18 January 2022: update
Any change to the Exhaustion of Rights framework for the UK has the potential to affect many business sectors and consumers.
The government has completed an initial analysis of the recent consultation. Unfortunately, there is not enough data available to understand the economic impact of any of the alternatives to the current UK+ regime. As a result, it has not been possible to make a decision based on the criteria originally intended. However, the government remains committed to exploring the opportunities which might come from a change to the regime. Further development of the policy framework needs to happen before reconsidering the evidence and making a decision on the future exhaustion of IP rights regime.
We do not currently have a timeframe for a decision, but we will provide a further update to stakeholders and businesses in due course.
The government has published the summary of responses to this consultation.
Now that the UK has left the EU, the UK has an opportunity to decide its future regime for the exhaustion of intellectual property rights. This decision is vitally important for the UK as it will govern future rules on parallel imports into the UK.
Intellectual property (IP) refers to creations of the mind. This includes inventions, creative works or symbols used in commerce. IP is protected by rights such as patents, trade marks, designs or copyright which are protected by law so that the creators can control use of their works in order to earn financial benefit or recognition. IP rights exist to incentivise innovation and creation of new technology, products or creative works. However, this also needs to be balanced against enabling competitive markets, consumer choice and fair access to IP-protected goods for the benefit of society.
One mechanism to provide this balance is the principle of ‘exhaustion of IP rights’. While owners of IP can control distribution of their creation in terms of the first sale of their product, the principle of exhaustion of IP rights puts some limits on how far that control extends. A basic example is that once you have bought a book, the owner of the copyright in that book can’t then stop you from selling that book to another person in the same territory.
Exhaustion of IP rights underpins parallel trade. Parallel trade is the cross-border movement of genuine physical goods that have already been put on the market. This is the import and export of IP-protected goods that have already been first sold in a specific market, for example moving a good that has been sold in another country and importing that good into the UK.
The question of what our future exhaustion regime is an important one as it underpins the rules on parallel trade of goods into the UK. While parallel importation of goods that have been first sold in other EEA countries is currently permitted, it is right to examine whether these current arrangements best serve the UK’s interests.
Given the potential impact across many business sectors, we appreciate that any change from the current system that came into force on 1 January 2021 could have far-reaching effects. We are seeking your views on what exhaustion regime should be implemented, and if there is to be a change, how any change should be implemented.
For further information about exhaustion of IP rights and parallel trade, please watch our webinar.
Please see the below links to the consultation document, impact assessment and response form.
Respond to the consultation by emailing IPExhaustion@ipo.gov.uk with your completed response form.