Exhaustion of Intellectual Property Rights and Its Limits under European Union Law

The principle of exhaustion of intellectual property rights is an institute of intellectual property law closely related to international trade and the principle of free movement of goods. This principle causes not only legal but also important economic consequences. There are three types of the principle of exhaustion - national, regional and international exhaustion of intellectual property rights. In the European Union law a regional exhaustion was established by a whole series of decisions of the European Court of Justice (ECJ). The main purpose of the exhaustion rule is to prevent intellectual property owners from using their exclusive rights in order to partition the market, to safeguard the balance between the protection of intellectual property rights and the principle of free movement of goods in the Community. The application of the exhaustion rule determines that once goods protected by any right of intellectual property are placed on the market by or with the consent of the right-owner, the right to control further distribution of these goods are exhausted. Trade marks are of fundamental importance in the market. Exhaustion of trade mark rights is an issue most related to the problematic of parallel trade. The Article 7 of the Trade mark Directive, which establishes the exhaustion of trade mark rights, is one of the most controversial articles of this Directive. It was concluded in Silhouette case that Article 7 of the Trade Mark Directive precluded Member States from applying international exhaustion. There are a lot of discussions concerning current regional exhaustion of trade mark rights and the possible change of it, the economic consequences of regional and international exhaustion of trade mark rights. The European Commission was considering the revision of the Trade mark Directive, so as to withdraw regional and start to apply international exhaustion of trade mark rights. According to the fact that patent law is not fully harmonized in the European Union, the economic justification of patent law is different than that of trade mark law, the exhaustion of patent rights is analysed separate. It is difficult to make the unambiguous conclusion concerning possible consequences of international exhaustion of trade mark rights, whereas international exhaustion of patent rights is hardly possible. International exhaustion of patent rights would have particularly negative impact to innovation in the European Union, to the competitivness of the European Union industry