The laws that govern Intellectual Property (IP) across the European Union have been relatively harmonized; the majority of the UK’s IP legal regime is the result of the application and enforcement of the EU’s Directives and Regulations. After the end of the transition period, unless these instruments are integrated into the English (and Scottish) legal system, there will be uncertainty in the provisioned framework of legal protection.

The Directives and Regulations will no longer have enforceability into the UK legal order; with the Withdrawal Act 2018 succeeding the European Communities Act 1972, this means than no direct application and integration of EU rules will take place.

The European Single Digital Market (ESGM) is such an example of EU legislation that will no longer affect the internal UK legal order after the end of the transition period. It was envisioned and implemented with the  Directive on Copyright in the Digital Single Market, which was introduced in September 2016 by the European Commission and entered into force on 6 June 2019.

The ESGM consists of three pillars: 1) the protection of the data of the consumers across the EU states, 2) ensuring the consumers can access services and products at less costs, 3) enhancing the digital environment’s potential and applicability. Unavoidably, among the different EU member states there is not a unanimous, de facto approach regarding the digital market. The divergence and policy gap are likely to be widened, after the UK’s exit, while at the same time the country will have no say in the policy shaping and making on EU level.

In terms of e-commerce for businesses, the European Digital Single Market stands as a particularly lucrative market. It is estimated that in 2016, UK based consumers have spent more than 153 billion euros on online commercial transactions, while in comparison their American counterparts have spent 363 billion euros the same year. The worth of the EU online consumption is placed at approximately 500 billion euros,  a number that is estimated to double  with the enforcement of the Digital Single Market Directive by 2020. The successful enforcement of the DSM Directive will make the significant contribution of up to €415 billion per year to the EU economy, according to then President Juncker. 

The UK has always been prompting discussions and legislative initiatives in the areas of Copyright in the EU. The UK had co-introduced, for example, the system of ‘follow-the-money’, which was the ‘approach to online copyright infringement through the involvement of financial and advertising intermediaries.’ It is widely considered as one of the most successful policies adopted by the EU. The UK is facing the pragmatic risk of exclusion from the policy making of an area that is prioritised by the Commission and crucial for the businesses’ e-commerce activities. 

The UK has pioneered in the field of data flow across borders; it is indicative that in 2015, it accounted for 11.5% of cross-border data flows worldwide. This is impressive if we juxtaposition it with 0.9 of population and 3.9% of GDP globally for that year. The country’s data flow further saw a skyrocketing rise between 2005 and 2015 of 28 and it is anticipated to increase 5x more till 2021. 75% of the UK’s data flows outside the country is directed towards EU countries. 

At this moment, the UK primarily exports digital services across Europe; via the Digital Single Market, distribution of these services is ensured across European markets. The effects of Brexit will have a noteworthy impact in the areas of data privacy and protection, creative content, broadcasting, copyright and e-commerce. The UK service providers will jeopardise their access to EU markets, since they can only operate across Europe through the establishment headquarters on the territory; as the E-commerce, Copyright Directives, SatCab stipulate under their ‘country-of-origin’ principle.

Financial, as well as media and audio-visual services follow this principle. The financial and commercial operations are less complicated because if a business has been established in an EU regulated territory and complies with all the legal provisions on a state level, it is no longer mandated for them to face hurdles of cross border regulation by another member state.  

Could a model like Norway (joining as an EEA/EFTA member) be adopted for the UK? The UK government has had a negatively adamant stance on this prospect. Nonetheless, the signing of a bilateral agreement between the UK and EU, under the prism of the Digital Single Market, would enable UK-based companies to distribute their digital content across Europe, but many companies have already relocated their headquarters and ceased UK operation.

Brexit will likely impede the flow of data across borders because of the need of third countries (as the UK will soon become one) to sufficiently comply with the European regulations on data protection.  The European Commission holds the power to decide, on the basis of article 45 of Regulation (EU) 2016/679 if a non EU country can provide an adequate level of data protection. It has been assessed that because the ambivalence on the determination of these adequate levels of data protection can result in “data localisation” legislations, which can ultimately affect the EU members’ GDP by 0,5 -1% decrease. 

In the digital market after Brexit, commerce will be heavily impacted as a result of the imposition of non-tariff barriers related to the regulation of services activities. Particularly the data, media and financial services will be impacted by the lack of a regulatory environment that enables access to market under the agenda of Single Market. 

The separation from the EU will result in the elimination of the contribution of a member with a dynamic presence in initiatives and policy making in the field of Digital Single Market. The UK would be limited in a way that its businesses and commercial sector will be deprived of their unhindered accessibility to digital services and goods among the EU territory, with various different trade barriers becoming imposed upon them. For the EU, simultaneously, “the loss of the UK’s input on the Digital Single Market would doubtless lead to more debate on how market-driven the Digital Single Market policies should be”. 

After all, as the European Commission has stated the European Single Market has transformed the way Europeans live, work, travel, do business and study. It has opened up opportunities for businesses to expand successfully on the global market". 

Maria Apostolidou

Maria is a trainee advocate, expected to become a Greek licensed barrister in spring ’21. She completed her LLB at the Aristotle University of Thessaloniki (with an Erasmus+ year at the Université Libre de Bruxelles), and continued her LLM in International Commercial Law at the University of Strathclyde. She is interested in commercial law, with an emphasis on e-commerce, intellectual property, international business law, and EU legislation affairs.