What is Exhaustion of IP Rights?
If a rights holder, or someone with the consent of a rights holder, places goods in a specific territory then their right to take legal action against infringement is ‘lost’ – the right is no longer enforceable and is considered exhausted. The reason such a system exists is to primarily support the market of secondary sales of legitimate goods.
The Current Regime
Prior to leaving the EU, the UK was a part of the EU’s regional exhaustion of IP rights regime. Goods placed anywhere within the European Economic Area (EEA) would be exhausted in all other EEA territories. As a result, goods could be parallel imported into the UK from the EEA and exported out of the UK to the EEA.
From the 1st of January 2021 the UK has been unilaterally participating in the EEA regional exhaustion regime. In essence, the scales are tipped heavily against UK rights holders who will find that their rights are exhausted once their goods are placed on the market in the UK or EEA. However, EU rights holders whose goods are placed on the market in the UK will not have their rights exhausted in the EEA. What does this mean? Well, EU rights holders will be able to prevent goods from being parallel imported into the EEA from the UK. Meanwhile, UK rights holders cannot prevent goods from being parallel imported into the UK from the EEA.
Will Things Change?
The UK government are considering new exhaustion regimes to put UK rights holders on an even footing with EU rights holders. The options, set out in a recent consultation on exhaustion of IP rights post-Brexit, include:
“UK+” regime – Doing nothing and stick with the current system.
International regime – Adopting this regime would mean IP rights in goods would be exhausted in the UK once they are put on the market in any other country.
National regime – IP rights in goods would be considered exhausted only in the UK once they were put on the market in the UK.
Mixed regime – This is where a specific good, sector or IP right are subject to one regime while remaining goods, sectors and IP rights are subject to a different regime.
A caveat to choosing a regime is the Northern Ireland Protocol. This prevents restrictions on parallel trade between Republic of Ireland and other EU member states and Northern Ireland.
The government will assess all options before proceeding, but now there is not a preferred option which does not help rights holders and causes further uncertainty.
Written by Saad Khan, Paralegal
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