distinction between UK courts being bound by the CJEU (which they will not be following Brexit), and an international patent litigation court such as the UPC, of which the UK is a part, being bound by the CJEU. There is some rationale to this distinction, particularly given that UK national patents will be unaffected by the UPC system and that all international cooperation requires some form of dispute resolution institution. However, it is possibly a tricky political issue for the UK at this time.
In essence, the UK’s continuing participation in the UPC is certainly possible following Brexit, though there will be some changes to its legal basis. All current indications are that such changes are likely to be made and agreed to facilitate the UK’s continuing participation, which is likely to be seen as good news for the UPC system as a whole and is certainly welcomed by the UK patent profession. As and when this is enabled for post-Brexit, it may even allow other countries that are keen to join, such as Switzerland, to do just that.
Geoff Hussey
Partner
Geoff is a Partner and Solicitor whose main practice areas are IP litigation, and Commercial IP. His experience includes acting for a broad range of clients in many sectors including life sciences, electronics, telecoms, chemicals, aviation, food & beverages and financial services.
Nick South
Senior Associate
Nick is a Senior Associate and a UK Chartered and European Patent Attorney in the Electrical Engineering, Electronics, Telecoms & IT patents department. Nick deals with patent issues across a wide range of areas, including electromagnetic sensors, semiconductor technology, electric motors, overhead power cables and medical instruments.
Chris DeConti, Executive Vice President, Global Solutions, at Axiom, the leading alternative legal services provider, offers insights into the changing structure of legal services for Lawyer Monthly, and what emerging trends will create a more perfect future for the legal sphere and its clients.
In economics, a perfect market is one with transparency and perfect information flows, where knowledge is freely available to all participants. As a result, the market will come to an optimal balance of supply and demand, with production distributed to each market participant on the basis of comparative advantage. In a perfect market, the market relentlessly self-corrects to weed out inefficiencies or economic rents in which a single market participant or group enjoys a disproportionate share of the economic surplus.[1]
In contrast, when we look at the legal industry, inefficiency, opaqueness and imperfect competition are hallmarks of the profession one General Counsel (GC) described as “the last vestige of the medieval guild system.”[2] As a result, production is distributed inefficiently across the legal ecosystem, creating enduring economic rents, with most legal production handled by legacy law firms at prices that most customers consider excessive, despite high levels of satisfaction with the work product itself.[3]
Mark Harris, Axiom’s founder, once stated that: “If one party in an exchange is satisfied and one is miserable, somebody struck a terrific bargain. But if both parties are miserable, the exchange needs to be reconceived from the ground up”.[4] While it’s tempting to think the inefficiencies in the legal industry are driven by law firms having ‘struck a terrific bargain’, with mounting financial pressure and well-documented levels of dissatisfaction among law firm lawyers, the truth may be that the exchange (the market) itself is broken.[5]
GCs spend billions of dollars with outside law firms that have comparative advantage in advisory services, when most of that work they need done is transactional (i.e. work, that by its very nature, follows a path that has been trodden many times before). Recent Axiom analysis reveals that although internal perceptions reveal that law firms (partners, in particular) provide very high-quality advice, 50% of total law firm hours are billed by junior associates with two years or less experience. These junior associates, who are often very bright but fresh out of law school, cost the client more than a senior in-house lawyer with decades of relevant and specialised experience. In the current model, in order to get the partner-level, specialised advisory services they want, GCs are forced to buy billions of dollars of junior associate hours as part of a ‘bundled’ package. Neither the complexity of the work, nor the risk underpinning it, demands this.
These juniors aren’t typically ‘advising’ but rather handling the surrounding transactional work which is informed by the advice their partners are delivering. Top law firms have genuine competitive advantage in high-end advice. Even if nominally expensive at $1000, $1500 or even $2000/hour at the most rarefied levels, client feedback suggests their offering represents real value for money and alternatives would likely be even more expensive or of lower quality. But what about the $300+/hour junior associates supporting transactional legal work? For this work, the argument that alternatives would be more expensive or of lower quality just does not hold up.
Conventional wisdom is that high-end advisory and transactional legal work are inseparable. For decades this may have been true but a number of trends have converged to challenge this status quo. Taken together these trends create the conditions for unbundling these once inseparable elements.
While imperfections in the legal market have persisted for decades, we believe these three emerging trends combined will create the conditions for a more perfect future – where each part of the ecosystem plays to its strengths (law firms doing pure advisory work, firms with scale and process expertise taking on more execution based tasks with technology enabling that, and in-house lawyers directed at higher value activities).
[1] Economics Online, Perfect Competition
[2] The Wall Street Journal, Law Firms: “The Last Vestige of the Medieval Guild System”
[3] Financial Times, Technology: Breaking the law
[4] Legal Week, Rethinking the firm/client relationship – a conversation with Axiom CEO Mark Harris
[5] UCLA Women’s Law Journal, The Alarming Growth of Dissatisfaction Among Lawyers
[6] Axiom, Axiom launches BrexitBridge to Handle the More Than 7.5 Million Financial Services Contracts That Require Updates for Brexit
Two years after the UK decided to exit the European Union, a lot has changed. Below Paresh Raja, CEO of Market Financial Solutions, discusses in depth the long term impact Brexit has had on the UK’s property market and the challenges moving forward.
23rd June 2018 marked two years since the UK public voted in favour of leaving the European Union. The implications of this decision were felt almost immediately – David Cameron’s resignation as Prime Minister on the morning of the announcement triggered a sharp downturn across various financial markets, with economic commentators fearing the worse. However, in the months that followed, the UK economy was able to effectively bounce back from the initial shock, with a “business as normal” mentality soon taking hold throughout the private sector.
The triggering of Article 50 on 29 March 2017 signalled the beginning of a two-year negotiation period, which will lead to the UK’s eventual withdraw from the EU in March next year. However, the calling of a snap general election followed by a hung parliament and formation of a minority-led Conservative Government brought into question Theresa May’s ability to manage Brexit. According to a nationally representative survey conducted by Market Financial Solutions at the beginning of the year, 58% of investors said they had less confidence in the strength and unity of the Government than they did at the beginning of 2017.
Yet, as we review the 24 months that have passed since this momentous political announcement, there has been little actual detail revealed as to how Brexit will impact areas such as immigration, taxation and investment. Despite such uncertainty, the UK economy has continued to post impressive growth figures – national GDP grew by 1.8% in 2017, which was higher than the 1.5% forecast issued by the Office for Budget Responsibility.
One of the industries that has remained a leading topic for debate is real estate. Worth an estimated £6.79 trillion – or 3.65 times of GDP – in 2016, the UK’s housing market is important due to the significant volume of capital investment it receives, not to mention the huge interest there is among prospective buyers. Observing the events that have transpired since 23 June 2016, it is timely to consider how the property market has fared?
UK property market remains robust
Following the EU referendum, there were concerns that property’s attractiveness as an asset would decline. This was based on the assumption that investors would be unwilling to pursue such a sizeable investment during times of political transition, with claims that foreign investors would be compelled to look to other European countries.
However, what we have seen instead is the UK’s on-going popularity as a destination for property investment. The Office for National Statistics revealed an annual rise of 4% in total investment in Q4 2017, equivalent of £84.1 billion worth of capital being injected into the UK’s construction, commercial and residential property sectors. Moreover, in April 2018 the average house price in the UK was £226,906 – a 3.9% increase on the previous year’s figures and a 6.6% rise since the EU referendum.
Part of the reason why property prices are rising is due to investor demand for a secure asset. Traditionally, investors gravitate towards assets that are able to offer safe returns in times of economic and political transition.
Indeed, to assess how investors were approaching their financial strategies in 2018, Market Financial Solutions surveyed more than 2,000 UK adults – the research found that 53% of investors would rather invest in traditional asset classes such as property instead of newer asset classes, such as cryptocurrencies. Moreover, nearly two-thirds (63%) of investors said they consider property to be a safe and secure asset in the current market.
This timely research demonstrated that investors are holding a positive long-term outlook for the UK property market, and are not letting the uncertainty surrounding Brexit affect their financial strategies. Moreover, the investor community is clearly confident in the future growth prospects of the UK economy.
Addressing the long-term challenges
Looking to the future, there is little indication that people in the UK will turn away from property investment. On the contrary, market demand is currently outweighing supply, leading to an imbalance which is making it more difficult for people to quickly find and complete on a property purchase. The Government has introduced a range of creative measures to increase the available housing stock, including proposed reforms to home planning laws. These have been generally welcomed by the sector, but there remain calls for more to be done.
Despite uncertainty surrounding Brexit, the UK property market remains increasingly competitive – this make it extremely important for government and industry bodies to address the fundamental challenges faced by those seeking real estate investments, including access to finance. Its popularity as a safe and secure asset, coupled with its stable returns, mean that Brexit will ultimately not deter investors from property opportunities; but evidently progress must be made to help people get on, or move up, the property ladder.
As the business world navigates the political uncertainty of Brexit, Charlotte Allery, Solicitor at Coffin Mew, comments on the skills shortage issues facing employers.
Even before the UK leaves the European Union and potential restrictions on EU migrants are imposed, research reveals that the on-going skills shortage is hitting employers. The results of a study by City and Guilds Group released recently show that nine in ten employers struggle to recruit the skilled staff they need. Also, two thirds of the senior executives at over 1,000 employers think that the skills gaps in their businesses are likely to get worse or remain the same in the next three to five years.
This is not the only research that gives the UK economy cause for concern. Earlier research from recruiting platforms, Totaljobs and Jobsite, highlighted that two thirds of UK businesses expect to struggle to find the candidates they need throughout 2018, with half of UK employers anticipating this will only get worse after Brexit.
Coupled with recent falls in net migration, a post-Brexit skills crisis is a very real concern. It is no surprise that companies and EU workers alike feel uncertain about the future, when the Government have unhelpfully provided little clarity on the rights of EU citizens, and business access to skills from overseas, after the Brexit transition period. The Immigration White Paper expected to provide some much-needed transparency on this grey area has been delayed until autumn this year, but it certainly cannot come soon enough.
So, what are employers doing about it now? Unsurprisingly, the lack of skills has created a candidate led market. Reportedly, the skills gap is being plugged by a reliance on temporary or contract workers, says the Totaljobs and Jobsite research, with eight in ten businesses believing that gig economy workers are more productive than permanent staff, while offering the employer flexibility and the option to scale operations up and down.
It is also unsurprising that the pervasive skills shortage has forced employers to raise wages in an attempt to attract the best permanent talent and retain the best workers, hopefully enticing the top individuals from the ever growing and flexible gig market.
But what steps should employers be taking to tackle this problem moving forward? Whilst automation and AI are the current buzzwords, Brexit could accelerate their wide implementation. In low to medium skilled jobs, typically the most reliant on EU workers, employers should consider whether automation is feasible, not just to replace roles, as some scaremongers would have us believe, but to support jobs to increase efficiency and reduce staff overheads.
Apprenticeships could also play an integral role in tackling the skills gap problem, to drive the growth of a young, skilled workforce, where on-the-job experience affords employers the ability to instil the skills greatly needed.
At a grass roots level, companies will need to invest more in training to close the skills gap from the inside and to attract the potential star employees of the future, by giving individuals the confidence in their own careers and the growth of their employer. Businesses would be wise to look at different sectors to find transferrable skills that could be harnessed to tackle relevant ability shortages. And, with the growth of the gig economy, employers will also need to consider whether a change in working model is needed to attract those employees who crave a new, flexible way of working.
Whatever the answer to the skills shortage is, the Government needs to react to quell the distress signals from UK employers, with businesses calling on the Government to implement an immigration system based on national or regional skills shortages. Whether the Government listens to the UK economy on this point remains to be seen, but the skills gap issue together with the rise in atypical working certainly means that the structure of the UK workforce is changing shape.
PM Theresa May discusses with Andrew Marr the unveiling of a £20bn boost to the NHS, the future of Brexit and what she plans to do with the upskirting law.
The patent work and adviser work has changed in the last five years. Cases are more complex, with less time to resolve them.
Nils Schmid, Partner at Boehmert & Boehmert says: “I think that being a partner at a law firm is no longer a one-man show. It is very important that the team under you is chosen well; the partner must consider if the attorneys working under them are good at what they do and consider the recruitment of those involved at the law firm. It is time to end the one-man shows and think about how to construct a good strong team.”
He speaks more below about important considerations behind developing global design patent strategies how the UPC will change the IP sector.
You develop both German and global patent strategies; what further considerations must you make for the global strategy?
The most important issue, for all my clients, is the conflict of interest regarding costs on the one side, and on the other, multinational protection for companies based in several jurisdictions. Ideally you want worldwide protection, but this comes with enormous costs for each invention.
Usually the clients, or people working in the patent field, think that the most important question is: 'where is the market and where can I sell my products?', which is a costly strategy to take on. There are other issues to address first, the first question to ask is: 'How long is the product on the market?'; some products are on the market for more than 10 - 15 years, and this is already a good parameter to judge to which countries you should apply for protection. For example, In Germany there are utility models which are much cheaper and have the same protection scope which last up to ten years. For short term products, this is a good strategy to avoid costs, therefore it is worth checking if this would better apply for the client beforehand.
The second most important part is telling my clients what a patent actually is. Patents are not just to do with ‘rights’ but can prohibit your competitor to ‘do’ something; so actually, I am not interested in getting protection for something which my client may use in some countries, but rather, to check where their competitors are sitting. This is very important for developing a global strategy. You find the competitor’s headquarters: find out the production sites and check the headquarters of distribution, because if you want to use patents for either as a defence or offence, you have to attack your competitors on the actions that they are doing, not what you think they may do. This is very important when fixing your global patent strategy.
Last but not least, is taking into account to how reliable the jurisdiction's legal system is. You should ask: 'do I really need to get protection in countries where I know I can find it difficult to enforce my patent rights?’. For example, the UK and Germany are traditionally very reliable; so even if there is no market or competitor in those countries, it is worth to consider them as part of the global strategy. The same, of course, goes for the US, which is a reliable system outside of the EU, as well as China, which is getting more interesting and is becoming more a reliable system for companies to develop innovation.
What do you think is the most difficult aspect of building up design patent portfolios?
Regarding my larger and midsized clients nationally, either in France, Germany or UK, I think it is very important to guide and teach the clients awareness about the strength of a design patent. Usually if you are considering technical innovation you should always have in mind patent protection, but this can take years, especially regarding prosecution. However, design patents can be very useful and a strong weapon to avoid copies. This is not in the awareness of even large companies.
The second aspect is being aware of the fact that your design patent – if, for example, is fixed by a drawing -, has its limits towards protection. How can you make the patent protection abstract, global and broad? This is something that is very important for the patent attorney; they need to establish patent design portfolio to use the tools of their design to get, not only the global protection, but rather finer details of the design protected.
The further difficulties involve the international filing system. There is of course the unified system, but there are other countries which might be important for the client’s global design patent portfolio. The legal systems are very different, and it is very important for a design patent lawyer knows these systems, in order to make a design patent application which works for all of those national systems.
From your experience, what do you think is the most common issue your clients deal with? What can be done for them to avoid such an issue?
For my larger clients, I think an issue is a lack of education regarding strategical patent positions. What does the client need to know in order to take the correct decision? The attorney needs to have a very good overview of what the patent portfolio is, its weaknesses and its strengths; on the other hand, they must know their clients and get to know their deciding person(s), as they know the economical background. It is very important that my knowledge is transferred, in a very effective way, to the deciding person(s). This person is not always the inventor so it is vital they too know the portfolio. Further to this the patent portfolio of the competitor(s) must be known by the CEOs. This is a big issue for patent attorneys, they must create a clear and effective line of communication, which allows the deciding person(s) to make the best decisions. It is hard work ensuring everyone is on the same page, but it is something I believe is very important for larger clients
For smaller clients, a common problem is that their deciding person(s) is not aware of the level of innovation in the company. They will not always be fully aware of the vast amount of innovative growth, thus not making the most sound decisions.
As thought leader in your field, can you share changes you are hoping to witness in your sector in 2018?
What is very important for those in the EU is the UPC. This is something that is very in the focus, because the future of IP depends on how it develops. It seems that it is not an accelerated project, for the time being, but it could be quickly implemented. The task is for all IP advisers to prepare everybody.
I am an honourable president of the union IP, which is an association of European patent attorney, and I am now in a position where I am invited by the UPC parliament. I gain insights into how the UPC are progressing and the advantages they could have.
Aside from the development of the UPC, the other issue is Brexit. I wonder how the UPC will involve a multinational entity post Brexit; I do not think I have one client that is not linked to the UK. I think that the UPC will have a positive impact and I hope that Brexit does not prohibit the UK from being a part of the impact.
I would also say how the EPO are tackling issues regarding efficiency discussions and are slowly raising the bar; I do hope the quality gets better in order for the betterment of the future.
You lecture at the University of Strasbourg for those preparing to qualify as a European Patent Attorney: what are three things you think are vital in order to be the best patent attorney in this given climate?
The European Qualification Examination (EQE) is quite close to the reality of practising law. The cases you handle there, are daily life cases and this is something I think is great.
Honestly, a young patent attorney should constantly question their skill. Because all of the candidates either have a PhD, or a master degree and they have a very good academic background. The years undertaken to be admitted for the exam are not sufficient enough to give you all the skills and even though the exam is relatively close to what they should expect post qualifying, I think it is very good the candidate remains humble regarding the profession, in order to check themselves to ensure they are really right. If they have this attitude, you are ready to become a patent attorney.
Nils T. F. Schmid
German Patent Attorney
European Patent and Trade Mark Attorney
Pettenkoferstraße 22
80336 Munich
Germany
T +49 (89) 55 96 80
21 Boulevard Haussmann
75009 Paris
France
T +33 (1) 5603 6591
www.boehmert.de
Nils T.F. Schmid specializes in traditional mechanical engineering. For his clients, especially medium-sized companies in Germany/Europe and Asian and American big corporations, he develops both German and global patent strategies and sees to their implementation with regard to the building up and management of patent and design patent portfolios.
As one of the largest and best-known law firms for Intellectual Property (IP) in Europe, we offer our clients any and all services relating to IP. Our company is proficient with assisting clients with patents pertaining to technical inventions and the protection of designs and trademarks. We offer support in copyright, antitrust and competition law in all fields of applied and engineering sciences.
Although the Markets in Financial Instruments Directive II (MiFID II) was implemented at the start of the year, work for the financial services industry to comply with this new regulation is far from over. Still remaining are a number of uncertainties, with multiple milestones and deadlines for specific requirements set throughout 2018 and beyond.
Hailed as one of the biggest overhauls of the financial services industry in decades, MiFID II introduced 1.4m paragraphs of rules and a number of new obligations for firms operating in the sector. These included new and extended transparency requirements, new rules on payments for research, increased competition in trading and clearing markets and guidelines to promote financial stability. With many of these rules being delayed or their introduction staggered over the course of the year, there is still a challenging path for the industry to navigate.
Below, Matt Smith, CEO of compliance tech and data analytics firm SteelEye, explains the key steps financial organisations should take over the course of the year to ensure they are meeting MiFID II’s demands.
Q2 2018: Best execution under RTS27 and 28
MiFID II has two major “best execution” requirements which must be met by financial services firms – regulatory standards RTS27 and 28. As part of their obligations, RTS28 mandates that firms report their top five venues for all trading. With the deadline being 30 April, the purpose of RTS28 was to enable the investing public to evaluate the quality of a firm’s execution practices. Firms were required to make an annual disclosure detailing their order routing practices for clients across all asset classes.
Obligations include extracting relevant trade data, categorising customers and trading activity, formatting the data correctly in human and machine readable formats, adding analytical statements and placing all of this information in a publicly available domain.
Limiting disclosure to five trading venues makes complying with these obligations relatively simple for small firms with straightforward trading processes. As a firm’s activity increases in complexity, however, so does its reporting obligation and managing RTS28’s data component could become a significant burden, as compliance departments spend time classifying trades, normalising data, formatting reports and completing administrative tasks.
RTS28 is followed soon after by RTS27, which will hit the industry on 30 June. RTS27 requires trading venues to provide quarterly best execution reports, free of charge and downloadable in machine readable format, and is intended to help investment firms decide which venues are most competitive to trade on. All companies that make markets in all reportable asset classes that periodically publish data relating to the quality of execution will be required to comply with RTS27.
The necessary publication of these reports requires the gathering and analysis of a significant quantity of data, which must detail price, costs, speed and likelihood of execution for individual financial instruments. Investing in the right technology ahead of the June deadline will ensure firms have the solutions needed to help digest such data and analyse it to inform their trading decisions. As we move through 2018 and 2019 however, analysis of this data, rather than being an additional burden, should help firms refine their best execution processes and generate a competitive business edge.
Q3 2018: Increasing transparency under Systematic Internalisers
One of MiFID II’s main aims was increasing transparency in the financial services industry in an attempt to avoid repetition of the 2007-2008 financial crash. In order to do this, a number of new rules attempting to regulate ‘dark pool’ trading were implemented, allowing regulators to police them more effectively and bring trading onto regulated platforms.
This system of increased transparency is designed to be effected through MiFID II’s new expanded Systematic Internaliser (SI) regime, the purpose of which is capturing over-the-counter trading activity to increase the integrity and fairness of industry trading and reduce off-the-book trades. For a firm to become an SI, they must trade on their own account on a ‘frequent and systematic basis’ when executing client orders. However, it is currently unclear what precisely ‘frequent and systematic’ means and as a result, many in the industry have been left without the necessary guidance to be able to implement these new rules correctly.
In August 2018, ESMA is set to publish information on the total number and volumes of transactions executed in the EU from January to June 2018. Any firm that has opted in under the regime or that meets the pre-set limits for ‘frequent and systematic’ basis will thereafter be classified as an SI under MiFID II.
The deadline for SI declaration follows shortly afterwards in September, which is when investment firms must undertake their first assessment and, where appropriate, comply with the SI obligations, which will become a quarterly obligation from then on.
Firms’ reporting obligations will increase considerably should they be classed as an SI. They will be required to notify their national competent authority; make public quotes to clients on request for their financial instrument; publish instrument reference data, post-trade data, and information on execution quality; and disclose quotes on request in illiquid markets. Adopting an effective pre- and post- trade transparency solution can help any firm set to be classified as an SI in September meet their obligations well ahead of the deadline in four months’ time.
Q4 2018: The impact of the pricing of research
Another major change under MiFID II is the regulation’s new rules on payment for research, which had previously been distributed to fund managers, effectively free of charge, but paid for indirectly through trading commissions. The provision of equity research is now considered to be an inducement to trade and the sell-side is only able to distribute their research to fund managers that pay for it. Moreover, an extra burden of red tape and reporting is being introduced as, by the end of 2018, investment firms must have provided clients with detailed information related to the costs and associated charges of providing investment services.
Research has effectively moved from an unpriced to a priced model and fund managers are now having to find a budget for research, with most firms electing to absorb that cost, which will inevitably impact their bottom line. The sell-side meanwhile will have to grapple with how to price their research, an unenviable task, given JPMorgan’s strategy to grab market share from smaller rivals by charging $10,000 for entry-level equity research.
Even before the aggressive pricing strategy adopted by the investment banking behemoth, the sell-side was facing consolidation and significant analyst job losses as the shrinkage of overall payments for research services to investment banks continues and asset managers become increasingly selective about the products and services they procure from investment banks. What is already certain is that the pricing and quality of investment research will be subject to closer scrutiny than ever before, driving up competition among research providers and triggering fragmentation and innovation in the marketplace.
Q1-2 2019: The UK’s departure from the European Union
While the FCA has stated that Brexit – at least currently – will not have an impact on their enforcement of MiFID II rules, the UK’s departure from the EU still leaves considerable uncertainty for those in the market. One recent survey found that 14% of surveyed compliance professionals had no idea how Brexit would affect their compliance requirements.[1] There is speculation that the UK could opt for ‘MiFID II-lite’ in all or some areas in order to better align it with the UK’s financial markets. This could mean that, while the industry must comply with MiFID II for this next year, after April 2019 a whole host of new rules and amendments could come into force.
As one of the core architects of the MiFID II rules, including many of its record-keeping and reporting principles, the FCA is unlikely to favour watered-down standards that could see London regarded as a less safe or transparent marketplace. However, with so much still up in the air, preparations should be made in order to ensure a swift transition once Brexit comes into force.
The strength of the UK’s regtech and fintech offering means the City should be well-placed to adapt to whatever shape MiFID II takes post-Brexit. To help prepare, strategy teams should work on plans for various post-Brexit scenarios in order to help weather the challenges that the UK’s EU departure will bring. UK players will undoubtedly emphasise their strengths in financial talent, product development, AI, fintech and regtech, helping the UK retain its leading position in the European financial market.
Matt Smith
CEO
Matt Smith is CEO of SteelEye, a fast-growing data analytics firm. After two decades as a manager, technologist and business partner, Matt is now focused on helping firms use technology and their data to gain a competitive edge and solve complex regulatory needs.
Matt has spent his career in technology management and, prior to his role at SteelEye, he was CIO for a global, $100bn trading company, where he was responsible for regulatory technology and the deployment of big data, trading and analytics platforms. He then spent time at a world-leading financial technology firm where he held a senior role in delivering financial regulation and compliance solutions.
SteelEye is a cloud-based platform which helps you consolidate and conform your trade and communications data to meet your regulatory obligations. This includes storing data securely in tamperproof form.
In addition, SteelEye allows you to analyse your consolidated data and gain powerful new insights into your business activities, helping you to trade with greater efficiency and profitability. Our mission is to empower you to leverage the opportunities presented by your data.
[1] https://www.thetradenews.com/uk-compliance-managers-predict-mifid-ii-exemption-post-brexit/
With Brexit less than a year away, Alan Kennedy, Associate at Womble Bond Dickinson provides a summary of the latest position on EU workers' rights and what employers should do now to prepare for the UK's departure from Europe.
Latest position on future status of EU nationals
EU citizens who arrive in the UK before 29 March 2019
On 8 December 2017, the UK Government reached an agreement with Europe on EU citizens’ rights, which related specifically to EU nationals who arrive (or who are already) in the UK prior to the Brexit date (i.e. 29 March 2019). We set out below a summary of the key points that have been agreed.
The Home Office has confirmed that there will be an online application process, which will be "streamlined, user-friendly and quick to use" and is likely to go live later this year. EU citizens will be required to provide an identity document and a photograph, and will be required to declare any criminal convictions. They will also be required to pay an application fee, which is likely to be the same as a UK passport (currently £75.50).
Transition period
On 19 March 2018, the UK and the EU also reached agreement on a number of key points in the draft withdrawal agreement, one of which included an agreement on a transition period after the UK leaves the EU. The key points to note are:
After the transition period
Unhelpfully, the UK Government has not provided any clarity on EU citizens' rights after the transition period.
It was intended that the Government would issue an Immigration White Paper last summer, which would set out its proposals for post-Brexit immigration and would include key details of the new immigration policy. However, this is now unlikely to be published before October this year. The delay has attracted criticism and is, understandably, creating anxiety for EU nationals and uncertainty for UK businesses, and is preventing proper planning and recruitment. It also means that the new Immigration Bill, promised in the Queen’s Speech, is likely to be delayed.
Key action points for employers
The Home Office has stated on its website that EU citizens (and UK employers) do not have to do anything now and that they should wait for the new online application process to go live in the second half of 2018. However, to be prepared for Brexit we would suggest that the following steps are carried out by employers:
Summary
The Migration Advisory Committee published its interim report on 27 March 2018, which provides an initial assessment of the UK labour market following Brexit. The final report is expected in September 2018. The interim report highlights the concerns among many employers regarding how the UK might restrict EU workers after the transition period and how this could prevent them from recruiting low skilled EU workers into the UK, (e.g. if the new post-Brexit immigration policy is similar to the current system we have in place for Tier 2 migrants).
The uncertainty has already had an adverse impact on some sectors within the UK economy, such as healthcare, construction, hospitality, agriculture, retail and manufacturing, which are currently facing critical labour shortages. There is evidence to suggest that UK employers are now starting to recruit outside of the EU to fill those gaps. It has also caused concern among many EU nationals, as highlighted by the recent fall in net EU migration into the UK.
While the UK Government has provided some much needed clarity on the rights of EU workers pre-Brexit and during the transition period, there is still a great deal of uncertainty over EU workers' rights after the transition period and this is likely to continue until the Government publishes its White Paper on immigration.
If you would like to discuss how we can help you prepare for Brexit or if you have any questions on this article, please do get in touch.
Brexit has often been described as a divorce, but there’s increasing debate over what brexit could mean for actual divorce and family law. Here Lawyer Monthly benefits from top expertise from Wendy Gouldingay, Co-chair of Resolution East Midlands/Nottingham & Director of Gouldingays Family Law & Mediation, who clarifies how things currently function, and how they could change.
I appreciate that people hold conflicting views on brexit and it is hard to predict what we might end up with come March 2019, but it is important that we’re aware of what’s at stake during the government’s negotiations for their brexit settlement.
At my practice in Newark, I work with an increasing number of clients who were either born in Europe or are married to someone who is. Indeed, the town is surprisingly multicultural, with the last census showing that more than 5,650 people in the town were born overseas, although that’s likely to be far higher today. It’s these people, as well as their husbands, wives and children who could be most affected if government negotiators cannot square a particularly difficult circle.
With one year to go before the brexit transition period begins, cross border family law has been an increasingly heated topic. This month, the government began negotiations with the European Union to make sure that as Britain leaves the EU, a clear set of rules remain in place to ensure that whenever an issue of family law crosses borders, it’s clear which courts will hear the case, and which country’s law will be applied. I also ensures that decisions that are made in Britain will be respected and enforced across all 28 states. This all needs negotiating, because it won’t happen automatically.
A failure to get this right could cause major problems for thousands of families and with one year to go, it’s an urgent issue.
If other countries don’t agree to this, it could lead to contradictory settlements and uncertainty. It also could mean injunctions and court orders won’t be upheld overseas. It might also affect child abduction cases, although there are still European and Hague conventions which could be relied on
Last week, Baroness Sherlock raised these concerns in the House of Lords with the support of former Lord Justice of Appeal Dame Butler-Sloss. Drawing on reports from the Brexit and Family Law group, including the Family Law Bar Association, the International Academy of Family Lawyers and Resolution - of which I am a member - she set out just how important it is that the situation is resolved
Before I explain further, it’s important to understand how the European Union affects family law in the UK. Unlike other areas of law, each member state of the EU keeps its own family law and can decide its own terms: While the EU provides a common set of rules for jurisdiction, recognition and enforcement of judgments and orders, Britain has three systems of substantive law in England, Scotland and Northern Ireland with each system operating almost independently.
What the EU does provide is three mechanisms which are extremely useful: Firstly, the EU provides a mechanism for deciding which country’s court take precedence if cases are issued in two countries at the same time. This avoids the situation where a divorce could be proceeding in two different countries simultaneously, leading to two possibly contradictory results. Secondly, the EU enables court orders for maintenance, child contact or injunctions to be enforced in all countries instead of just the country of origin. And thirdly, it ensures that there is cooperation between EU member states surrounding the sharing of information which is used to protect children and to make former partners pay maintenance wherever they are.
Over the years, Britain and the rest of the EU have constructed a system that enables the different family law systems of all 28 countries to work alongside one another with each state respecting the laws, orders and arrangements made in each other member state. It’s therefore extremely important that this system is preserved as much as possible once Britain leaves the EU.
Unfortunately, as it is, this system depends on the overarching European Court of Justice (ECJ) to guarantee that this works on a reciprocal basis. As has been made clear, the government is seeking to remove Britain from the jurisdiction of the ECJ while replicating EU law in British law to ensure the transition is as smooth as possible. Unfortunately, a consequence of these two changes is that it could lead to a one-way street situation where the UK is obliged to apply current provisions but the EU 27 won’t have to do the same for us.
The argument goes that the other 27 states would have no obligation to respect British court’s decisions. Whenever there is a divorce involving a British citizen and a person from an EU member state, the EU citizen could overrule the proceedings in British courts if they have filed for a divorce in their country first, yet the British citizen couldn’t do the same in reverse.
To complicate things further, the EU’s regulations are due to change shortly after brexit. Before the brexit vote, Britain was helping to shape these new regulations which would improve several areas including the rights of children, but if these changes aren’t in place before brexit, Britain could be on the back foot.
I’d like to make it clear that I am not a “remoaner”; I believe that Britain could well make a success of brexit but problems like these have to be overcome. The government has made clear that it understands how critical this is to family life going forward and it is intent on negotiating a system whereby courts in each country will continue to recognise the orders made by the British courts.
Hopefully, in March 2019, things will work just as well as they do now and divorces between British nationals and EU citizens will proceed smoothly. Currently, the government’s prefered option for achieving this will be a bespoke arrangement, with a new framework in place to ensure cooperation between legal systems.
The other option may be a voluntary commitment to being bound by the European court and its decisions, just as we are now, which might be unpalatable for some, given that many voted to remove Britain from the ECJ’s jurisdiction.
Alternatively, it’s been suggested that the agreements Britain is already subject to such as the Hague convention may help us retain some of these systems. Whilst the Hague Convention does offer a framework for returning children who have been internationally abducted, as the Archbishop of York pointed out in the Lords debate, the convention is much weaker than the present arrangements protected by the ECJ and it doesn’t address the other problems we’re facing regarding reciprocity.
With one year left in which to resolve these problems, the government’s negotiators have a enormous task ahead of them. Hopefully the government, the EU and the negotiators can put politics aside in this issue and focus purely on what is best for families and children in Britain and across Europe which would be to have a system in place which is effectively identical to what we currently have. Any other outcome could cause serious repercussions.
