Parallel Imports And Exclusive UK Distribution Post-Brexit

• Published date: 07 June 2021
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Blaser Mills
• Author: Ms Rebecca Cooper

The UK's departure from the European Union on 31 January 2020 was followed by the long and well-documented negotiation to strike an acceptable trade deal. It has been clear from news bulletins this year that the agreed deal, implemented on 1 January 2021, has had an inescapable impact on cross-border trade. One important aspect that has not made headlines but has major implications for domestic owners and exclusive licensees of intellectual property rights (IPR) such as trade marks in the UK, lies in the changes to the law relating to parallel imports and exhaustion of rights.

Parallel imports and exhaustion of rights

Normally, any trade, including import and export, of branded goods with registered trademarks can only be done with the permission of the owner of the IPR, for example through a licensed distributor. Parallel importing is where genuine IP-protected goods - not counterfeits - are imported from one territory into another licensed territory. While the default position should be that such imports and exports need the IPR owner's permission, the EEA has adopted a rule known as exhaustion of rights. This states that where the branded goods are sold in one EEA country with the IPR owner's permission, those goods can lawfully be sold or imported/exported into any other EEA country without seeking any further permission. In other words once placed on the market in the EEA the right to prevent the further onward sale of those goods are exhausted. This means that ownership of a registered trade mark in the UK cannot by itself stop the sale of those goods into the UK from another member of the EEA.

Changes

Prior to Brexit, IPR-protected goods that were sold legally in the UK could (subject to any contractual limits set by the IPR owner) be freely exported to any other EEA country under the exhaustion of rights rules, and vice versa.

The legal position following Brexit however, creates a more uneven legal position.

• Branded goods sold in the UK can no longer be freely exported to the EEA without permission, as the IPRs are no longer considered exhausted in the EEA by being placed on the UK market. UK businesses looking to export branded goods into the EEA now need to seek the permission of the IPR owner(s) in the EEA in order to export there, with the risk that the IPR owner may refuse that permission and prevent the export.
• Owners of IPR in the UK cannot, however wield this same power over branded goods imported into the UK. This is because IPR in...