ABSTRACT
This chapter traverses the legal terrain relating to IPRs and free movement of goods in the internal market. It focuses primarily on one legal tool to promote this free movement: the doctrine of exhaustion of rights. It considers this doctrine in relation to patents, trade marks and copyright. Although these are very different types of IP rights, the chapter shows that there are common challenges. The main shared challenge has been that of international exhaustion, specifically, whether EU law – aside from mandating EU-wide exhaustion – prohibits Member States from adopting national rules on the permissibility of international exhaustion. The answer for copyright and trade marks has been a resounding ‘yes’ – international exhaustion is prohibited. In the case of patents, there is yet to be a ECJ ruling, however, the legislation establishing the new European patent with unitary effect and United Patent Court appear to indicate solely EU-wide exhaustion.
Another shared challenge – although only for patents and trade marks – has been what constitutes putting the goods on the market by or with the rightholder’s consent. This led to notions of implied consent, albeit fairly strictly defined, in the case of trade marks and clarification that marketing pursuant to compulsory licences (but not licences of right) or placing goods on the market where patent protection did not exist did not amount to consent. In the case of copyright, what amounts to consent to placing goods on the market has not really troubled the Court, except where goods have been marketed in Member States where copyright had expired. Instead, what has dominated the jurisprudence has been which economic rights for copyright works are exhausted and whether there can be exhaustion of digital copies of copyright works. Again, after multiple references, there is now clarity on these issues.
It is fair to say that the ECJ has, through its rulings over a 50-year span, grappled with the complexities of free movement of goods principles and IPRs in a way that is coherent and consistent, and has balanced the goals of achieving a smooth functioning internal market with preserving the exclusivity of IPRs. This begs the question whether any challenges remain for the Court to resolve in this area. Arguably, there are some. The question of permissibility of international exhaustion for European patents with unitary effect is a question that is likely to be referred to the ECJ. There is also much more scope for interrogating when free movement of services principles are violated by territorial restrictions for on-line copyright content. Finally, in the context of Brexit, we may anticipate debate (and possibly a reference, although not from the UK) about whether the Northern Ireland protocol requires exhaustion of IPRs in the EU where goods have been legally put on the market in Northern Ireland. The EU Commission does not seem to think so, but the UK government (in its reluctance to consider a national exhaustion or “mixed” regime of exhaustion) appears to think otherwise.
Aplin, Tanya F, Intellectual Property Rights and the Internal Market (January 1, 2024). Forthcoming in T Tridimas and R Schutze, Oxford Principles of EU Law: Volume II – the Internal Market (OUP).
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