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Exhaustion of Industrial Property Rights

  • 20 December 2016
  • Articles

The great investment, both economic and intellectual, involved in the development of new technologies and distinctive signs that are subsequently subject to Intellectual Property rights such as trademarks and patents, makes holders of such rights yearn for them to be unlimited. However, in order to promote free trade and competition for the benefit of consumers, legislation has set limits on industrial property rights.

These limits are often ignored by right holders, who often must understand that there are uses of their stretchers or patents that no longer depend on their authorization or control and must accept it.

The exhaustion of the right is one of those limits to the exclusive rights of Intellectual Property and what it implies for its owner is the loss of control over the subsequent distributions that are carried out with the product (protected by a trademark or patent), for once it is inserted in the market, the possibility of preventing the commercialization and distribution of the same is considered exhausted.

It is vital to clarify that what is allowed when the good is placed on the market is the marketing or distribution thereof, this cannot be confused with a permission to third parties to alter the product, use the mark on non-original products or Manufacture own products using anther´s patents.

The exhaustion of the right can be presented in three different opportunities:

– National exhaustion, occurs when the good has been distributed in the interior of a country, extinguishing the possibility for the holder of the right of Industrial Property to control the market of that product within that country.

– Regional exhaustion occurs when the first commercialization of the good takes place in a regional market such as the Andean Community of Nations or the European Union, thus ensuring the sub-regional commitment to allow the free circulation of goods as a result of a real process of sub-regional integration.

– International exhaustion, which occurs when the first sale of the good takes place in a foreign market in such a way that there is full freedom of imports or parallel sales of the products. The holder cannot control or prohibit the commercialization in a foreign market of the original merchandise protected by Industrial Property rights.

Industrial Property Rights holders must have these limits in mind in order to be clear on their reach and their scope of protection.

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Exhaustion of Industrial Property RightsExhaustion of Industrial Property Rights