Edited by Irene Calboli and Edward Lee
Chapter 18: Trademark exhaustion and its interface with EU competition law
The exhaustion doctrine moulds trademarks into legal rights of exclusion, which are, in principle, solely pertaining to the initial commercialization of the trademarked good.1 Mirroring the common law principle against the imposition of restrictions on the alienation of chattels, the doctrine of exhaustion creates alternative commercial sources for commodities outside the trademark proprietor’s control and opens up collateral markets, all to the benefit of consumers. For the rights holder, there remains a single opportunity to devise a strategy for extracting revenue from the commercialization of the trademarked good when setting the price for the initial sale. This legal construct reflects the archetypical form of the doctrine. A more functional approach was dictated by the need to promote the proper functioning of the common market. Territorial trademark exhaustion has been qualified so that it may only be triggered by sales within the European Union (EU) or European Economic Area (EEA) market.2 Therein lies a decision of economic policy to protect the integration of the single market and incentivize European undertakings to exploit rent-seeking opportunities through price discrimination in international markets. The exhaustion doctrine is further mandated by EU primary law forbidding the partitioning of the internal market, in particular Articles 34 and 36 of the Treaty on the Functioning of the European Union (TFEU),3 which is a goal shared by EU competition law.
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