Pharma Trade Marks: Exhaustion and Parallel Trade in the UK - Special Report 2022

We are excited to announce the release of our latest special report Pharma Trade Marks: Exhaustion and Parallel Trade in the UK.  Led by trade mark attorney Rebecca Anderson-Smith it looks at the current trade mark exhaustion landscape, and the outcome of the recent UK government consultation (2021) on Exhaustion and Parallel Trade in the Pharmaceutical Sector.  It also includes commentary from Kate O'Rourke, Sean Jauss and Jan Rether.

Ever since the UK announced its intended departure from the EU, there has been much speculation about whether and how the UK would amend its trade mark exhaustion and parallel trade regime.

The EU currently has a regime of EEA regional exhaustion, whereby IP owners’ rights over their goods are ‘exhausted’ once they are put on the market in the EEA under a trade mark. Since the UK left the EU on 31 December 2020, the UK is no longer recognised as part of the EEA, and a business importing IP protected goods from the UK to the EU could require the consent of the EU rights holder.

On the other hand, the UK has continued to unilaterally participate in the EEA regional exhaustion regime, meaning that IP rights in goods first placed on the market in the EEA are considered exhausted in the UK, and these goods can be imported into the UK without the right holder’s permission, subject to certain conditions. There is a considerable market for these parallel or ‘grey’ imports of pharmaceuticals in the UK and the EU, due to the significant difference in pricing of these products across the different countries. The trade mark owner may find their goods being sold in countries where they never intended them to be on the market.

In June 2021, the UK Government launched a public consultation on the UK’s future exhaustion of intellectual property rights regime. The majority of respondents favoured the current unilateral application of the EEA regional exhaustion regime (termed “UK+”), at the same time expressing unhappiness at the lack of reciprocity from the EU.

As such, the UK will retain its current exhaustion regime. However, the UK government has not ruled out the possibility of making changes in the future.

Rebecca Anderson-Smith, Partner, Chartered Trade Mark Attorney at Mewburn Ellis, said:

“Before Brexit, dealing with the trade mark issues under a European distribution agreement was relatively straightforward. Now however, the impact of the different exhaustion regimes within Europe needs to be accounted for. At the same time, pharmaceutical trade mark owners continue to see parallel imports of their goods into the UK, often in spite of their commercial interests.

“For the moment the Government has held off making any changes to the regime. However, the landscape is complex and it is vital that pharmaceutical trade marks owners keep abreast of developments as we may well see changes from the UK government in the future.”