The exhaustion of rights principle and parallel importation : its effect on free movement of goods in relation to trade marks

Abstract

The obvious purpose of intellectual property is to give protection to rights owners against competing enterprises. In international trade however, these rights have acquired a separate significance. While the free movement of goods is a basic instrument for Member State integration into the EU, goods benefiting from some sort of intellectual property protection can be prevented from moving from one territory to another, thereby leading to a partitioning of the internal market. The lack of harmonisation of the intellectual property laws of Member States, together with the fact that none of these laws are fully reconciled with the requirements of the free movements of goods, has led to conflicts revolving around parallel importation. The underlying rationale of this conflict encompasses the extent to which territoriality limited intellectual property rights could prevent the cross-border movement of legitimate goods, which in tum gives rise to internal parallel importation. An important factor which emerges from the relationship between parallel importation and the internal market is the question of the exhaustion of rights. This is concerned with what effect the sale of protected goods could have upon an intellectual property owner's ability to control the resale of those goods. This thesis aims to delve into the above concerns with particular emphasis on trade marks, the enforcement of which is considered as the most obvious means of market partitioning. The Court of Justice has been instrumental in resolving the conflict between the desire for an unrestricted common market and inherently restrictive national intellectual property rights. For this reason frequent reference will be made to the decisions of the ECJ in an effort to assess how various national courts have treated parallel trade under the Trade Marks Directive. In trying to determine if there is an inherent limitation to intellectual property rights within the Community, this thesis will consider the Community's efforts at eliminating differences in national laws and how harmonisation of trademark laws of Member States might set limits upon trade mark rights. Due importance is given to the development of the doctrine of exhaustion of rights after a consensual first sale. This leads to an evaluation of what constitutes consent, a fundamental element to the whole system of first sale exhaustion. The lack of any definition of this term in both the Trademark Regulation and the Trade Marks Directive will be addressed in an effort to assess whether this approach, which precludes national laws from filling in the definitional gap left by the Community legislators, serves to create further market segregation.