No deal Brexit - what does it mean for exhaustion of rights?

Exhaustion is the hot Brexit topic du jour. Regardless of the industry, changes to the exhaustion regime are set to affect everyone in ways both predictable and unpredictable.

This Kat has had lots of messages from friends in very different sectors wondering what on earth exhaustion of rights could mean and why everyone is so worried about it. The note goes some way toward answering both questions.

What is exhaustion?

The guidance note has this helpful explanation:

• The exhaustion of IP rights refers to the loss of the right to control distribution and resale of that product after it has been placed on the market within a specified territory by, or with the permission of, the right holder.
• A parallel import is a non-counterfeit product which is imported into a country where the intellectual property rights in that product have already been exhausted.
• The UK is currently part of a regional European Economic Area (EEA) exhaustion scheme, meaning that IP rights are considered exhausted once they have been put on the market anywhere in the EEA with the rights holder’s permission.

What if there is a no deal?

The UK government plans to have a one sided approach to exhaustion in the first instance if there is no deal.

The key points from the note are:

1. The UK will continue to recognise EEA exhaustion so the rules affecting imports of goods into the UK will not change. 
2. There may be restrictions on the parallel import of goods from the UK to the EEA. 
3. The government is currently considering all options for how the exhaustion regime should operate after this temporary period. 
4. The government is undertaking a research programme to support this decision. Information relevant to specific areas can be found here.

This could have major implications for a lot of cross border trade in both the short and longer term. The government's advice is buried within the note: "Businesses undertaking such activities [i.e. parallel imports] may need to check with EU right holders to see if permission is needed".

This is going to get complicated...