On 28 November 2018, the UK Government published draft secondary legislation changing UK intellectual property law relating to exhaustion of IP rights to deal with Brexit. The aim is to ensure that the doctrine of EEA-wide exhaustion continues to apply in the UK post-Brexit, irrespective of whether there is a deal or a no-deal Brexit.
What is exhaustion?
As summarised in the explanatory memorandum, the exhaustion rule prevents the holder of an intellectual property right from using that right to stop the importation of a product into an EU country where it has been lawfully placed on the market in another country in the European Economic Area (EEA). In other words, an IP holder cannot use its IP rights to prevent parallel import (sometimes called grey imports) of goods from within the EEA. Unless the law is changed, this will not apply after Brexit, because the UK will no longer be part of the EEA. The proposed legislation seeks to change this so that exhaustion still applies to any goods brought into the UK, provided they have been placed on an EEA market with the IP owner’s consent. This will apply irrespective of whether there is a Brexit deal or not, and it is intended that this comes into effect on Brexit-day, if approved by Parliament.
In other words it keeps the status quo. Or does it?
The draft legislation does not, and cannot, provide that the same will also apply in the EEA. Unless the EU makes analogous changes, an IP owner will (as of Brexit-day) be able to use its EEA IP to stop the importation into the EEA of goods which were placed on the market in the UK. If there is a no-deal Brexit, this could mean that an IP holder could prevent parallel imports of UK goods into the EEA.
What about the regulatory position?
As mentioned in an earlier blog, the MHRA’s guidance on no-deal Brexit follows a similar line, as the MHRA has said it will ensure that parallel imports of goods, including pharmaceuticals, can continue from the EU/EEA.