Table of Contents

Research Handbook on Intellectual Property Exhaustion and Parallel Imports

Research Handbook on Intellectual Property Exhaustion and Parallel Imports

Research Handbooks in Intellectual Property series

Edited by Irene Calboli and Edward Lee

From the Americas to the European Union, Asia-Pacific and Africa, countries around the world are facing increased pressure to clarify the application of intellectual property exhaustion. This wide-ranging Research Handbook explores the questions that pose themselves as a result. Should exhaustion apply at the national, regional, or international level? Should parallel imports be considered lawful imports? Should copyright, patent, and trademark laws follow the same regime? Should countries attempt to harmonize their approaches? To what extent should living matters and self-replicating technologies be subject to the principle of exhaustion? To what extent have the rise of digital goods and the “Internet of things” redefined the concept of exhaustion in cyberspace? The Handbook offers insights to the challenges surrounding these questions and highlights how one answer does not fit all.

Chapter 6: Economic perspectives on exhaustion and parallel imports

Keith E. Maskus

Subjects: law - academic, intellectual property law, international economic law, trade law


Parallel imports (PI) are legitimately sourced goods brought into a country, without the authorization of the entity owning some form of intellectual property rights (IPRs) to those goods, after they have been placed into circulation in another nation. Whether such trade is legally permitted depends on the geographic scope within which the IPR, whether patent, copyright, trademark or other exclusive right, is exhausted upon first sale. Typically when a commodity is first sold within a country the IPR holder cannot prevent its owner from reselling it within that market. The exhaustion doctrine governs the ability of such goods to be imported legally into another market. Some countries give the IPR owner in the target market the right to exclude such goods sold abroad from importation, a situation referred to as national exhaustion. The United States (U.S.) adopts this policy in most areas.1 Others permit parallel imports, which are called that because by definition they occur within a parallel distribution channel outside the control of the originator. This is the case of international exhaustion, which may be found for certain types of IPR in Brazil, New Zealand, and elsewhere.2 The European Union (EU) and other members of the European Economic Area (EEA) pursue an intermediate policy of regional exhaustion, under which IPR owners may exclude PI from outside the EU geographical area but such trade is fully legal inside the region. Under the terms of Article 6 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) at the World Trade Organization (WTO), member nations are given full latitude to select their own exhaustion regimes. It is not surprising that a global rule could not be reached, given the complexity of the subject. There are marked differences across markets in the permissibility of this trade.3 Moreover, for any country the law may vary across types of IPRs. For example, Japan traditionally followed national exhaustion in patents until recent court decisions opened the market in certain circumstances.4 However, it is open to parallel imports in copyrighted goods except motion pictures. Australia has a mixed regime, being open to PI in trademarks but closed in patented goods (with limitations) and in copyrighted products, except for compact disks and books.

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