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Exhaustion of Trademark Rights and Legality of Parallel Imports Under the GATT 1994

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Trade Marks and Free Trade

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Abstract

This chapter considers the issue of exhaustion of trademark rights in the light of the provisions of the GATT 1994 related to the problem of the legality of parallel imports. In particular, the provisions of the GATT 1994 relevant to the problem of the legality of parallel imports are reviewed in order to see whether that Agreement obliges the Contracting Parties to adopt any rule of exhaustion of trademark rights (national, regional, or international exhaustion) or, in the event there is no such obligation, whether a specific rule of exhaustion of trademark rights appears to be more compatible with the legal system established by that Agreement. The analysis comes to the conclusion that the GATT 1994 does not impose on its Contracting Parties an obligation to adopt a certain doctrine of exhaustion of trademark rights, but the doctrine of international exhaustion of trademark rights appears to be more consistent with the law relating to the GATT 1994.

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Notes

  1. 1.

    See Stucki (1997), p. 48.

  2. 2.

    See Cottier and Stucki (1996), p. 54; Freytag (2001), p. 241; Stucki (1997), p. 53; Verma (1998), pp. 553–558.

  3. 3.

    See Bronckers (1998), pp. 143–154.

  4. 4.

    So also Freytag (2001), p. 239.

  5. 5.

    So also Freytag (2001), pp. 240–241.

  6. 6.

    See Report of the Appellate Body, Canada—Certain Measures Concerning Periodicals, WT/DS31/AB/R (19×97), Chapter IV, 17–20; Report of the Panel, Indonesia—Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT DS59/R, and WT/DS 64/R (1998), at 342, para. 14.56, where it is noted: “We consider rather that the obligations contained in the WTO Agreement are generally cumulative, can be complied with simultaneously and that different aspects and sometimes the same aspect of a legislative act can be subject to various provisions of the WTO Agreement”; Report of the Appellate Body, European Communities—Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R (1997), paras 217–222; Report of the Appellate Body, Brazil—Measures Affecting Desiccated Coconut, WT/DS22/AB/R (1997); WTO Appellate Body of 25.09.1997, European Communities—Sale and Distribution of Bananas (WT/DS27/AB/R), at 89, para. 221; WTO Appellate Body of 21.02.1997, Brazil—Measures Affecting Desiccated Coconut (AB-1996-4), at 12–13.

  7. 7.

    See Report of the WTO Panel, EC—Measures Concerning Meat and Meat Products (Hormones), WT/DS26/R/USA, WT/DS48/R/CAN (1997), at 196–197, paras 8.27–8.31; Report of the Appellate Body, EC—Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R (1998), 46–48, paras 126–128; Report of the Appellate Body, European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (2001), at 29, paras. 75–76.

  8. 8.

    So also Freytag (2001), p. 239. Besides, the Preamble to the TRIPs Agreement also speaks in favour of the parallel application of the principles of national treatment and the most favoured nation of the TRIPs Agreement and the GATT 1994

    (RECOGNIZING, to this end, the need for new rules and disciplines concerning: (a) the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions…).

  9. 9.

    So also Freytag (2001), pp. 241–242; Perrott (1988), p. 55; Stucki (1997), p. 49.

  10. 10.

    See, under the GATT 1947, Jackson (1969), p. 743. Cf. also Case C-70/87, Fediol versus Commission, [1989] ECR 1781, para. 37; Report of the Panel adopted on 7 February 1984 (L/5504–30S/140), Canada—Administration of the Foreign Investment Review Act, at 16, para. 5.20; Report by the Panel adopted on 7 November 1989 (L/6439–36S/345), United States—Section 337 of the Tariff Act of 1930, at 44, paras 5.22–5.24.

  11. 11.

    See, under the GATT 1947, Litpher (1997), p. 249; Perrott (1988), p. 55.

  12. 12.

    Those exceptions are partly reproduced in the Uruguay Round Agreement on Agriculture (of April 15, 1994).

  13. 13.

    The text of the provision of Article XIX (1) of the GATT 1994 reads as follows:

    1. (a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession.(b) If any product, which is the subject of a concession with respect to a preference, is being imported into the territory of a contracting party in the circumstances set forth in subparagraph (a) of this paragraph, so as to cause or threaten serious injury to domestic producers of like or directly competitive products in the territory of a contracting party which receives or received such preference, the importing contracting party shall be free, if that other contracting party so requests, to suspend the relevant obligation in whole or in part or to withdraw or modify the concession in respect of the product, to the extent and for such time as may be necessary to prevent or remedy such injury.

    Procedural conditions for the application of Article XIX (1) of the GATT 1994 are set out in paragraphs 2 and 3 of Article XIX of the GATT 1994.

  14. 14.

    According to Article 4 (1) of the Uruguay Round Agreement on Safeguards:

    1. For the purposes of this Agreement:(a) “serious injury” shall be understood to mean a significant overall impairment in the position of a domestic industry;(b) “threat of serious injury” shall be understood to mean serious injury that is clearly imminent, in accordance with the provisions of paragraph 2. A determination of the existence of a threat of serious injury shall be based on facts and not merely on allegation, conjecture or remote possibility; and (c) in determining injury or threat thereof, a “domestic industry” shall be understood to mean the producers as a whole of the like or directly competitive products operating within the territory of a Member, or those whose collective output of the like or directly competitive products constitutes a major proportion of the total domestic production of those products.

  15. 15.

    According to 7 (1) of the Uruguay Round Agreement on Safeguards:

    A Member shall apply safeguard measures only for such period of time as may be necessary to prevent or remedy serious injury and to facilitate adjustment. The period shall not exceed four years, unless it is extended under paragraph 2.

  16. 16.

    So also Freytag (2001), p. 242; Verma (1998), p. 554.

  17. 17.

    Verma (1998), pp. 553–554; Yusuf and Moncayo von Hase (1992), p. 128.

  18. 18.

    So also Bale (1998), pp. 650–651.

  19. 19.

    So also Freytag (2001), p. 246.

  20. 20.

    So also Freytag (2001), p. 246; Stucki (1997), p. 49.

  21. 21.

    See supra n. 11.

  22. 22.

    It is interesting to mention that the exemptions provided for in Articles XX and XXI of the GATT 1947 (now Articles XX and XXI of the GATT 1994) have been considered as being “the most troublesome GATT exemptions” and the “most troublesome administrative barriers to trade” (see Jackson 1969, p. 741). In this regard, it has been submitted that the exemptions provided for in Article XX of the GATT 1947 (now Article XX of the GATT 1994) had been abused for protectionist purposes (see Senti 1986, p. 274).

  23. 23.

    So also Freytag (2001), p. 243.

  24. 24.

    So also Freytag (2001), p. 243. It is to be reminded that the Contracting Parties may implement in their law more extensive protection than is required by the TRIPs Agreement, provided that such protection does not contravene the provisions of that Agreement [Article 1 (1) of the TRIPs Agreement.

  25. 25.

    So also Freytag (2001), p. 243.

  26. 26.

    So also Freytag (2001), pp. 243–244.

  27. 27.

    Verma (1998), p. 555. This view was supported, under the GATT 1947, also by Yusuf and Moncayo von Hase (1992), pp. 127–129.

  28. 28.

    For the legal treatment of parallel imports of trademarked goods under US law, see infra Sect. 13.1. For Canadian law, see Peterman (1993), p. 181; Swanson (2000), pp. 347–348.

  29. 29.

    So also Abbott (1998), pp. 632–635; Stucki (1997), p. 51.

  30. 30.

    See Article 1 (1) of the TRIPs Agreement, according to which “Member [the Contracting Parties] may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement”.

  31. 31.

    Cf., in this regard, the judgment by the GATT panel in United States—Section 337 of the Tariff Act of 1930, GATT Doc. L/6439 of 16.01.1989, BISD 45, 1988–1989, at 345; also Bail (1991), p. 140.

  32. 32.

    Cf. the first judgment by the WTO Appellate Body of 20.04.1996, United States—Standards for Reformulated Gasoline, AB -1996-1, WT/DS2/AB/R.

  33. 33.

    So also Freytag (2001), pp. 244–245.

  34. 34.

    See Cottier (1991), p. 400: “Article XX (d) of GATT provides the basis for exclusion of parallel importation whenever the doctrine of national exhaustion is applied by a contracting party”.

  35. 35.

    See Bronckers (1998), pp. 156–158.

  36. 36.

    For the application of the “in dubio mitius” principle in the interpretation of the WTO Agreement, see WTO Appellate Body, EC—Measures Concerning Meat and Meat Products (Hormones) (WT/DS26/AB/R—WT/DS48/AB/R), adopted on 13.02.1998, at 63–64, para. 165, and the references thereto, where the semantic content of the above-mentioned principle is given as follows: “The principle of in dubio mitius applies in interpreting treaties, in deference to the sovereignty of states. If the meaning of a term is ambiguous, that meaning is to be preferred which is less onerous to the party assuming an obligation, or which interferes less with the territorial and personal supremacy of a party, or involves less general restrictions upon the parties”.

  37. 37.

    For the Doha Declaration on the TRIPs Agreement and public health, see indicatively Abbott (2002), Amir (2002), Dilip (2005) and Haochen (2004).

  38. 38.

    Cottier (1995), p. 55. So also Stucki (1997), p. 54.

  39. 39.

    Cottier (1995), p. 55. So also Stucki (1997), p. 54.

  40. 40.

    So also Freytag (2001), p. 250.

  41. 41.

    See Case C-355/96, Silhouette International Schmied GmbH & Co. KG v. Hartlauer Handelsgesellschaft mbH, [1998] ECR I-4799 (see infra Sect. 9.4.4.2).

  42. 42.

    So also Freytag (2001), p. 251.

  43. 43.

    So also Freytag (2001), p. 248.

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  1. Faculty of Law, Aristotle University of Thessaloniki, Thessaloniki, Greece

    Lazaros G. Grigoriadis

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Grigoriadis, L.G. (2014). Exhaustion of Trademark Rights and Legality of Parallel Imports Under the GATT 1994. In: Trade Marks and Free Trade. Springer, Cham. https://doi.org/10.1007/978-3-319-04795-9_4

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