Research On The Exhaustion Of Intellectual Property Rights In International Trade

The exhaustion of Intellectual Property Rights (IPR) is a controversial issue in the area of IP law and international trade. This dissertation makes an inquiry into the exhaustion of IPR in international trade through the following perspectives:the basic theories of IPR Law, international trade policy and competition policy, various regulations on the exhaustion of IPR under international law and domestic laws, as well as exhaustion-related legal and policy issues in China. Four chapters are devoted to this dissertation in addition to the introduction and concluding parts.Chapter one analyses the basic theories on the exhaustion of IPRs. Based on the basic theories of IPR Law such as scarcity of IPR goods and balancing of interest, this chapter makes a systematic analysis on the origin and purpose of exhaustion principle, the relationships between IPRs, property rights and contractual rights, as well as the theoretical basis of international/national exhaustion of IPRs. This chapter indicates that the fundamental purpose of exhaustion principle is to coordinate the scarcity of IPR goods and the free circulation of goods on the market, and to harmonize the exclusivity of IPR and the exclusivity of property rights, so as to balance the interest of IPR owner and the society. The issue of international/national exhaustion of IPR is the logical consequence of transnational circulation of IPR goods in international trade, and is a reflection of the conflict between the territoriality of IPR and the liberalization of International trade. This dissertation makes an analysis on the negotiating history and the nature of TRIPS Article 6 with the above conflict in mind.Chapter two makes an analysis on the exhaustion of IPR through the perspectives of international trade policy, competition policy, customs regulation as well as regional trade arrangements. Based on the nature of trade policy, this chapter discusses the influencing factors in the exhaustion-related trade policy making process, as well as the economic analysis on the welfare effect of various exhaustion rules. The research of this chapter shows that the welfare effect on the influencing factors are very complicated, making the harmonization of rules on exhaustion by various states nearly impossible. But the consequential inconsistencies among the regulations of various nations on exhaustion will have a negative impact on the further liberalization of international trade, as IPR goods may be under uncertain rules in transnational circulation. But when this negative effect on the liberalization of international trade accumulates to certain degree, WTO members would have a strong motivation to try to achieve harmonization. This chapter also discusses the impact of parallel importation on competition policy. As the consequence of vertical restrains on parallel importation is transnational, the competition polices based on "the effect principle" could not function very well on this issue. This situation makes the international coordination of competition policy an issue to consider. As to the customs regulation related to the exhaustion of IPR, parallel import presents a difficult issue to the customs of various countries. Customs must strike a balance between the facilitation of international trade and the protection of intellectual property when implementing the laws and regulations on parallel imports. Finally, exhaustion of IPR has become the subject of the FTAs negotiated by U.S. and E.U., and both try to put national exhaustion principle to the FTAs they signed.Chapter three makes an extensive review of regulations on the exhaustion of IPR in international trade under various domestic laws and trade arrangements. This chapter analyzes the regulations in the area of patent, trademark and copyright under as many countries as possible. The research in this chapter proves that the rules on exhaustion taken by nations are extremely complex. There are inconsistencies not only among nations, but also among approaches toward different subject matters of IPR taken by the laws of the same country. This has further increased the hardship of coordination of exhaustion under multilateral legal system. But this chapter has also proved that it is possible to conduct tentative coordination of exhaustion principle for specific subject matters of IPRs among certain countries.Chapter four analyzes the issue of exhaustion of IPRs faced by China in international trade. Starting with the recent amendment of Chinese Patent Law which adopts the principle of international exhaustion, this chapter traces the development of provisions on exhaustion in Chinese Patent Law, and reviews the judgments of Chinese courts on the exhaustion issue in the fields of patent, trademark and copyright. According to the status of China in international trade, this chapter holds the view that the principle of international exhaustion would better serve the interest of China in the foreseeable future. Based on this conclusion, this chapter makes recommendations on the improvement of provisions on exhaustion in Chinese Patent Law, Trademark Law and Copyright Law, and on the complementary role that Antitrust Law, customs regulations as well as FTAs signed by China could play in the realization of goals China intended by the adoption of international exhaustion principle.As a conclusion, the issue of exhaustion of IPRs in international trade is a combined reflection of the multiple conflicts between property rights and IPRs, IPR owners and the public, the territoriality of IPR and the liberalization of international trade. As a result, this issue is highly complicated. The regulation of exhaustion and parallel import must be based on the systematic analysis on related trade policy, competition policy and IPR policy, and must serve the national interest of specific countries. This means that the international coordination of exhaustion would be very difficult to achieve under multilateral legal regime, and the controversies surrounding this issue would still last for a long time. China has already realized that the principle of international exhaustion is more consistent with its national interest, and should implement this principle through further modification to its domestic law, as well as conduct bilateral coordination with its trade partners, so as to make sure that the multilateral coordination of exhaustion of IPRs in the future would not conflict with the interest of our country.