The Government has confirmed that the UK’s existing regime governing the exhaustion of intellectual property rights will continue.

What’s an exhaustion regime?

One of the central features of ownership of IP rights is the rights holder’s ability to control the first sale their goods. However, once a good has been lawfully placed on the market, the rights-holder’s ability to control the distribution of their good is said to be “exhausted”, thereby allowing a secondary market in that good to develop.

An exhaustion regime determines in which countries the placing of a genuine physical good on the market will ordinarily exhaust the relevant IP rights in that good in the UK.

What has prompted the Government’s announcement?

Prior to Brexit, the UK followed the EU’s exhaustion regime. However, in January 2021 a new exhaustion regime – known as “UK+” – was imposed which mirrored the position prior to Brexit and, in general terms, meant that relevant IP rights in goods are exhausted in the UK when that good is placed on the market either in the UK or in the European Economic Area (EEA).

Later that year, a consultation was launched which asked whether to maintain the new regime or to introduce one of three alternative options.

What has the Government announced?

The Government has now responded to that consultation, confirming that it has chosen to maintain the UK+ exhaustion regime, stating that it 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”.

In practical terms, this means that the position for rights holders continues as it has been since January 2021: in general terms, they cannot rely on their rights to control the distribution of genuine physical goods after they have been lawfully placed on the market in the UK or in the EEA.

To read the Government’s response to the consultation in full, click here.