Sted og dato (Indsæt --> Diasnummer) Dias 1 Navn på enhed (Indsæt --> Diasnummer) EU Commercial Law 2011 III.B. Trade in IPR protected goods: Parallel Importation and Exhaustion Part 1 Professor Jens Schovsbo

Sted og dato (Indsæt --> Diasnummer) Dias 2 Navn på enhed (Indsæt --> Diasnummer) Can IPR form barriers to trade? Arts. 34 and 36: Quantitative restrictions on trade Dassonville: “Directly or indirectly, potentially or actually …” Casis de Dijon: Legitimate restrictions “the protection of industrial and commercial property”

Sted og dato (Indsæt --> Diasnummer) Dias 3 Navn på enhed (Indsæt --> Diasnummer) Principle of territoriality

Sted og dato (Indsæt --> Diasnummer) Dias 4 Navn på enhed (Indsæt --> Diasnummer) ”Parallel Importation” ”Parallel Importation”: Unofficial importation of (”genuine”) copies of IPR protected items – such as trade marked goods, cd’s, or patent protected pharmaceuticals – which have 1) been marketed for the first time by the rightholder or with its consent and 2) which takes place in parallel to an authorised systems of importers and distributors controlled by the rightholder Sometimes called “Grey Imports/Exports” The terms does NOT include counterfeits Normally “re importation” is covered by the term

Sted og dato (Indsæt --> Diasnummer) Dias 5 Navn på enhed (Indsæt --> Diasnummer) A case for negative harmonization: TFEU Article 345 “ This Treaty shall in no way prejudice the rules in Member States governing the system of property ownership. ” Article 34 “ Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States. ” Article 36 “ The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. ”

Sted og dato (Indsæt --> Diasnummer) Dias 6 Navn på enhed (Indsæt --> Diasnummer) The “ existence ” / ” exercise ” dichotomy Joined Cases 56 and 58/64, Consten [the treaty] … [does] not exclude any influence whatever of community law on the exercise of national industrial property rights … SO: The EC Treaty does not limit the “ existence ” of rights. It merely affects the “ exercise ” of these rights. (PS: This is a legal “ Moment of Zen ” : Does a right “ exist ” if it cannot be “ exercised ” ? Of course not! Despite of this flaw the distinction provides some legal certainty and therefore can be used as long as nobody takes it too serious (which the ECJ doesn ’ t)).

Sted og dato (Indsæt --> Diasnummer) Dias 7 Navn på enhed (Indsæt --> Diasnummer) Finding exhaustion in the TFEU: Case 16/74, Centrafarm/Winthrop 9 An obstacle to the free movement of goods may arise out of the existence, within a national legislation concerning industrial and commercial property, of provisions laying down that a trade mark owner's right is not exhausted when the product protected by the trade mark is marketed in another member state, with the result that the trade mark owner can prevent importation of the product into his own member state when it has been marketed in another member state. 10 Such an obstacle is not justified when the product has been put onto the market in a legal manner in the member state from which it has been imported, by the trade mark owner himself or with his consent … 11 In fact, if a trade mark owner could prevent the import of protected products marketed by him or with his consent in another member state, he would be able to partition off national markets and thereby restrict trade between member states, in a situation where no such restriction was necessary to guarantee the essence of the exclusive right flowing from the trade mark.

Sted og dato (Indsæt --> Diasnummer) Dias 8 Navn på enhed (Indsæt --> Diasnummer) Phase 2: Positive harmonization Exhaustion and Trade Marks (TM-Directive) Article 5: Rights conferred by a trade mark 1.The registered trade mark shall confer on the proprietor exclusive rights therein … 2.The following, inter alia, may be prohibited... (a) affixing the sign to the goods or to the packaging thereof; (b) offering the goods, or putting them on the market; (c) importing or exporting the goods under the sign; (d) using the sign on business papers and in advertising. Article 7: Exhaustion of the rights conferred by a trade mark 1.The trade mark shall not entitle the proprietor to prohibit its use [i.e. rely on Article 5] in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent. 2.Paragraph 1 shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market.

Sted og dato (Indsæt --> Diasnummer) Dias 9 Navn på enhed (Indsæt --> Diasnummer) Regulating Parallel Importation: Traditional starting points Two ”schools”: “Contract” (implied licence) (e.g. traditional French and UK law and to some extent also present U.S. law) ”Freedom of Contract”; the parties define the balance. ”Exhaustion” (originated in Germany 1900 (J. Kohler)) The legislator defines the balance. A statutory limitation to the distribution right which has the effect that a rightholder automatically looses (some of) its distribution rights with the first marketing of a copy.

Sted og dato (Indsæt --> Diasnummer) Dias 10 Navn på enhed (Indsæt --> Diasnummer) Traditional positions in national law on territoriality Trade marks: Global exhaustion (for genuine goods) Trade mark law protects the function of the trade mark which is to indicate origin. That function is protected as long as the goods in question are genuine. The place of the first marketing is immaterial. Patents: National exhaustion It is the function of patents to reward the patent holder by securing a monopoly profit in the first marketing. Because patents are national in scope and independent that right exist for each country separately. (Copyright: ?) Note: It’s very difficult to identify common starting points especially regarding the law in countries which do not base themselves on “exhaustion” but on contract. An example: In traditional UK law the ability to parallel import products produced by a licensee would basically depend on the terms of the contract.

Sted og dato (Indsæt --> Diasnummer) Dias 11 Navn på enhed (Indsæt --> Diasnummer) Central cases C-355/96, Silhouette: Regional exhaustion C-414 and 416/99, Zino Davidoff and C-173/98, Sebago: “Consent” C-16/03, Peak Holding and C-59/08, Copad SA: “Putting on the market” C-143/00, Boehringer Ingelheim: Pharmaceuticals

Sted og dato (Indsæt --> Diasnummer) Dias 12 Navn på enhed (Indsæt --> Diasnummer) TM-Directive, Article 7 Regional or global exhaustion? Does Article 7 only regulate the national/regional interface? Or does it (also) regulate the regional/global interface and exhaustion vis- à -vis trade with non-EU countries? If so: Are Members free to operate their own rules?

Sted og dato (Indsæt --> Diasnummer) Dias 13 Navn på enhed (Indsæt --> Diasnummer) Regional and/or global? C-355/96, Silhouette/facts Silhouette produces spectacles in the higher price ranges. Hartlauer sells inter alia spectacles through its numerous subsidiaries in Austria. In November 1995 Silhouette delivered frames to Union Trading in Sofia. Hartlauer bought those goods and offered them for sale in Austria from December Silhouette claims that it has not exhausted its trade mark rights, since, in terms of the Directive, trade-mark rights are exhausted only when the products have been put on the market in the EEA by the proprietor or with his consent.

Sted og dato (Indsæt --> Diasnummer) Dias 14 Navn på enhed (Indsæt --> Diasnummer) Silhouette/decision 25. “... Articles 5 to 7 of the Directive must be construed as embodying a complete harmonization of the rules relating to the rights conferred by a trade mark... ” 26. Accordingly, the Directive cannot be interpreted as leaving it open to the Member States to provide in their domestic law for exhaustion of the rights conferred by a trade mark in respect of products put on the market in non-member countries.

Sted og dato (Indsæt --> Diasnummer) Dias 15 Navn på enhed (Indsæt --> Diasnummer) 27. This, moreover, is the only interpretation which is fully capable of ensuring that the purpose of the Directive is achieved, namely to safeguard the functioning of the internal market. A situation in which some Member States could provide for international exhaustion while others provided for Community exhaustion only would inevitably give rise to barriers to the free movement of goods and the freedom to provide services. ”

Sted og dato (Indsæt --> Diasnummer) Dias 16 Navn på enhed (Indsæt --> Diasnummer) ”Consent”: C-173/98, Sebago/facts Sebago is a company incorporated in the United States of America and is the proprietor of.. marks in the name 'Docksides‘ and.. … registered, inter alia, for shoes. Maison Dubois is the exclusive distributor in the Benelux of shoes bearing Sebago's trade marks... GB-Unic advertised Docksides Sebago shoes for sale in its Maxi-GB hypermarkets. The goods in question were pairs of shoes manufactured in El Salvador and purchased from a company incorporated under Belgian law which specialises in parallel importation. The entire stock was sold during the summer of Sebago and Maison Dubois do not dispute that the shoes sold by GB-Unic were genuine goods. They claim, however, that since they had not authorised the sale of those shoes in the Community GB-Unic had no right to sell them there. Is there consent?

Sted og dato (Indsæt --> Diasnummer) Dias 17 Navn på enhed (Indsæt --> Diasnummer) Sebago/decision Article 7(1) must be interpreted as meaning that: — for there to be consent within the meaning of Article 7(1) of that directive, such consent must relate to each individual item of the product in respect of which exhaustion is pleaded.

Sted og dato (Indsæt --> Diasnummer) Dias 18 Navn på enhed (Indsæt --> Diasnummer) Parallel Importation and EU Law Ideology: It’s all about Market Integration, Stupid! Parallel Importation has a value in itself because it both reflects market integration and furthers market integration Law: Focus on geographic scope of exhaustion Focus is shifting from national/global to regional/national and regional/global interfaces: To what extent can a rightholder in one Unioan Country rely on its national IPR to prevent the importation of (”genuine”) goods from Another EU (EEA) country, or A non-EU (EEA) country?