Brexit - where are we now?

Zoey Forbes
Opinion - Publishing Friday, 13 March 2020

Zoey Forbes looks at the key legal and regulatory implications for the UK publishing industry once the Brexit transition period is up

Much has changed since the 2019 London Book Fair: Boris Johnson ascended to Number 10; his Withdrawal Bill became law; and the UK left the EU at 11pm on 31 January. And yet, very little has changed, or will change, until the end of the transition period which is scheduled for 31 December 2020.

During the transition period, the UK remains in both the EU single market and the EU customs union while its government seeks to negotiate free trade agreements with the EU (which is still the UK's largest trading partner) and other major economies across the globe. What will happen at the end of the transition period is still unclear, as it is entirely dependent upon what the UK government is able (or unable) to agree with the EU and its other trading partners. So where does this leave the UK publishing industry and its global network of partners? Here are three of the key legal and regulatory implications.

The fundamentals of copyright law are unlikely to change substantially, at least initially, as copyright is largely harmonised, deriving from international treaties that remain unaffected by Brexit. However, some aspects of copyright and related rights are also harmonised at an EU level (or are due to be so). Unless the UK government actively seeks alignment with these aspects, the UK and European copyright regimes could begin to diverge.

A case in point is the new EU Copyright Directive, which introduces significant changes such as new statutory rights for authors (which allows them to renegotiate their remuneration, request revenue reports and revoke exclusive licences in certain circumstances) and the "value gap" proposal (which requires some online service providers to introduce measures to proactively enforce copyright law). Member states are required to implement the directive into their national laws by 7 June 2021. However, in January the UK government announced that it had "no plans" to implement the Directive before the end of the transition period, and that any changes to UK copyright law would be "considered as part of the usual domestic policy process". If the UK does not make domestic changes akin to the directive, then UK publishers and authors will have fewer rights (and, in the case of publishers, fewer obligations) than their European counterparts.

Copyright may also come into play as part of the UK trade negotiations with countries outside the EU, particularly those that have differing approaches to intellectual property laws, such as the United States and China. There are concerns that copyright may be used as a bargaining chip in trade deals, thereby risking dilution of the UK's robust copyright regime.

Rights exhaustion
Copyright exhaustion remains a key concern for the UK publishing industry, as it underpins territorial protections.

During the transition period, the UK will continue to subscribe to a "regional" exhaustion of rights within the European Economic Area (EEA). This means that once a print book has been put onto the market in the EEA with the rightsholder's consent, the book can be freely resold within the EEA. This regional regime allows free movement of goods inside the EEA while safeguarding against UK publishers' export editions being resold (potentially at lower prices) into the EEA market, thus maintaining the value of the UK's book export market.

At the end of the transition period, the rights in a print book first put onto the market in the EEA will continue to be exhausted in the UK. However, unless an agreement to the contrary is reached, putting a print book onto the market in the UK will not exhaust the rights in the EEA.

With the regional exhaustion regime provided by the EU no longer available at the end of the transition period, the UK will have to choose between a "national" or "international" exhaustion regime. If international exhaustion applies, the rightsholder will not, in most cases, be able to prevent the books it puts on the market elsewhere in the world (for example in the US, Norway or Japan) from being resold in the UK. As a result, the UK rightsholder will no longer have a mechanism to prevent international editions being resold in the UK market, for example through online marketplaces, even where it has been granted exclusive UK rights. There are concerns that this may provide arguments for overseas English-language publishers to "landgrab" European distribution rights, which have historically been granted exclusively to UK publishers.

The UK publishing industry will therefore need to make a strong case to the UK government against international exhaustion of rights, particularly as other industries (such as the pharmaceutical industry) may be lobbying in its favour.

Although there will be no change to the movement of goods during the transition period, there is still a great deal of uncertainty around the future regulatory framework.

In February, the UK government confirmed its plans to introduce import controls on EU goods at the UK border at the end of the transition period. Similarly, the EU has said it intends to introduce controls on UK goods entering the Eurozone. This will mean traders in the EU and the UK will have to submit customs declarations and be liable to checks on goods.

The tariffs applicable to the import and export of goods will depend upon the terms of the free trade deals struck by the UK government. In the event no deal is reached, then the rules of the World Trade Organisation (WTO) will apply. The UK will need to set its own WTO tariffs for its imports. By way of example, the WTO tariff applied by the EU on physical books and journals is 0%, and members of the WTO have agreed not to impose any tariffs on electronic commerce, such as ebooks. Given that exports of published material are currently worth £2.9bn to the UK economy, with 36% of these destined for Europe, it will be essential that the new trade barriers are as frictionless as possible.

Zoey Forbes is associate at Harbottle & Lewis LLP.

This article was written for the Publishers Weekly/BookBrunch London Book Fair Show Daily.

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