Research Handbook on Intellectual Property Exhaustion and Parallel Imports
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Research Handbook on Intellectual Property Exhaustion and Parallel Imports

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.
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Chapter 5: International intellectual property rules and parallel imports

Susy Frankel and Daniel J. Gervais


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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