Legal Challenge of the Rules A. Law to Sport 2.
In the latest edition stemming from Marchthe focus was laid on several U. This part 4 of the "Exhaustion Theory Is Not Yet Exhausted" series will have a closer look at some recent national court decisions from within the European Union where, for several reasons, the IP right holder considered that he had never authorized the products to be "put into circulation for the first time" considered as the specific subject-matter of an IP rights by the European Court of Justice as defined in Sterling Drugs vs.
Such authorization or consent is an essential condition for the application of the exhaustion theory and the absence of such consent will entitle the IP right holder to pursue the protection of his rights.
Consequently, legal proceedings were opened against either the trader or the purchaser of those goods by the IP right holder contending that he never authorized the sale. Whether or not consent was given by the IP right holder arose in the following cases: Impro Europe Court of Appeals Brussels, Belgium, decision of October 20, regarding the consequences of a contractual reservation of property on the supply of ink Centrafarm vs sterling to wholesalers and end-customers, 2 Living Tower vs.
California Classic Cars District Court The Hague, The Netherlands, decision of March 16, regarding the consequences of a letter of intent where goods were made available to the potential licensee, 4 Flynn Pharma vs.
Drugsrus High Court London, England, decision of October 6,confirmed by Court of Appeal, decision of April 6, regarding the consequences of the transfer of a UK marketing authorization coupled with a contract manufacturing arrangement, 5 A vs.
B District Court Dusseldorf, Germany, decision of December 12, regarding the exhaustion of combination claims through the sale of individual components, 6 FSEL vs.
Verum District Court Amsterdam, The Netherlands, March 10, regarding the intricacies of the application of the exhaustion theory in a software context. Centrafarm parallel trade dispute where it had to reconcile on the one hand the fundamental principle of the free movement of goods within the European Union as laid down in article 34 of the EU Treaty and on the other hand the protection of industrial property rights as a legitimate exception to such free movement of goods as laid down in article 36 of the EU Treaty.
The right of Centrafarm vs sterling placing a product on the market enables the patentee, by allowing him a monopoly in exploiting his product, to obtain the reward for his creative effort without, however, guaranteeing that he will obtain such a reward in all circumstances Merck vs.
The consent that is implicit in an assignment of rights is not the consent required for application of the doctrine of exhaustion of rights. For trademarks, consent implies that the owner of the right in the importing Member State must, directly or indirectly, be able to determine the products to which the trade mark may be affixed in the exporting Member State and to control their quality.
That power is lost if, by assignment, control Centrafarm vs sterling the trade mark is surrendered to a third party having no economic link with the assignor Ideal Standard vs. A sale which allows the proprietor to realise the economic value of his IP rights exhausts the exclusive rights thereof, more particularly the right to prohibit the acquiring third party from reselling the goods Peak Holding vs.
Exhaustion occurs solely by virtue of the putting on the market in the EU by the proprietor. Any stipulation, in the act of sale effecting the first putting on the market in the EEA, of territorial restrictions on the right to resell the goods concerns only the relations between the parties to that act Peak Holding vs.
Where a licensee puts goods bearing the mark on the market he must, as a rule, be considered to be doing so with the consent of the proprietor of the trade mark; but the license agreement does not constitute the absolute and unconditional consent of the proprietor of the trade mark to the licensee putting the goods bearing the trade mark on the market Christian Dior vs.
Various regulations adopted by the European Council codify the exhaustion rule in applicable legislation, especially in the area of trademark law both the Community Trademark Regulation and the Trademarks Directive provide for the exhaustion of the trademark when the trademarked goods have been released within the EU market by the proprietor or with his consent.
A key element in the decisions of the European Court of Justice for the application of the exhaustion theory is the consent by the proprietor of the intellectual property right to the introduction of the product on the marketplace. According to the Court's ruling in the Christian Dior vs.
COPAD case, consent is tantamount to the proprietor's renunciation of his exclusive right and constitutes the decisive factor in the extinction of that right.
The extent to which contractual reservations of rights can be considered sufficient to deny consent have already been dealt with at several occasions by the European Court itself, including, inter alia, in the above mentioned cases of Peak Holding vs. Axolin-Elinor and Christian Dior vs. In these cases, the court recognized that contractual reservations to sales transactions do not prevent exhaustion from occurring, to the extent that the transaction allows the proprietor to realise the economic value of his intellectual property right.
Regarding reservations to licensing transactions, although in principle exhaustion of the intellectual property right occurs when the goods are put on the market by a person with economic links to the proprietor e. Hustin and Goossens decision, what should be considered as essential features of the Community plant variety right.
This fourth article in the series of "Exhaustion Theory Is Not Yet Exhausted" chronicle will now focus on some national court decisions that have had to deal with non-consent arguments of the intellectual property owner regarding the impact of such non-consent on the exhaustion of rights following the introduction of the product on the market.
It sources those articles from companies that, following their initial order for such products from the original manufacturer, find themselves confronted with overstock or remainder items. Impro Europe acquires such unused overstock from such companies and then resells those products mainly over the internet.
Some of those products that are offered for sale by Impro Europe originate from Xerox Corporation. The particular feature at stake in this case was that Xerox supplied the consumables to its customers under two different formats: The products ordered under the different formats, although identical in composition, can be distinguished by their different packaging and different purchase channels.
Xerox did not contest that its IP rights were effectively exhausted for all products that it had sold to customers under the second format; however, Xerox contended that it had never "put into circulation" the products supplied under the first format because of its reservation of title to the goods and the contractual obligation to return unused cartridges to Xerox without compensation.
The Brussels Court of Appeal concurred with Xerox and overruled the decision of the lower court who had retained that, despite these elements of fact, the IP rights of Xerox to the trademarked products were exhausted. The Court considered that the products were merely made available to the customer as part of the maintenance agreement, and were not sold to the customer as evidenced by the contractual restrictions quoted above.
Under these circumstances, the goods cannot be said to have been "put on the market … by the proprietor or with his consent" which would have been a ground for exhaustion under article 9 of the Community Trademark Regulation for the goods in question.
Impro claimed that irrespective of the contractual reservations made in the agreements, the Xerox products were effectively acquired by its clients because they were paid for through the maintenance fee, but this argument was dismissed by the court.
Likewise, the argument that these contractual reservations were merely a "legal loophole" in order to shield the market from parallel trade was rejected.
This case provides a good illustration of how the particular details surrounding the various commercial transactions within the supply chain for the products will ultimately determine the navigational direction to either the "absolute" exhaustion rule defined by the European Court of Justice in the Peak Holding decision where the Court concluded that exhaustion takes place irrespective of any contractual reservations that "concern only the relations between the parties to that act" or the "relative" exhaustion rule defined by the European Court of Justice in the Christian Dior decision where the Court underscored that the license agreement does not constitute the absolute and unconditional consent of the proprietor of the trade mark to the licensee putting the goods bearing the trade mark on the market.
Unlike the facts in the Peak Holding decision where the goods were effectively introduced to the marketplace through a sales transaction despite the breach by the intermediate vendor of the resale restrictions that were agreed with the supplier and trademark ownerin the Christian Dior case as well as in the present case, the goods were not sold by the proprietor to his own clients but made available to the other party, either through a license to manufacture and sell the goods under the trademark of the proprietor in the Christian Dior case or through a consignment structure where the client orders the cartridges for future use with his printing machine as part of his maintenance agreement with the vendor and owner of the trademark in the present case.6 Case C/74 Centrafarm vs Sterling Drug.
4 Approximation of Pharmaceutical Legislation Especially in the pharmaceutical business, major disparities in the national law would directly affect the functioning of the European Common Market.
This problem is even addressed in.
patentee’s consent (by way of a license) (cf. decision “Centrafarm vs. Sterling Drug” by the European Court of Justice, ECR , at ). This even applies if the price of the medicine in the country of export, due to governmental provisions, is regulated and considerably lower.
Centrafarm, of which Mr de Peijper is a director, imported medicinal products - a medicament named acidum nalidixicum, marketed under the trade mark “Negram - manufactured according to a patented method for which Sterling Drug Inc. (“Sterling”) held the patent rights in several countries including the Netherlands and Great Britain.
Centrafarm BV and Adriaan de Peijper v Sterling Drug Inc. Reference for a preliminary ruling: Hoge Raad - Netherlands. Parallel patents.
Case Judgment of the Court of 31 October Centrafarm BV and Adriaan de Peijper v Sterling Drug Inc. Centrafarm BV and Adriaan de Peijper v Sterling Drug Inc.
Reference for a preliminary ruling: Hoge Raad - Netherlands. Parallel patents. Case Judgment of the Court of 31 October Centrafarm BV and Adriaan de Peijper v Sterling Drug Inc. Operations of a VC Fund Stages of a VC Fund Formation – Partners, Roles, Equity, Niche etc.
Fund Raising – Road show, Validation and acquire LPs Investing Deal Flow, Screening, Selecting and establishing a value Term Sheet and Equity negotiations Agreements on Governance Building Value for the Portfolio Company Harvesting – Design.