Copyright (c) 2007 Tulane Journal of International and Comparative Law
Tulane Journal of International and Comparative Law
COMMENT: Parallel Imports: The Tired Debate of the Exhaustion of Intellectual Property Rights and Why the WTO Should Harmonize the Haphazard Laws of the International Community
16 Tul. J. Int'l & Comp. L. 189
Christopher B. Conley*
The doctrine of exhaustion is one of the most enigmatic concepts of intellectual property (IP) rights. Exhaustion defines the territorial rights of IP owners after the first sale of their protected products. The national exhaustion theory, which is a clear example of a nontariff barrier to trade, prevents the importation of IP unless authorized by the holder of the IP right. 1 For example, a patent holder may block the importation of any patent-infringing work or the sale of the patented product on the domestic market. However, under no circumstances may the producer control the subsequent resale of the patented product after he has exhausted the right of first sale in the domestic market. Conversely, under the international exhaustion theory, the patent holder loses his exclusive privilege after the first sale of the product anywhere in the world, thus allowing parallel imports from abroad. 2 A hybrid is the regional exhaustion theory where "parallel trading is allowed within a particular group of countries," such as the European Union, but prohibited from countries outside the region. 3 The importation of patented products is called "parallel" or "gray market" imports.
Naturally, these gray market goods are unwelcome competition to businesses selling the same goods obtained at a higher cost. IP rights occasionally exclude such products. If products sold or imported by third parties fall within the scope of valid patents in the imported country, the gray market goods are typically considered infringing. Owners of IP rights have the exclusive ...
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