Exhaustion regime post-Brexit – A new UK consultation

Nicole Marshall is a trainee trade mark attorney at Appleyard Lees IP LLP. Nicole works alongside a range of clients, varying from technology start-ups, to SME’s and all the way through to large household names.

As a trainee, Nicole provides preliminary advice to clients on an array of issues, whether that be the registrability of a mark, providing advice in relation to examination reports or oppositions.

 

The current exhaustion regime

The Brexit transition period came to an end on 31 December 2020 and as of 1 January 2021 the UK was no longer bound by EU legal framework. Before the UK left the EU, the UK was party to the EU’s regional exhaustion of IP rights regime. Under this regime, any IP rights in goods which were (legitimately) placed on the market anywhere in the EEA would be considered exhausted in the rest of the EEA, therefore allowing the parallel import of goods into the UK from the EEA and also out of the UK to the EEA.

However, since 1 January 2021, the UK is no longer part of this reciprocated exhaustion regime and is currently a ‘unilateral participant’. This means that the IP rights in goods first placed on the market in the EEA are considered exhausted in the UK and so can be imported into the UK without the rightsholders permission, but this does not apply vice versa to goods being exported from the UK to the EEA. In this scenario, any traders in the UK who wish to export goods to the EEA should seek permission from the rightsholder first.

This unilateral participation has received some criticism and at the time of leaving the EU, the UK government planned to publish a formal consultation. This formal consultation was launched on 7 June 2021.

The UK government consultation

The aim of the consultation as launched on 7 June 2021 is to collate views and explore the options on the future of exhaustion of IP rights in the UK. The consultation provides four different options of how the exhaustion regime may look in the future:

  1. UK’s unilateral application of a regional EEA regime, otherwise known as a “UK+” regime
  • This is essentially a “do nothing” option whereby the current existing regime which came into force on the 1 January 2021 is maintained.
  • Parallel imports from the EEA to the UK would continue to be allowed, however, parallel exports from the UK to the EEA could be prohibited.

 

  1. National exhaustion
  • IP rights in goods would be considered exhausted in the UK only once they were (legitimately) put on the market in the UK.
  • This would mean that businesses would not be able to import goods from outside of the UK.
  • This option would be most beneficial to rightsholders as it would enable them to control the market in their goods and apply differential pricing.

 

  1. International exhaustion
  • IP rights in goods would be considered exhausted in the UK once they had been put on the market in any other country.
  • This would mean that businesses could import goods into the UK from any country globally without the rightsholder’s permission (as long as they were legitimately placed on the market elsewhere).
  • This option would be most beneficial to parallel importers wishing to easily import branded goods into the UK.

 

  1. Mixed
  • A ‘mixed’ regime would involve specific goods, sectors or IP rights being subject to one regime and all other goods, sectors and IP rights subject to a different regime.
  • A good example of this would be Switzerland whereby most goods can be parallel imported, but a national exhaustion regime remains in place for medicines.

 

At the time of writing, the government does not have a preferred option for the UK’s future exhaustion regime and all options are to be assessed in light of the responses and evidence they receive. If you wish to respond to this consultation, details on how to do so can be found here. The consultation will run for 12 weeks and will close at 23:45 on 31 August 2021.

The UK government is also currently running a number of other IP related consultations, details of these can be found by following the links below:

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