No Deal Brexit Government advice: exhaustion of rights
The impact of a No Deal Brexit on exhaustion of rights – UK Government advice released on 24 September 2018.
As part of the UK Government’s preparations for a possible “hard Brexit”, it has published a set of guidance notes on how intellectual property rights would be affected if the UK leaves the EU in March 2019 with no deal. This is part of a series of technical notices being issued by the Government to assist businesses in their preparations, although it is widely anticipated that an agreement between the UK and EU will still be possible.
Exhaustion of rights
Currently, IP rights are considered “exhausted” once goods have been placed on the market by the IP owner or with his consent anywhere within the European Economic Area (EEA), namely the member states of the European Union plus Iceland, Liechtenstein and Norway.
In a no-deal scenario, the UK Government has confirmed that the UK will unilaterally continue to recognise EEA regional exhaustion from exit day “to provide continuity in the immediate term for businesses and consumers”. Accordingly, IP rights in relation to goods which are being imported into the UK from an EEA country will continue to be considered as exhausted, at least for a temporary period (currently of unspecified length). This clarification will no doubt be welcome news for businesses such as those who parallel import pharmaceutical products into the UK. The UK Government is also considering options for what exhaustion regime should apply after the end of such temporary period.
However, the position relating to exports from the UK may well be different, if the UK and EU fail to reach agreement. (Under the terms of the proposed Withdrawal Agreement, published in March 2018, exhaustion was to continue to apply in relation to any goods for which the IP rights had already been exhausted both in the EU and the UK prior to the end of a transition period running to the end of 2020.) Therefore, there could be restrictions from exit day on the parallel import of goods from the UK into the EEA. In its technical notice, the UK Government advises that “business undertaking such activities may need to check with EU rights holders to see if permission is needed”. This could of course have potentially important implications for UK businesses who export to the EEA, as well as for business in the EEA who rely on supplies of products from the UK.