Study On The Exhaustion Principle Of International Intellectual Property Law

Coexistence of free trade and trade friction among countries and simultaneousdevelopment of measures for promoting economic development and methods for hinderingcargo movement are typical phenomenon in international trade environment all the time andthey also reflect increasingly expansion and prosperity of international trade. In terms ofvaried trade barriers hindering economic development, people have to pay attention to andworry about influences of intellectual property barriers on international trade. Therefore, in amanner of speaking, the part where intellectual property law is associated with multinationaltrade belongs to one part of international trade law. Exhaustion Doctrine of IntellectualProperty Rights introduced in this paper is one of intellectual property issues that arouse manydisputes in multinational trade.The Exhaustion Doctrine of Intellectual Property Rights is a peculiar doctrine ofintellectual property, which means that it is a carrier bearing intellectual property, and onceintellectual products are put on the market, the obligee loses his or her control power on theintellectual product, and then rights of the obligee is exhausted. This means that the buyer canresell or reuse the sold intellectual product based on this doctrine and without restrictionsfrom the obligee. The existence of this doctrine smashes monopoly position of intellectualproperty and thus provides a more reasonable space for competitors to participate in themarket and customers to conduct consumption selection so as to facilitate application ofintellectual products in social life. Rooted in Doctrine of Prohibition on Abuse of Rights intraditional private law and with the help of the special platform of intellectual property, theExhaustion Doctrine of Intellectual Property Rights develops theories with uniquecharacteristics. And the theory includes traditional compensation theory, implied licensetheory, legal rules theory, etc. With the increasing application frequency of ExhaustionDoctrine, behaviour continuation theory, new implied license theory, public interests theoryand other theories are derived.Through analysis on legislations and practices of each country, the Exhaustion Doctrineof Intellectual Property Rights is classified into international exhaustion doctrine, domesticexhaustion doctrine and interregional exhaustion doctrine executed in European Union.Differences between legal systems of each country and utilization of different intellectual property doctrines result in current status of extremely non-uniform application of ExhaustionDoctrine of Intellectual Property Rights in international trade and form barriers hindering freeflow of international trade, and thus extensive disputes are caused around the world. Amongthese disputes, legality argument on the issue about “parallel imports” has the largestinfluence. The existence of “grey market” results from large differences between prices of thesame intellectual product on different markets around the world and profits of price differenceearned by international traders through buying the intellectual product from low-price countryand selling it to high-price country. By means of Exhaustion Doctrine of Intellectual PropertyRights, the above action of international traders treads on the fringe of rights protection ofintellectual property owner. Notwithstanding speculative nature of this action and itstremendous threat to monopoly profits of intellectual property, this action is beneficial torevitalize international market and is good for free flow of cargos and even the public health.Conflicts between rights of intellectual property owner and competitors and interests of thepublic become increasingly obvious on this issue; however, consensus has not been reachedon this issue around the world. TRIPS Agreement aiming to “reduce distortion and obstaclesin trade, promote sufficient and effective protection for intellectual property andsimultaneously guarantee preventing measures for and procedures of law enforcement ofintellectual property from becoming obstacles of fair trade” also meets difficulties in this issue.Embarking from their own benefit, each country have their own views on the issue about howto assume Exhaustion Doctrine of Intellectual Property Rights, resulting in failure to reachconsensus on this issue under TRIPS Agreement. Even the subsequent internationalconference is stuck in explaining for items in TRIPS Agreement, and breakthrough progresscan not be made on the issue about Exhaustion Doctrine of Intellectual Property Rights.Therefore, this issue is left over to domestic legislative authority of each country, and eachcountry can make laws by themselves to determine standards for this doctrine. It is evidentthat under the current circumstance of increasing integration of global trade, the aforesaidtreatment for this issue is only a temporary expedient, and only the adoption of uniformstandards for application of this doctrine can be the development orientation of internationalintellectual property law.Performance relating to Exhaustion Doctrine of Intellectual Property Rights is not onlylimited to parallel imports of international trade but also limited to other performancesincluding reverse passing off and reproduction of intellectual products. For methods of regulating these performances, application of Exhaustion Doctrine of Intellectual PropertyRights is required. However, it is obviously that at present, most domestic researches focus onargumentation on “parallel imports” and issues about Exhaustion Doctrine of IntellectualProperty Rights and neglect the nature of Exhaustion Doctrine of Intellectual Property Rights.This paper gives detailed introduction and analysis for the origin, theory development, typeanalysis, regulations on performances and case demonstration of Exhaustion Doctrine ofIntellectual Property Rights. In framework of the above theoretical system, this paper makes afurther research on rights scope of Exhaustion Doctrine of Intellectual Property Rights and itis supplemented by methods for dynamic demonstration of four rights changes includingobtaining of rights, utilization of rights, exhaustion of rights and regeneration of rights; andthis paper amplifies the whole links of flow of intellectual products, striving to makebreakthrough in theory of Exhaustion Doctrine of Intellectual Property Rights.After all, the study on theories shall be put into practice. The Intellectual Property Lawof China is still in its immature stage, and the Exhaustion Doctrine of Intellectual PropertyRights has not been reflected on legislation. In practice, however, the theory has been widelyapplied. The application cases, especially cases related to international trade, have indicatedthat it is impending to perfect the laws and regulations of China in relation with ExhaustionDoctrine of Intellectual Property Rights. Through analysis on Chinese international trade andcurrent economic status and in combination with the demand of Chinese Intellectual PropertyStrategy, the paper puts forward that China should select “revised” Doctrine of InternationalExhaustion of Rights, i.e. conditionally apply Doctrine of International Exhaustion of Rights,and further proposes advices on how to perfect legislation establishment, judicial applicationand administrative measures.The paper is divided into five chapters, which systematically introduces and analyzes theExhaustion Doctrine of Intellectual Property Rights and puts forward advices in respect ofperfection of relevant domestic legislation of China from the view of doctrine outline, typeanalysis, theory breakthrough, advices on relevant legislation of China, etc.The first chapter emphasizes on the introduction of the definition, classification,applicable condition and other aspects of Exhaustion Doctrine of Intellectual Property Rights.In its first section, the chapter introduces the emergence, definition and traditional theories ofExhaustion Doctrine of Intellectual Property Rights; while the second section describes theapplicable purposes, applicable scope and applicable condition of Exhaustion Doctrine of Intellectual Property Rights in general; and the third section presents about the classificationof Exhaustion Doctrine of Intellectual Property Rights–Doctrine of International Exhaustionof Rights, Doctrine of Domestic Exhaustion of Rights and Doctrine of Regional Exhaustion ofRights and the analysis on advantages and disadvantages of these doctrines in respective oftheir specific contents and applicable scopes.The second chapter classifies the Exhaustion Doctrine of Intellectual Property Rightsinto Principle of Exhaustion of Patent Rights, Doctrine of Exhaustion of Trademark Rightsand Doctrine of Exhaustion of Copyrights in accordance with the types of intellectual property,and aims at the features of these three different types and discusses the width and depth ofapplicable scope to which the exhaustion doctrine can be applied. Through analysis onexhaustion doctrine of these three types of intellectual property and reference of casesbetween countries, the chapter compares and inferentially studies the judicial precedent, andconcludes that the three different types of intellectual property require different extent ofExhaustion Doctrine of Intellectual Property Rights.The third chapter introduces and analyzes the forms of Exhaustion Doctrine ofIntellectual Property Rights; mainly aiming at parallel imports, reverse passing-off,reconstruction of patented product and other forms, the chapter develops the analysis bydemonstration. The parallel imports are classified into type of own issuance, type of ownapproval for issuance and parallel imports from the same source; different types of parallelimports involve in different law issues but they all take Exhaustion Doctrine of IntellectualProperty Rights as support of legality of their action. In addition, the chapter also introducesreverse passing-off, a controversial circumstance like parallel imports, and presents legalliability analysis on and regulation methods of that issue. Moreover, other forms related toExhaustion Doctrine of Intellectual Property Rights are also introduced in the chapter.Through the comparison of regulation method of each countries and the different reasoningcontent, the chapter provides juridical advices on how to regulate the forms above byapplying Exhaustion Doctrine of Intellectual Property Rights.The fourth chapter is about the theory development and theory breakthrough ofExhaustion Doctrine of Intellectual Property Rights, introducing the new development ofbasic theory of and distinguishing and analyzing other relevant private law principles withExhaustion Doctrine of Intellectual Property Rights. Among that, the chapter tries to dissectthe “Rights” of exhaustion doctrine of rights and re-defines the “Rights” from the perspective of right existence and right exercise. Meanwhile, the chapter dynamically presents theacquisition of rights, exercise of rights, exhaustion of rights and regeneration of rights, andsystematically analyzes the Exhaustion Doctrine of Intellectual Property Rights from themicroscopic point of view.The fifth chapter demonstrates the significant meaning of Exhaustion Doctrine ofIntellectual Property Rights for legislation and judicial practice from the point of view ofpublic interest and private right protection and from the real meaning of establishment andperfection of Exhaustion Doctrine of Intellectual Property Rights. The chapter introduces theexperience of the using situation in China, and also indicates the real absence of Chineseintellectual property legal system in respect of Exhaustion Doctrine of Intellectual PropertyRights. Under the general framework of the paper, the fifth chapter, by combining thestrategic requirements of Chinese intellectual property and the trend of Chinese intellectualproperty rights and economic development, analyzes the theoretical value and practicalmeaning of Exhaustion Doctrine of Intellectual Property Rights in international tradeactivities. Moreover, the chapter puts forward the altitude of China on the ExhaustionDoctrine of Intellectual Property Rights, i.e. use “revised” Doctrine of InternationalExhaustion of Rights; the chapter advises to clearly specify the doctrine in the IntellectualProperty Law along with other relevant principles or doctrines in the manner of establishinggeneral rule of Intellectual Property Law so as to guide the application of the IntellectualProperty Law; in addition, it also indicates the absence of relevant legislation of China andpropose the improvement advices on legislation and demonstration to perfect relevant legalsystem of China.