UKFT together with the British Fashion Council and Walpole held a webinar to outline the different possibilities for the UK’s future regime for the exhaustion of intellectual property rights which will underpin the UK’s system of parallel trade, with legal firm Mishcon de Reya.

We urge UK fashion and textile brands to respond to the consultation as the chosen exhaustion regime will have significant impact to brand owners and their businesses.

UKFT, BFC and Walpole will be making a submission to the consultation on behalf of the industry. Please tell us your views by completing this survey here.

If you would like to make an individual submission, the link to the consultation is here. 

Intellectual property (IP) rights such as patents, trade marks, designs or copyright exist to incentivise innovation and creation of new technology, products or creative works. However, this needs to be balanced against enabling competitive markets, consumer choice and fair access to IP-protected goods for the benefit of society.

One mechanism to provide this balance is the principle of ‘exhaustion of IP rights’. While owners of IP can control distribution of their creation in terms of the first sale of their product, the principle of exhaustion of IP rights puts some limits on how far that control extends. A basic example is that once you have bought a book, the owner of the copyright in that book can’t then stop you from selling that book to another person in the same territory.

Exhaustion of IP rights underpins parallel trade. Parallel trade is the cross-border movement of genuine physical goods that have already been put on the market. This is the import and export of IP-protected goods that have already been first sold in a specific market, for example moving a good that has been sold in another country and importing that good into the UK.

Prior to 1 January 2021 (Pre-Brexit), the UK was part of the EU which applies a regime of EEA-wide exhaustion. This meant when an IP owner puts goods on the market (or they are put on the market with their consent) within the EEA, they cannot enforce their IP rights in relation to those goods to prevent their resale in the EEA (except in limited circumstances).

After 1 January 2021 (Post-Brexit), the UK decided unilaterally to participate in the EEA-wide exhaustion regime. This means goods put on the market in the EEA can continue to be imported into the UK without requiring the consent of the relevant IP owner. As the UK is now no longer in the EEA, the same does not apply for goods put on the market in the UK. The relevant IP owner may be able to prevent goods put on the market in the UK being exported to the EEA.

The current exhaustion regime in the UK means:

• Goods purchased in UK can be freely resold in the UK
• Goods purchased in the EEA/EU can be freely resold into the UK and EEA/EU
• IP Rights owner could challenge re-sale of goods purchased outside UK/EEA/EU

There are currently four main options for consideration as part of the UK consultation ending 31 August 2021.

• UK+ regime – maintain unilateral participation in the EEA regional exhaustion regime
• National exhaustion regime
• International exhaustion regime
• Mixed regime, potentially comprising differing approaches for certain sectors, products and/or IP rights

Exhaustion of Rights presentation: Mishcon de Reya

This was presented as part of UKFT and BFC’s Industry Government Forum. Read more here.