The UK Intellectual Property Office has published a draft regulation on exhaustion of intellectual property rights, which has been laid before Parliament for approval. The regulation is aimed at ensuring that the UK's post-Brexit 'one-way' exhaustion regime continues after the Retained EU Law (Revocation and Reform) Act comes into effect on 1 January 2024, at least for now.

Retained EU Law (Revocation and Reform) Act

The Retained EU Law (Revocation and Reform) Act 2023 (the "Act") was passed in June 2023, with the aim of ensuring that certain EU law that was retained on Brexit is repealed, revoked or amended by the end of 2023. It will also make it easier for UK courts to depart from retained EU case law. Directly effective rights and obligations derived from EU treaties and EU directives will be repealed by the Act. The doctrine of EU law supremacy, as well as general principles of EU law, will be abolished. And certain retained EU law, set out in Schedule 1 of the Act, will automatically expire on the 'sunset' date of 31 December 2023.

The government is now considering the impact of the Act, and whether any laws need to be preserved or amended to avoid any unintended consequences of the Act. As a result, in the area of intellectual property, the UK Intellectual Property Office (IPO) has published the Intellectual Property (Exhaustion of Rights) (Amendment) Regulations 2023 and the The Design Right, Artist’s Resale Right and Copyright (Amendment) Regulations 2023 which have been laid before Parliament for approval and, if approved, will come into effect on 1 January 2024.

Exhaustion of Rights Regulation

When the UK left the EU, the UK and the EU agreed that both parties are free to determine what exhaustion regime should apply to their territories. The UK implemented a unilateral application of the pre-Brexit regional EEA exhaustion regime. This means that the current position is that once a product has been legitimately placed on the market in the EEA, that product can continue to be re-sold into the UK, without being prevented by the rightsholder. However, the EU may allow rightsholders to restrict the importation of certain goods from the UK into the EEA that have not previously been put on sale in the EEA. In effect, this means the UK has a one-way exhaustion regime, until the UK decides on a future regime.

Since the principle of regional EEA exhaustion derives from directly effective rights and obligations relating to free movement of goods, and those rights and obligations will fall away when the Act comes into force, the government is restating the current UK laws on exhaustion of rights, to avoid any unintended consequences of the provisions of the Act. This means the primary legislation for copyright, patents (and SPCs), designs and trade marks will be amended by the regulations, to ensure that the current exhaustion regime continues after the Act comes into force.

Comment

The UK IPO has identified exhaustion of rights as an area where it is necessary to ensure that the regime the government put in place on Brexit (a unilateral "one-way" exhaustion regime) is not affected by the Act coming into force on 1 January. However, the government has said this does not mean the current exhaustion regime will not be amended in the future but that at the time of publishing the regulation, no decision has been made on a future regime. To read more about the government's consultation on a possible future regime, see our earlier article here. If and when the government decides to revisit the regime remains to be seen.