UK: The UK Government's Guidance On Effects Of A "No Deal" Brexit On Exhaustion Of IP Rights

On 24 September 2018 the UK Government published a series of Technical Notices addressing various scenarios in which the UK leaves the European Union without an agreement, the so-called "no deal" or "hard" Brexit scenario. The Technical Notice dealing with exhaustion of IP rights is here.

The government has re-emphasised its commitment to seeking a positive deal with the EU ahead of the potential Brexit date of 29 March 2019, but has outlined contingency plans in the event that no deal is reached.

The legal doctrine of "exhaustion" of an IP right relates to the loss of the ability of a right holder to control further distribution and resale of a product protected by an IP right (such as a patent, SPC, design or trade mark right) once the product has been placed on the market in a specified territory with the right-holder's consent. The UK currently forms part of the European Economic Area (EEA) which operates a scheme in which an IP right in a product is considered exhausted once that product has been put on the market anywhere in the EEA by, or with the permission of, the right-holder. Thus, it is not possible for example for a UK patent to be used to prevent importation into the UK of a product protected by that patent, if the same product was previously placed on the market elsewhere in the EEA with the right-holder's consent.

The government now indicates that in the event of "no deal" it will continue to recognise the EEA exhaustion scheme for a temporary period from the date of the UK's exit from the EU, resulting in no immediate changes to rules affecting imports into the UK. This should provide useful certainty to companies importing into the UK products that were first placed on the market in the EEA. Options for future operation of the exhaustion regime after the initial temporary period are being investigated.

However, the position as regards import of products first placed on the market in the UK into the EEA is not clear – the UK government indicates that restrictions may be applied by the EEA. It is therefore suggested that businesses undertaking such activity check with EU right holders to see if their permission is needed to continue the activity.

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