Cherrie Stewart

Columnist

Cherrie Stewart

Director and Chartered Trade Mark Attorney at Ansons (MacLachlan & Donaldson)

Exhausted?

Ansons’ Cherrie Stewart discusses the exhaustion of rights in relation to the Northern Ireland Protocol.

The Protocol on Ireland and Northern Ireland, (the Protocol) has created a situation wherein, in theory, Northern Ireland companies have access to markets of both the United Kingdom (UK) and the European Economic Area (EEA), which consists of the European Union plus Norway, Liechtenstein and Iceland. One thing not fully addressed in the Protocol is Intellectual Property Rights (IPRs) and the doctrine of exhaustion of rights.

What is Intellectual Property?

Intellectual Property is an umbrella term which covers individual rights, such as trade marks which protect those signs which distinguish one undertaking’s goods and services from those of another, patents which protect technical innovations and improvements, design rights which protect the appearance of a product and copyright which protects creative and literary works.

Exhaustion of Rights

The aim of the doctrine of exhaustion of rights is to balance the rights of the owners of IPRs while preventing obstacles to freedom of movement within the EEA and encouraging competition and fair trade.

Position Pre-Brexit

Pre-Brexit, goods first placed on the market anywhere in the EEA (including in the UK) by the owner of the IPRs, or with their consent, “exhausted” the IPRs in those goods. This meant that the purchaser of those goods could move them anywhere within the EEA and further deal with them without, except in very specific circumstances, interference by the IPR owner.

Position Post-Brexit

While the IPRs in any goods placed on the market within the UK or EEA before 1st January 2021 continue to be exhausted in both the UK and the EEA, as with so many other things, the situation changed. Goods placed on the market in the UK after 1st January 2021 no longer exhaust IPRs in the EEA. Those who wish to put goods from the UK onto the market in the EEA will require the consent of the owner of any IPRs in those goods which may subsist there. This includes IPRs in raw materials and parts for manufacturing as well as finished articles.

However, currently the IPRs in goods placed on the market in the EEA are still exhausted in the UK, meaning goods, which have been placed on the market in the EEA by the owner of the IPRs or with their consent, can be brought into the UK without reference to the owners of said IPRs. This is unlikely to be the long-term position. At the time of writing a consultation into the UK’s future exhaustion of intellectual property rights regime is ongoing and changes are highly likely to be made.

The Protocol and Exhaustion of Rights

What does this mean for goods placed on the market in Northern Ireland, which has a ‘special’ relationship with the EU? Under Article 5(4) of the Protocol there are a number provisions of EU law which now apply to IPRs in NI. Those specifically listed under Section 45 of Annex 2 of the Protocol relate to:

• geographical indications of spirit drinks; • quality schemes for agricultural products and foodstuffs; • geographical indications of aromatized wine products; • a common organisation of the markets in agricultural products; and • customs enforcement of intellectual property rights.

Mention of the doctrine of exhaustion of rights is not made and the EU Commission has previously declared that:

“While the Protocol on Ireland/Northern Ireland provides that certain rules of the EU acquis in respect of goods apply to and in the United Kingdom in respect of Northern Ireland, it does not provide for the exhaustion of intellectual property rights in the EU in cases where a good has been legally put on the market of Northern Ireland.”

The consequence of this is that the IPRs in goods placed on the market by their owners, or with their consent, in Northern Ireland after 1st January 2021 have not been exhausted in the EEA therefore, be warned, those who export goods from Northern Ireland into the EEA, without the consent of the owner of any IPRs, risk infringing those rights and may potentially face legal action.

Next steps

For the future, keep an eye out for the likely change to the exhaustion of intellectual property rights regime of the United Kingdom.

For now, we strongly recommend that, if you have not already done so, you review your supply chain. Are you exporting physical goods to the EEA, including to Ireland? Have you, or your supplier, obtained the consent of the owner of the IPRs in the goods to allow the export of those goods to the EEA?

If you own IPRs, consider whether you wish to allow the export of those goods from the UK into the EEA? If not, explore what action you can take to prevent it? Without border checks between Northern Ireland and Ireland it will be difficult to place a customs order on such goods.