Regional exhaustion of trade marks and other intellectual rights applies within the EEA (the EU + Norway, Iceland and Liechtenstein).  Until recently, the UK has been part of the EEA, but left as a result of Brexit.  What does this mean for exhaustion of rights?

The UK formally left the EU on 31 January 2020 and entered into a transition period, governed by the snappily titled ‘Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’ (the “Withdrawal Agreement”).  The Withdrawal Agreement provides that existing laws will continue to apply until the transition period ends on 31 December 2020.  From 1 January 2021, the transition period will no longer apply.

Goods sold before 1 January 2021

Rights which were exhausted in the UK or EEA before the end of the transition period will remain exhausted.  So, for products first put on the market in the UK or EEA on or before 31 December 2020, relevant rights will remain exhausted and those goods will be able to continue to move freely (from an exhaustion point of view) between the UK and EEA after 1 January 2021.

Goods sold after 1 January 2021: imports from the UK into the EEA

As things stand, from 1 January 2021 the EEA will regard the UK as a ‘third country’ for exhaustion purposes.  As such, from 1 January holders of relevant intellectual property rights, such as trade marks, will be able to object to the importation into the EEA from the UK of products first put on the market in the UK, unless consent has been given for those specific products to be marketed in the EEA.  The usual evidential requirements will need to be satisfied, such as those set out in case law of the Court of Justice of the EU relating to imports from outside the EEA without consent.

Goods sold after 1 January 2021: imports from the EEA into the UK

Conversely, again as things stand, from 1 January 2021, the UK will be maintaining (at least initially) one-way regional exhaustion, so that goods first put on the market in the UK or the EEA will be exhausted so far as the UK is concerned. As such, holders of relevant intellectual property rights, such as trade marks, will not be able to object to the importation into the UK from the EEA of, or further dealings in products first put on the market in the EEA or UK, unless there are ‘legitimate reasons’ to object to further marketing.  At present, what count as ‘legitimate reasons’ will follow the case law of the CJEU, including relevant case law on repackaging of pharmaceuticals.  However, the UK courts, including the Court of Appeal and Supreme Court, will have power to depart from CJEU case law going forwards. The UK government intends to publish a formal consultation on the UK’s permanent exhaustion regime in early 2021.

These changes will affect the way parallel importers can trade, and the way that rights holders may be able to respond to notifications or to becoming aware of imports into the EEA from the UK.