The Principle of Free Movement of Goods – Community Exhaustion and Parallel Imports

Intellectual property rights (hereinafter: IPRs) attribute to their owners, inter alia, the exclusive right to control the number of exemplars incorporating the IPR protected works that are placed on a market, i.e., to control their distribution. Under a principle common to continental and common law countries, the IPR owner loses his right to control the resale of said exemplars once they are placed on the relevant market either by himself or with his consent. This principle is called the ‘exhaustion of intellectual property rights’ and is ʼnothing more than a figurative expression to describe the idea that once genuine goods have been marketed [by the IPR owner or with his consent] subsequent distribution should not be impeded by [IPR] action’. The exhaustion of IPRs can be of a national, regional or international/global nature. When country A follows a national exhaustion regime the IPR owner does not lose his/her (hereinafter: his) right to resell and to oppose the importation of the IPR-protected products in country A, even if these products were already sold by him/her (hereinafter: him) or with his consent in country B. A national exhaustion system is followed for instance in the United States of America (USA). In contrast, when country A follows an international exhaustion system, the sale of IPR protected goods by or with the IPR owner’s consent in any part of the world results in the exhaustion of his right to control any reselling of the same goods in country A.