Earlier this month, the UK government announced its long-awaited decision on the future exhaustion regime for intellectual property (IP) rights: the interim “UK+” system put in place after Brexit is now permanent. 

The announcement came with minimal fanfare and could almost be seen as an anticlimax. However, it means that rights-owners, parallel traders and consumers can now continue to operate without the uncertainty of a potential fundamental shake-up to their business models.

What was the position before Brexit?

Before Brexit, the UK was a part of the EU’s regional exhaustion system. This meant that IP rights in goods first placed on the market anywhere in the EEA, by or with the right-owners' consent, would be considered exhausted in the rest of the EEA. Consequently, they could be both parallel imported into the UK from the EEA and parallel exported out of the UK to the EEA. (Note this is referring to genuine goods, not counterfeits.) 

The exhaustion of IP rights was one of the hot topics during the Brexit negotiations and one in which the UK government fought hard, but was ultimately unsuccessful in securing reciprocity. 

From 1 January 2021, there has been an asymmetric exhaustion regime in place where goods placed on the EEA market can flow freely into the UK, but UK-placed goods cannot automatically enter the EEA, unless they have the requisite permission from the rights-owner. The UK government considered this to be the best interim position while it had time to consult on other options and the way forward for UK businesses and consumers. 

Key sectors identified as IP rights-intensive and affected by parallel trade are fast-moving consumer goods (FMCG), luxury goods, print and publishing, pharmaceuticals and automotive. 

Consultation 

In June 2021, the UK Intellectual Property Office (IPO) launched a wide-ranging consultation on the UK's future exhaustion regime (excluding geographical indications, plant variety rights and rights in purely digital goods). 

There were four options on the table:

• Option 1: Maintain the “UK+" regime in place since January 2021. Parallel goods may be freely imported into the UK from the EEA, but not from the UK to the EEA. 
• Option 2: Move to a national exhaustion regime. This would mean that IP rights in goods would be exhausted in the UK when they are put on the UK domestic market, preventing the parallel importation of goods into the UK. Although the government included this option for completeness and to gather evidence on its economic impact, it was always considered incompatible with the UK's obligations under the Northern Ireland Protocol and subsequently the Windsor Agreement.
• Option 3: Move to an international exhaustion regime. This would mean that IP rights in goods would be exhausted in the UK when a good is placed on the market in any country. This would enable businesses to parallel import goods from anywhere in the world without permission from the IP rights-owner.
• Option 4: Move to a mixed exhaustion regime. This would customise the UK’s exhaustion rules for a specific good(s), sector(s), or IP right(s). Other goods, sectors, or IP rights would face different rules.

There were 150 responses to the consultation, which included those from trade associations, with the pharmaceutical and creative industries being most heavily represented.

The government's initial analysis from the consultation was that there was not enough data to understand the economic impact of the options and support a change from option 1, which had been put in place as a temporary option after Brexit (as explained above). The government at the time said:

 "….[it] remains committed to exploring the opportunities which might come from a change to the regime. 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".

Decision time!

On 15 May 2025, news broke that the UK government had reached a final decision on the future exhaustion regime in the UK: the interim “UK+” regime was here to stay. (See IPO, press release and the government's full response to the consultation released on the same day.) 

The government explained that after careful consideration, it has decided to maintain the “UK+” regime. Key to its decision was that the majority of respondents to the consultation reported that this regime is working well, which is a view shared by interested parties who have been engaging with the policy choice since the consultation period closed. Also, the fact that the consultation did not elicit robust quantitative evidence to support a change to any of the alternative options.

The government's assessment of each of the four options includes the following points:

1. UK+ regime: This regime is working well providing an effective balance between the various interests of the country, including the promotion of competition and fair access to IP-protected goods. Maintaining this regime will avoid transition costs arising from amending business models.
2. National exhaustion regime: The government continues to maintain that this regime is not reconcilable with the UK's international commitments.
3. International exhaustion regime: Although, theoretically, this regime could lead to greater competition among businesses, increased choice and lower prices for consumers, there was insufficient evidence to demonstrate it would lower prices for consumers, as any savings made may not be passed to UK consumers. There could also be a potential reduction of goods tailored specifically for the UK market. This option received little support from respondents to the consultation, with the creative industries in particular raising concerns about how it may damage their sector.
4. Mixed exhaustion regime: This regime could create the largest regulatory burden of all the potential options. Establishing specific rules for a type of good, sector or IP right could potentially create substantial operational and administrative challenges for parallel imports, as a good or sector could contain multiple IP rights. This option received little support from consultation respondents.

Final comments

Navigating exhaustion regimes and knowing when parallel imports may freely enter a market has never been straightforward for rights-owners, importers and consumers. While the UK leaving the EU added another layer of complexity with the regime becoming asymmetrical, the fact that the government has now made a final decision will provide some stability in an increasingly unstable international geopolitical environment. Businesses and consumers will generally be able to continue operating as they have done so since Brexit kicked-in, being alive to the challenges and opportunities open to them through the different international exhaustion regimes.

For UK rights-owners, this will include continuing to routinely monitor the source of parallel imports (such as working with customs) as they can still rely on their IP rights to prevent products from outside the EEA entering the UK without permission. Parallel traders will equally need to continue with robust systems for checking the origin of products before moving them across borders, and examine existing contracts to check they align with the “UK+” regime.