WHAT ABOUT EXHAUSTION OF IP RIGHTS?
IP rights are said to be "exhausted" when the goods have been placed on the market in a given territory. This is important for distributors and retailers because once IP rights have been exhausted, the IP owner cannot object to any further re-sale or distribution of those goods within that territory (and possibly further afield, depending on the position in other territories on exhaustion). The TCA provides for both parties to adopt their own independent (and potentially different) positions on exhaustion.
Until the end of the Brexit transition period, the position in the UK and the rest of the EEA was that IP rights were regarded as exhausted when goods were placed on the market anywhere in the Single Market (which, until 31 December 2020, included the UK). For example, goods imported from say, Japan, into the UK, could be transported to France and sold there without the Japanese rights holder (or any of its licensees in the EEA) being able to object on the basis of its IP rights. However, from 1 January 2021, so far as the EU is concerned, the Japanese firm's IP rights in the EEA will not have been exhausted by placing the goods on the market in the UK. The Japanese firm will therefore be able to object to a UK business exporting those goods to France, on the basis that it has not given its consent to the use of its EEA trade marks (or other relevant IP rights) for the marketing or sale of those goods in the EEA. The UK, meanwhile, is taking a different approach from the EU to exhaustion. It will continue to regard IP rights as having been exhausted in respect of the UK as soon as goods are put on the market in the EEA. So, if the Japanese firm were to put its goods on the market in France, it could not then use its UK IP rights to prevent them being exported to the UK.
The upshot of this is that businesses importing goods into the UK will need the consent of the rights holder in the EEA if they subsequently wish to sell the relevant goods there. Meanwhile, IP rights holders in the EEA will have significantly more scope to restrict the supply of their goods from the EEA into the UK.