Exhaustion of Rights

Exhaustion of rights is a principle in intellectual property law stating that after the first authorized sale or circulation of a protected product, the rights holder can no longer oppose its resale or further distribution within a specific geographical area. This concept seeks to balance the exclusive rights of intellectual property holders with the free movement of goods.

Main Characteristics:

• Scope of application: Exhaustion of rights applies to various areas of intellectual property, including trademarks, patents, and copyrights. It occurs when the protected product is placed on the market with the rights holder’s consent.

• National, regional, and international exhaustion: Depending on the jurisdiction, exhaustion of rights can be:

  • National: Rights are exhausted only within the country where the first sale occurred.

  • Regional: Rights are exhausted within a specific region, such as the European Union.

  • International: Rights are exhausted worldwide after the first authorized sale.

• Exceptions and limitations: Certain restrictions may apply, particularly if resale alters the condition of the product or damages the brand’s reputation.

Applicable Legal Provisions:

• Article L713-4 of the French Intellectual Property Code (CPI): This article states that trademark rights do not allow the rights holder to prohibit the use of the mark for products placed on the market in the European Economic Area by the rights holder or with their consent.

• Article 15 of Directive (EU) 2015/2436 on trademarks: This directive establishes that trademark rights are exhausted after the first placement of goods on the market in the European Union by the rights holder or with their consent.

• Article 4, paragraph 2, of Directive (EU) 2001/29 on copyright: It specifies that the distribution right of a work is exhausted within the European Union after the first sale or other transfer of ownership of the original or copies of the work by the rights holder or with their consent.

In summary, exhaustion of rights is a fundamental mechanism in intellectual property law that balances the rights of owners with the need to ensure the free movement of goods in the market. It is regulated by specific legal provisions to ensure a coherent and fair application.