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UK Government Consults on Future Scheme for Intellectual Property Rights Exhaustion

on Thursday, 08 July 2021.

The UK Intellectual Property Office (UK IPO) has opened a consultation on the UK's future exhaustion regime for intellectual property rights (IPR).

The laws on 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. This means that, broadly speaking, 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 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 trade of products first sold in the UK being imported into the EEA. By contrast, the UK has continued to operate the pre-Brexit exhaustion of rights scheme. This means that traders can continue to import into the UK products which are first sold in the EEA. The UK Government implemented this arrangement as a temporary measure to ensure the continued supply of key products (eg medicines).

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Have Your Say

The UK IPO is now consulting on the UK's future exhaustion regime for IPR. The consultation is open from 7 June to 31 August 2021. The UK IPO's paper sets 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. The Government considers this option would be the least costly for businesses reliant on the EEA for the supply of goods and raw materials, and would continue to provide the same level of choice for UK consumers.
  • National regime - The IPR of owners would be exhausted in the UK only where goods are first put on the market in the UK. The Government advises that it is unlikely to select this option because it 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 outside the UK. This would significantly weaken IPR but would increase consumer choice and reduce prices in the UK.
  • Mixed regime - Different regimes would apply depending on the particular IP right, product or sector in question. The Government considers that such a scheme would likely be complex, and difficult for consumers and businesses to understand.

Have your say before 31 August 2021.

The Government has essentially ruled out a national exhaustion regime as incompatible with the Northern Ireland Protocol. The Government also appears concerned about the complexity of a mixed regime. Therefore, the choice seems to be: (1) the existing unilateral EEA regime or (2) international exhaustion. Given the likely significant impact of international exhaustion on sectors such as the pharmaceutical industry, the current regime may well continue for a while longer. 

If you have any views on exhaustion of rights or want to speak with us about parallel trade, please contact Tom Cahill in our Pharmaceuticals & Life Sciences team on 07976 550923, or complete the form below.

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