Recent U.S. And EU Developments: The Exhaustion Theory Is Not Yet Exhausted

by Erik Verbraeken

Erik Verbraeken

IFP, Associate Director Business Law & Contracts Div., Rueil-Malmaison, France

Although this article will compare recent developments in both the U.S. and the European Union with respect to the application of the exhaustion of intellectual property rights, the focus of this overview will be laid on the application of the exhaustion theory in the European Union, using U.S. case law as a source of inspiration.

The exhaustion theory has been developed by the European Court of Justice in the early seventies in order to define a bridge between two incompatible provisions of Community law: on the one hand the fundamental principle of free movement of goods, enshrined in article 28 (formerly article 30) of the Treaty of Rome, in accordance with which a product, once introduced on the European marketplace, should circulate freely without being subject to trade restrictions or other measures having equivalent effect, and on the other hand the mandatory requirement of the protection of intellectual property rights, recognized in article 30 (former article 36) of the Treaty of Rome, and supported by provisions of article 295 (formerly article 222) according to which the Treat “shall in no way prejudice the rules in Member States governing the system of property ownership,” that may justify a derogation from this fundamental principle.

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