Parallel imports into the UK: still no change to the law
In May, the government published its response to the Intellectual Property Office's (UK IPO) consultation on the UK's future exhaustion regime for intellectual property rights (IPR). The government has announced that the current UK+ exhaustion regime will continue in place.
The government found that:
- most consultation respondents reported that the current regime is working well
- the consultation had elicited insufficient evidence to support a change to any alternative scheme.
Parallel trade
The laws on the exhaustion of IPR determine the ability of IPR owners to control the sale of their products after they have been first placed on the market. A key aspect of such exhaustion schemes is the extent to which IPR owners can prevent their products from being traded across borders (ie parallel trade).
The EU operates a regional exhaustion of IPR scheme. Broadly speaking, this means that once a unit of product is placed onto the EEA market by the IPR owner (or with its consent), the rights owner cannot prevent the product from being traded within the EEA. However, IPR owners can prevent traders from importing into the EEA products which are first sold outside the EEA.
Following Brexit, the UK has become a third country in relation to the EU. This means that IPR owners can prevent units of product first sold in the UK (after 1 January 2021) being imported into the EEA. By contrast, parallel traders can continue to import into the UK products which are first sold in the EEA. The government initially implemented this arrangement as a temporary measure to ensure the continued supply to the UK of key products such as medicines.
The options
The UK IPO's consultation was conducted in 2021 and received 150 responses. Unsurprisingly, the pharmaceutical sector was very well represented in those responses. The UK IPO's paper set out four options:
- Unilateral EEA (UK+) regime - Maintaining the current situation, in that goods can be freely imported into the UK from the EEA, but not from the UK to the EEA.
- National regime - The IPR of owners would be exhausted in the UK only where goods are first put on the market in the UK. (An option rejected by the government because it considers this would be inconsistent with the UK's obligations under the Northern Ireland Protocol).
- International regime - The IPR of owners would be exhausted in the UK when goods are put on the market anywhere in the world.
- Mixed regime - Different regimes would apply depending on the particular IP right, product or sector in question.
Comment
The government's decision to maintain the current exhaustion scheme is unsurprising. A change to any of the alternatives would have likely caused considerable disruption and uncertainty. For this reason, the decision will be welcomed by many businesses, including in the pharmaceutical sector. By contrast, some UK rights holders, who remain vulnerable to EEA imports, will have hoped for increased protection.