Exhausted but unchanged: UK maintains UK+ IP exhaustion regime following consultation

The UK Government has confirmed that the current ‘UK+’ exhaustion regime for intellectual property (IP) rights will be maintained, citing insufficient evidence to support any changes at this time. The announcement will be welcomed by businesses, investors and consumers.

Background

Exhaustion regimes play a crucial role in everyday commerce, setting the rules that are in place for the parallel importation of goods.  Under the UK+ regime, which has been in place since the UK left the EU, once goods have been legitimately placed on the market in either the UK or the European Economic Area (‘EEA’), the relevant IP rights in those goods are considered exhausted in the UK.  This allows parallel imports of goods from the EEA into the UK without the consent of the IP owner.

However, this arrangement is not reciprocated by the EU as the EU and UK did not agree any reciprocal arrangements for the exhaustion regime as part of the Brexit negotiations. This has resulted in goods first sold in the UK not being automatically considered exhausted in the EEA, potentially restricting UK exports to those markets.

Consultation

In June 2021 the Government launched a twelve-week public consultation which sought evidence and the views of stakeholders on four options for the UK’s future exhaustion regime. In summary, the options under consideration were to maintain the asymmetrical UK+ regime, adopt a limited national regime or an international regime, or a mixed exhaustion regime in relation to different sectors, products and IP rights.

There has been little change to the UK+ regime since the consultation was launched. A statutory instrument in 2023 (‘The Intellectual Property (Exhaustion of Rights) (Amendment) Regulations 2023’) ensured the continued operation of the regime, meaning that businesses, investors, and IP rights holders could continue to operate on the basis of the UK’s current parallel importation rules.

Maintaining the status quo

The consultation received 150 responses, mainly from businesses and organisations operating in the creative and health industries.   Overall, the responses to the consultation showed significant support of the UK+ regime and provided little quantitative data to support a change. The Government acknowledged that the lack of quantitative data on parallel trade corroborated the conclusions of an independent feasibility study commissioned by the UK Intellectual Property Office in 2019, which found that parallel trade was difficult to measure in most sectors as businesses collected little data on this matter.

Therefore, given the support for the existing arrangements, and in the absence of any economic evidence to support a change, the Government has decided to make the interim measures permanent. Furthermore, difficulties were identified with some of the proposed alternatives. For example, although some respondents favoured a national regime, they understood it was not considered reconcilable with the Northern Ireland Protocol (now amended by the Windsor Framework).

In maintaining the status quo, the Parliamentary Under-Secretary of State, Feryal Clark MP, commented that the UK+ regime “is a stable, well-understood regime that meets our objective to provide balance by having parallel importation laws which promote the interests of the British people and our IP-rich businesses”.

Conclusion

The Government’s decision to maintain the current UK+ regime is effective immediately and as it confirms the current law, no further legislation is required for it to come into force. The decision will be welcomed by UK businesses, particularly those reliant on parallel imports from the EEA. However, some respondents noted that the current system affords an advantage to EEA- based exporters compared to those based in the UK.

While the decision provides clarity for businesses, the Government has indicated that it remains open to revisiting the exhaustion regime in the future should comprehensive data concerning the economic impact of any proposals become available.  We will continue to monitor this area and report on any future developments.

The Government’s press release can be read here.