Edited by Irene Calboli and Edward Lee
Chapter 5: International intellectual property rules and parallel imports
There is much international disagreement about the merits or otherwise of parallel importing. As the phrase “parallel importing” suggests, an import (of a good that is protected as a patent or copyright or bearing a protected trademark) is “parallel” to a domestic intellectual property (IP) right in the country of importation. Put differently, there is a parallel IP right in the country from which the good is exported. The owner or exclusive licensee of the right in both territories may or may not be the same. The price at which the good is sold is often different (reflecting market conditions), thus creating an “arbitrage” incentive for export to a higher priced market. There is a relationship between the legal concept of parallel importing and exhaustion of rights in domestic law. When IP is embodied in a physical product, the sale of that product transfers ownership rights in the product, but not the underlying IP. For example, the person who purchases a copy of a copyright book cannot make and sell new copies of the book. However, the distribution-related IP rights are said to be “exhausted,” by which we mean that that copy of the book can be resold or otherwise treated as the property of the purchaser. If a country or trade territory allows the importation of a copy sold in another country or trade territory, then it is said to allow parallel importing. In this way the IP rights in both countries, or trade territories, are put in “parallel.”
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