First things first: what do “parallel trade” and “exhaustion of rights” mean?
When goods that are protected by intellectual property (IP) are placed on the market by the IP owner, or with their permission (e.g. by a licensee or distributor), the IP owner “exhausts” their rights in that territory. This means that they cannot stop the further distribution of the goods within the same territory by invoking their IP rights. This further sale and distribution of genuine goods by third parties is what is called parallel goods (or trade, or imports/exports).
While the UK was a member state of the European Union (and during the Brexit Transition Period), the UK’s territory for purposes of exhaustion of rights and parallel trade was the whole European Economic Area (EEA). So, for instance, if an IP owner had placed their chairs, protected by a registered EU design, on the market in France, they had no recourse to stop a third party reselling these genuine chairs in the UK or Bulgaria or anywhere else in the EEA.
Once the Brexit Transition Period ends – on 1 January 2021 unless there is an eleventh hour extension – the UK will no longer be part of the EU’s exhaustion of rights and parallel trade regime.
The UK has yet to decide exactly what its post-Brexit regime will be. Like so much post-Brexit forecasting, then, the advice below is provisional, and assumes no deal is reached between the UK or EU (or that any such deal does not cover exhauastion of rights or parallel trade).
The likely legal position from 1 January 2021 is as follows:
- parallel exports: if you are exporting IP-protected goods from the UK to the EEA, you will most likely need the owner’s permission to do so, as their EU-wide rights will not have been exhausted by sale on the UK market; and
- parallel imports: if you are importing IP-protected goods from the EEA to the UK, these IP rights will likely still be regarded as having been exhausted for purposes of the UK, and you can continue to import lawfully into the UK as you did before Brexit.
Find out more at the government’s transition advice here.