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CIPIL Spring Conference 2014: Exhaustion without Exasperation: Intellectual Property Imports and Border Measures

Saturday 15th March 2014

This one-day conference reviewed developments in the law of exhaustion, parallel imports, and border measures, and considers whether the current state of affairs is satisfactory.

Where goods have been marketed in Europe with the consent of the IP holder, that person cannot oppose further circulation unless there are legitimate reasons to do so. This “exhaustion” rule most obviously facilitates the transportation of goods from one market to another (so-called parallel imports), but it also underpins the development of markets in second hand goods as well as the provision of various services that for repair and upkeep. Inevitably, the scope of the exhaustion rule is a focus of contest. One question is what constitute the “goods” to which the rules apply and whether the new digital offerings fall within their scope. Thus recent case-law has CJEU case-law has considered questions of the free movement within the EU of decoder devices (FAPL v QC Leisure, Cases C-403/08 and C-429/08 (2011)) and second-hand software (Usedsoft v Oracle, Case C-128/11 (2012). Everyone is guessing how the Court will deal with other digital offerings, and whether second-hand markets will be allowed to emerge for eBooks, videos, and music files. Another question yet to be explored is what are the legitimate interests, if any, that might justify a right-holder preventing further circulation of copyright or patent-protected goods (Cp. Schutz v Werit [2013] UKSC). A third issue, recently before the US Supreme Court, concerns how “exhaustion” applies to self-replicating technologies (Bowman v Monsanto (2013), an issue seemingly anticipated in the Biotech Directive, arts 8, 9 and 11).

Where goods have been placed on the market outside the EU, relevant IP holders may rely on harmonized EU rights to oppose the importation of those goods into the EU (Silhouette, Case C-355/96 (1998), Davidoff, Case 414/99 (2001), Laserdisken, Case C-479/04 (2006)). The underlying policy basis of these rules is controversial, and the US Supreme Court recently adopted a different approach in relation to copyright-protected books: Kirstaeng v Wiley (2013)(but cf. the approach to patents discussed in HTC v Nokia [2013] EWHC 3247 (Pat), [180] ff. In the EU, litigants continue to contest the absolute-ness of the “no international exhaustion” rule. In Oracle v M-Tech [2012] UKSC a valiant attempt got as far as the Supreme Court. Subsequently, it has been suggested that such a rule is inconsistent with the doctrine of trade mark functions (Senftleben, forthcoming), and that international regimes, particularly GATT, might require the rule be reconsidered (pending Case C-535/13 Honda). Moreover, the rules for patents remain unharmonized, and traditional English rules dating back to Betts v Willmott (1870-71) continue to be relevant, id not necessarily satisfactory (HTC v Nokia [2013] EWHC). For new Member States, special rules preventing exhaustion apply for a transitional period (pending Case C-593/13 Merck v Sigma).

The question of parallel importation has often been linked with the so-called “fight against counterfeiting”. Although the new Border Measures Regulation, No 608/2013 represents a significant expansion in scope (through the definition of intellectual property right in Art 2), goods marketed with the consent of the IP holder remain outside its scope (Art 1(5), recital 6). Nevertheless, border measures constitute a related topic of some significance, about which the most significant recent litigation related to goods in transit (Phillips and Nokia, Cases 446 and 495/09 (2011), an issue perhaps being reopened in the reform of Community trade mark law), while there are important cases pending at the CJEU: Case C583/12 Sintax Trading (on the role of Customs authorities); Case C-98/13 Blomquist v Rolex SA (on individual imports of fakes other than in luggage).

Chair: Mr Richard Arnold

The programme was as follows and discussions took place at the end of each session:

Morning Sessions

To What Objects Does Exhaustion Apply?
 James Mellor QC (8 New Square) Decoding Exhaustion after FAPL and Murphy
 Thomas Vinje (Clifford Chance, Brussels) The Implications of Used Soft

Location and Consent
 Christopher Stothers (Arnold & Porter) Applying the law: litigation of parallel trade disputes: Oracle v MTech [2012] UKSC 27 and Merck v. Sigma [2013] EWCA Civ 326
 Martin Senftleben (VU University Amsterdam) International Exhaustion and the Contest over the Origin Function in the EU Legislative Process
 Lorna Brazell (Osborne Clarke) Thinking About Implied Licences and Exhaustion after HTC v Nokia

Afternoon Sessions

The Limits to Exhaustion - Legitimate Reasons to Oppose Further Commercialisation
 Jennifer Davis (University of Cambridge) What Exhaustion Teaches Us about Trade Marks
 Lionel Bently (University of Cambridge) The Distribution of Altered Versions under Patent and Copyright Law
 Mark Janis (Indiana University Maurer School of Law) The Right to Repair - Some Observations from Recent US Case Law

The Hinterland Between Legal and Illegal Goods
16.00 – 16.30 Olivier Vrins (ALTIUS Lawyers) Private imports of counterfeit goods: the example of Martin Blomqvist
16.30 – 17.00 Henning Grosse-Ruse Khan (University of Cambridge) Goods in Transit under the WTO Rules on Trade and IP