Exhaustion of IP rights if there is a no deal Brexit

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The United Kingdom Intellectual Property Office has issued advice concerning the exhaustion of rights and parallel imports after the UK leaves the European Union.

Photo of the UKIPO

The United Kingdom Intellectual Property Office (a trading name of the Patent Office) has issued the following advice on September 11, 2019 concerning exhaustion of rights and parallel imports after the United Kingdom leaves the European Union:

This page tells you what to do if there is a no deal Brexit

It is aimed at businesses who trade in parallel goods in the European Economic Area (EEA).

Parallel goods are genuine goods that are manufactured by or under licence from the rights holder, but are sold directly by the rights holder or their authorised seller. At present these parallel goods are often brought in from other EEA countries.

1. Actions for businesses and other stakeholders

Businesses first need to identify whether they currently export intellectual property (IP) protected goods to the EEA (for example, goods branded with a trade mark) that have already been placed on the UK market, where they currently do not need to obtain the right holder’s permission (i.e. parallel trading).

Business that want to continue to export these IP-protected goods to the EEA may need to contact the IP right holder to obtain permission to do so. The IP right holder may choose to withhold permission if they do not wish for these goods to be exported to the EEA.

Exporters of the IP-protected goods may need to review their business arrangements/business model/supply chain based on the outcome of the discussion with the IP right holder.

Businesses that own IP rights (for example, a trade mark) may wish to seek legal advice if their IP-protected goods are parallel exported from the UK to the EEA and consider if they wish such arrangements to continue after a no-deal Brexit.

2. Before the UK leaves the EU

Currently, exhaustion of IP rights occurs in the UK when an IP-protected good is placed on the market anywhere in the EEA. This means that rights holders (such as the owner of a brand) may not prevent the movement of those goods within the EEA. These goods are known as parallel goods, which are genuine goods (that is, they are not counterfeit).

While the UK remains a full member of the EU, IP rights remain exhausted after the first sale of a good, with the right holder’s permission, within the territory of the EEA.

3. If there’s no-deal

The UK will continue to recognise the EEA regional exhaustion regime from exit day for a temporary period. This will provide continuity in the immediate term for businesses and consumers.

This approach means there will be no change to the rules affecting imports of goods into the UK. Businesses that undertake this activity may continue unaffected.

Ongoing UK recognition of the EEA regional exhaustion area will ensure that parallel imports of goods, such as pharmaceuticals, can continue from the EEA.

A parallel import is a non-counterfeit product which is imported into a country where the IP rights in that product have already been exhausted.

There will be no change for the importation of goods into the UK. However, there may be restrictions on the parallel import of goods from the UK to the EEA.

Businesses undertaking such activities may need to check with EU right holders to see if permission is needed. 

The government is currently considering all options for how the exhaustion regime should operate after this temporary period and is undertaking a research programme to support this decision.

4. Implications

IP-protected goods placed on the EEA market by, or with the consent of, the right holder after Brexit will continue to be considered exhausted in the UK.

This means that parallel imports of these goods from the EEA to the UK will be able to continue unaffected.

Goods placed on the UK market by or with the consent of the right holder after the UK has exited the EU may not however be considered exhausted in the EEA.

This means that businesses exporting these goods from the UK to the EEA might need the right holder’s consent.

If there’s a no-deal Brexit, the UK will continue to recognise EEA exhaustion, so the IP rights attached to goods being imported into the UK will not change.

Goods placed on the market in the EU, after the UK has left the EU, will continue to be considered exhaustion in the UK. This means that parallel imports of these genuine goods from the EEA to the UK will continue unaffected.

However, there may be restrictions on the parallel export of goods from the UK to the EEA. This is because goods placed on the UK market, after the UK has exited the EU, will not be considered exhausted in the EEA.

5. Next steps

The government is currently considering all options for the choice of regime, if the UK does not remain within the EEA following Brexit.
The legal and economic arguments for the future regime are highly technical, complex and finely balanced. The government is committed to engaging fully with stakeholders and consulting before any policy changes are made. “

Source - United Kingdom Intellectual Property Office (UKIPO)

Franks & Co have made arrangements to continue to represent our clients without interruption before the European Union Intellectual Property Office (EUIPO).

Article by Robert Franks robert.franks@franksco.com

Article Published September 20, 2019