Brexaustion: “a feeling of utter weariness with the Brexit process and a longing for it to be over”. Trademark owners may feel the same way about the exhaustion of their trademark rights in post-Brexit UK.
1. What is trademark exhaustion?
Exhaustion of trademark rights means that, after a branded product has been put on the market by or with the consent of the trademark owner, the trademark owner cannot prevent the further sale, export or import.
2. Why is exhaustion relevant?
The principle of exhaustion is an important concept for trademark owners, because it will determine to what extent trademark owners can control their market areas, use different prices in different territories and deal with parallel import.
3. Exhaustion in the EU: today
To put it simply: once a trademark owner has put a product on the EEA market, he cannot use his trademark rights to prevent the further commercialization of this product in the EEA. This is due to the principle of “free movement of goods”.
Let’s further clarify with the example of a Belgian company producing branded toys.
1) If the company has sold a toy in Belgium, this toy can be resold and circulated freely in the EEA without the company’s consent.
2) If the company has sold a toy in the UK, this toy can be resold and circulated freely in the EEA without the company’s consent.
3) If the company has sold a toy in the US, this toy cannot be imported into the EEA without the company’s consent.
4. Exhaustion in the EU27 and UK after Brexit
While the EEA exhaustion regime will continue to apply in the EEA – which will not include the UK after Brexit -, the UK is considering the adoption of another exhaustion regime, notably “international exhaustion”. This means that products that have been put on the market by a trademark owner anywhere outside of the UK can subsequently be imported in the UK without the consent of the trademark owner.
In our example of the Belgian toy company, this would have the following consequences:
1) If the company has sold toys in Belgium, his toy can be resold and circulated freely in the EEA (which does not include the UK) without the company’s consent.
2) If the company has sold toys in the UK, this toy cannot be imported in the EEA without the company’s consent.
3) If the company has sold toys in the US, this toy cannot be imported in the EEA without the company’s consent but it can be imported in the UK without the company’s consent.
5. Impact for brand owners
Brand owners should be aware that, if the regime of international exhaustion will effectively be adopted by the UK after Brexit, their products can freely enter the UK market once they have been put on the market anywhere else. Therefore, the UK may become a marketplace for parallel import. While this may lead to lower prices for the UK consumer, trademark owners and their distributors will have less control over the UK market and may eventually face lower margins in the UK.
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