Edited by Irene Calboli and Edward Lee
Chapter 26: Exhaustion and the Internet as a distribution channel: the relationship between intellectual property and European law in search of clarification
The expression “exhaustion,” in intellectual property (IP), conveys a radical image, with broad connotations capping proprietary rights without a need to fall back on sector-specific exceptions. The term, with all its metaphorical imagery, is well-matched to European Union (EU) law as a system requiring flexible, yet normatively solid, principles that may still curtail national rights, very much in the sense of a collision clause. Broadly speaking, exhaustion occurs where a product is placed on the market by or with consent of the owner. Evidently, such rule is attractive as a generally restricting tool, especially as regards the creation of digital markets unfettered by exclusionary practises of IP owners. Indeed, the exhaustion theory,1 as developed by German scholar Josef Kohler in the nineteenth century,2 was arguably a rather broad concept.3 It relied on the fundamental insight that any IP right was consumed by the first act of exploitation,4 and relied much on an understanding of IP as a commercial, rather than a personality right. But the doctrine of exhaustion, which developed out of the implied consent doctrine,5 was also known in other jurisdictions such as the United Kingdom (U.K).6 It led to the formulation of a sole-standing exclusive right of distribution in German copyright law.7 In the EU, the completion of a digital single market is now a highly important target,8 and exhaustion plays a vital part in securing an unobstructed development. Following the coming into force of the Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community in 2007,9 the (digital) single market aim is enshrined in the (partially new) EU provisions concerning the creation of an internal market.10 Consequently, the EU has capacity to enact secondary legislation aiming at the harmonization of national laws under Article 114 of the Treaty on the Functioning of the European Union11 (TFEU) and the specific new clause of Article 118 of the TFEU— though the question of “digital” exhaustion and the exclusion of Internet sales channels as such, have not yet been addressed by EU law-makers.
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