Following a 12-week consultation last summer the UK government has announced that, for now at least, there is to be no change to the current exhaustion of IP rights regime in the UK.

Exhaustion of IP rights is a mechanism to balance the rights of IP creators and access to products by the public.  In essence, whilst the IP owner can put limits on the original sale of a protected product, once it has legally been sold into the marketplace, further sales within that marketplace are possible without the IP owner being able to limit these sales.

At present the relevant “marketplace” for goods traded in the UK is the EEA.  For example, a DVD subject to copyright protection which had previously been sold in France with the consent of the copyright holder could freely be imported into the UK.  This is known as parallel trade.  However, as a result of Brexit this parallel trade is no longer reciprocal.  Accordingly, a product initially sold in the UK with the consent of the copyright holder cannot be exported into the EEA.

The consultation sought views on how the current mechanism affected their company and, preferences for a future exhaustion regime and what affect changes would have.  Responses from the creative industry where the most prevalent accounting for over a third of the 150 responses received, followed by the health sector with a little over a quarter of all responses.

Perhaps unsurprisingly in such a complex area affecting a wide range of industries, there was no overall consensus as to whether the current situation should be maintained, or if an alternative was required.  For instance, whilst the current unilateral approach can provide an advantage for importers into the EEA over their UK counterparts, UK based importers in some sectors are able to leverage a larger market to keep UK prices lower.  The current regime also broadens the UK supply base, increasing resilience.

Given the broad range of responses and the potentially far reaching economic and legal impact of the potential changes the government has decided that there isn’t enough data to make a decision at this time.  As such they will  continue to assess the situation for the time being.

If you trade with Europe and have questions regarding exhaustion of rights, please contact one of our experts.