Government completes its initial analysis of the consultation on exhaustion of TM rights

Importers to and exporters from the UK need to be careful that they do not fall foul of trade mark law.

Following Brexit, traders can bring trade marked goods into the UK from the EEA without infringing trade mark laws provided that the trade mark proprietor has consented to those goods being placed on the EEA market.  However, the reverse is not true. So, traders selling trade marked goods in the UK, cannot export them to other EEA countries without the relevant trade mark owner's consent.  If you are the trade mark proprietor then this is not an issue for you, but it will be an issue for any resellers or distributors of third party trade marked goods.

Goods coming into the UK from outside the EEA continue to infringe trade mark rights unless the trade mark proprietor has consented to those goods being put on the UK or EEA market.

The government has completed an initial analysis of the recent consultation to determine if anything should change to the system described above, which is referred to by professionals as the trade mark exhaustion regime (i.e. trade mark rights are exhausted once the trade mark proprietor has consented to putting the goods on the market in this case in the UK or EEA). It is designed to facilitate the free movement of goods around the EEA.

The proposed solutions

The Government is considering three possible long term solutions to trade mark exhaustion namely:

National exhaustion

Trade mark rights would only be considered exhausted in the UK once the goods were put on the market in the UK with the consent of the trade mark proprietor. This would mean that any goods coming from any other country including the EEA would infringe trade mark rights without the consent of the trade mark proprietor.

International exhaustion

Trade mark rights would be exhausted worldwide once the goods had been put on the market of any country with the consent of the trade mark proprietor. So, any goods could then flow into the UK without infringing any trade mark laws regardless of where they originate. This used to be the position before the UK joined the EU.

Mixed Regime

Some form of mixed regime could be adopted by the UK. This is where specific goods, sectors or IP rights are subject to one regime and all other goods, sectors and IP rights are subject to a different regime. This regime may be complex and present challenges for businesses and consumers to understand.

Due to the lack of responses, the Government concluded that there is insufficient data to understand the potential economic impact of the various alternatives. As a result, a decision has not been made on whether or not the current regime will change. The government has said that further development of the policy framework needs to happen before reconsidering the evidence and making a decision on the future exhaustion of IP rights regime.

So, what is the current position?

Currently, the UK is unilaterally participating in the EEA regional exhaustion regime. The result being that IP rights in the goods first placed on the market in the EEA by the trade mark proprietor or with its consent are considered exhausted in the UK, and so the goods cannot be prevented from being imported and sold in the UK. However, the IP rights in goods first placed on the market in the UK are not exhausted in the EEA and so the trade mark proprietors can prevent the importation and sale of such goods in the EEA.

Therefore, if you are exporting trade marked goods originating from a third party to the EEA, you run the risk of infringing trade mark rights and having the goods seized.

Paul Cox, Partner, said: "It is a shame that there was insufficient data for a decision to be made. Clarity in this area is really beneficial to businesses and trade mark exhaustion has big implications for businesses and trade between countries."

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