Exhaustion of intellectual property rights

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The exhaustion of intellectual property rights constitutes one of the limits of intellectual property (IP) rights. Once a given product has been sold under the authorization of the IP owner, the reselling, rental, lending and other third party commercial uses of IP-protected goods in domestic and international markets is governed by the principle. [1]

Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. Intellectual property encompasses two types of rights; industrial property rights and copyright. It was not until the 19th century that the term "intellectual property" began to be used, and not until the late 20th century that it became commonplace in the majority of the world.

After a product covered by an IP right, such as by a patent right, has been sold by the IP right owner or by others with the consent of the owner, the IP right is said to be exhausted. It can no longer be exercised by the owner. [1] This limitation is also referred to as the exhaustion doctrine or first sale doctrine. [1] For example, if an inventor obtains a patent on a new kind of umbrella, the inventor (or anyone else to whom he sells his patent) can legally prohibit other companies from making and selling this kind of umbrella, but can not prohibit customers who have bought this umbrella from the patent owner from reselling the umbrella to third parties.

Patent set of exclusive rights granted by a sovereign state to an inventor or their assignee so that he has a temporary monopoly

A patent is a form of intellectual property. A patent gives its owner the right to exclude others from making, using, selling, and importing an invention for a limited period of time, usually twenty years. The patent rights are granted in exchange for an enabling public disclosure of the invention. In most countries patent rights fall under civil law and the patent holder needs to sue someone infringing the patent in order to enforce his or her rights. In some industries patents are an essential form of competitive advantage; in others they are irrelevant.

The same applies to software patents. If a piece of software containing a patented algorithm is redistributed by the patent owner, for example by Microsoft via GitHub, the patent is exhausted. [2]

A software patent is a patent on a piece of software, such as a computer program, libraries, user interface, or algorithm.

Microsoft U.S.-headquartered technology company

Microsoft Corporation (MS) is an American multinational technology company with headquarters in Redmond, Washington. It develops, manufactures, licenses, supports and sells computer software, consumer electronics, personal computers, and related services. Its best known software products are the Microsoft Windows line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge web browsers. Its flagship hardware products are the Xbox video game consoles and the Microsoft Surface lineup of touchscreen personal computers. As of 2016, it is the world's largest software maker by revenue, and one of the world's most valuable companies. The word "Microsoft" is a portmanteau of "microcomputer" and "software". Microsoft is ranked No. 30 in the 2018 Fortune 500 rankings of the largest United States corporations by total revenue.

GitHub is a web-based hosting service for version control using Git. It is mostly used for computer code. It offers all of the distributed version control and source code management (SCM) functionality of Git as well as adding its own features.

While there is a "fairly broad consensus" throughout the world that patent exhaustion "applies at least within the context of the domestic market", [1] "[t]here is less consensus as to what extent the sale of an IP protected product abroad can exhaust the IP rights over this product in the context of domestic law." [1] The former is the concept of "national exhaustion", the latter of "regional exhaustion" or "international exhaustion". The rules and legal implications of the exhaustion largely differ depending on the country of importation, i.e. the national jurisdiction. [1]

The legal concept of international exhaustion is much more controversial, and is recognized in some countries but not in others. The importation, in a country that recognizes the concept of international exhaustion, of a product sold in a foreign country with the authorization of the IP right owner cannot be prevented by the IP right owner. [3] The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), an international agreement administered by the World Trade Organization (WTO), does not address the issue of exhaustion of intellectual property rights. [4]

World Trade Organization organization that intends to supervise and liberalize international trade

The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 124 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.

See also

The exhaustion doctrine, also referred to as the first sale doctrine, is a U.S. common law patent doctrine that limits the extent to which patent holders can control an individual article of a patented product after a so-called authorized sale. Under the doctrine, once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be "exhausted," and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew, unless it is specifically authorized by the patentee to do so.

The first-sale doctrine is a legal concept playing an important role in U.S. copyright and trademark law by limiting certain rights of a copyright or trademark owner. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder put the products on the market. The doctrine is also referred to as the "right of first sale," "first sale rule," or "exhaustion rule."

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A grey or gray market refers to the trade of a commodity through distribution channels that are legal but unintended by the original manufacturer or trade mark proprietor. Grey market products are products sold by a manufacturer or their authorized agent outside the terms of the agreement between the reseller and the manufacturer.

Industrial property is one of two subsets of intellectual property, it takes a range of forms, including patents for inventions, industrial designs, trademarks, service marks, layout-designs of integrated circuits, commercial names and designations, geographical indications and protection against unfair competition. In some cases, aspects of an intellectual creation, although present, are less clearly defined. The object of industrial property consists of signs conveying information, in particular to consumers, regarding products and services offered on the market. Protection is directed against unauthorized use of such signs that could mislead consumers, and against misleading practices in general.

Intellectual property rights (IPRs) have been acknowledged and protected in the People's Republic of China since the 1980s. The People's Republic of China has acceded to the major international conventions on protection of rights to intellectual property. Domestically, protection of intellectual property law has also been established by government legislation, administrative regulations, and decrees in the areas of trademark, copyright, and patent. This has led to the creation of a comprehensive legal framework to protect both local and foreign intellectual property. Despite this, copyright violations are common in the PRC, The American Chamber of Commerce in China surveyed over 500 of its members doing business in China regarding IPR for its 2016 China Business Climate Survey Report, and found that IPR enforcement is improving, but significant challenges still remain. The results show that the laws in place exceed their actual enforcement, with patent protection receiving the highest approval rate, while protection of trade secrets lags far behind.

A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product and are implicated in issues of international trade, and intellectual property.

Intellectual property law in Romania has developed significantly in the period since the Romanian Revolution of 1989 because of the need to enforce various regional and international treaties and agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the European Directives on Biotechnological Inventions, on Trademarks and Geographical Indications, and on Supplementary protection certificates, the Trademark Law Treaty, the Patent Law Treaty, and the European Union regulation on the Community Trademark, and the need to harmonize domestic patent law with the European Patent Convention (EPC) and with the European Union.

Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs is a European Union directive in the field of industrial design rights, made under the internal market provisions of the Treaty of Rome. It sets harmonised standards for eligibility and protection of most types of registered design.

The Gowers Review of Intellectual Property was an independent review of UK intellectual property (IP) focusing on UK copyright law that was published in December 2006. The then Chancellor of the Exchequer Gordon Brown commissioned Andrew Gowers to lead the review in December 2005. The Review was published on 6 December 2006 as part of the Chancellor's annual pre-budget report. The review concludes that the UK's intellectual property system is fundamentally strong but made 54 recommendations for improvements.

The following outline is provided as an overview of and topical guide to intellectual property:

Customs Regulation 1383/2003, the full title of which is Regulation concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights, is a measure passed under Article 133 of the EC Treaty. The provision is designed to protect the intellectual property rights of constituents of member nations.

TRIPS Agreement International treaty on intellectual property protections

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO). It sets down minimum standards for the regulation by national governments of many forms of intellectual property (IP) as applied to nationals of other WTO member nations. TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) between 1989 and 1990 and is administered by the WTO.

Limitations and exceptions to copyright are provisions, in local copyright law or Berne Convention, which allow for copyrighted works to be used without a license from the copyright owner.

Layout designs (topographies) of integrated circuits are a field in the protection of intellectual property.

Quanta Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617 (2008), is a decision of the United States Supreme Court in which the Court reaffirmed the validity of the patent exhaustion doctrine, and in doing so made uncertain the continuing precedential value of a line of decisions in the Federal Circuit that had sought to limit Supreme Court exhaustion doctrine decisions to their facts and to require a so-called "rule of reason" analysis of all post-sale restrictions other than tie-ins and price fixes. In the course of restating the patent exhaustion doctrine, the Court held that the exhaustion doctrine is triggered by, among other things, an authorized sale of a component when the only reasonable and intended use of the component is to practice the patent and the component substantially embodies the patented invention by embodying its essential features. The Court also overturned, in passing, the part of decision below that held that the exhaustion doctrine was limited to product claims and did not apply to method claims.

Iran is a member of the WIPO since 2001 and has acceded to several WIPO intellectual property treaties. Iran joined the Convention for the Protection of Industrial Property in 1959. In December 2003 Iran became a party to the Madrid Agreement and the Madrid Protocol for the International Registration of Marks. In 2005 Iran joined the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, which ensures the protection of geographical names associated with products. As at February 2008 Iran had yet to accede to The Hague Agreement for the Protection of Industrial Designs.

"Authorization" and "Secondary Infringement" are two instances of "indirect infringement" in Canadian Copyright law. In cases of indirect infringement, individuals can be held liable for infringement even where they did not personally make the copies of the copyrighted subject-matter. This expands the scope of liability. The Canadian courts have dealt with these concepts in a number of cases, several of which will be elaborated upon below.

Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. ___ (2017), is a decision of the Supreme Court of the United States on the exhaustion doctrine in patent law in which the Court held that after the sale of a patented item, the patent holder cannot sue for patent infringement relating to further use of that item, even when in violation of a contract with a customer or imported from outside the United States. The case concerned a patent infringement lawsuit brought by Lexmark against Impression Products, Inc., which bought used ink cartridges, refilled them, replaced a microchip on the cartridge to circumvent a digital rights management scheme, and then resold them. Lexmark argued that as they own several patents related to the ink cartridges, Impression Products was violating their patent rights. The U.S. Supreme Court, reversing a 2016 decision of the Federal Circuit, held that the exhaustion doctrine prevented Lexmark's patent infringement lawsuit, although Lexmark could enforce restrictions on use or resale of its contracts with direct purchasers under regular contract law. Besides printer and ink manufacturers, the decision of the case could affect the markets of high tech consumer goods and prescription drugs.

References

  1. 1 2 3 4 5 6 "International Exhaustion and Parallel Importation". WIPO. Retrieved 23 May 2015.
  2. Van Lindberg (2 February 2019). The surprising interaction of open source and patent exhaustion (Speech). FOSDEM. Brussels.
  3. The United States Supreme Court adopted the doctrine of international exhaustion in Kirtsaeng v. John Wiley & Sons, Inc. for US copyright law, and in that decision explained the general rationale for the doctrine under common law principles of property rights.
  4. Article 6 TRIPS: "For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights."