Exhaustion of right theory

The exhaustion of rights theory in intellectual property is a principle that limits the exercise of exclusive rights conferred by an intellectual property title (such as a patent, trademark, or copyright) once the protected product has been placed on the market with the consent of the rights holder, in a given geographical area. In other words, once a product has been lawfully sold or distributed by the right holder or with his consent, the holder loses his power of control over the future distribution of this product.

Exhaustion of rights is based on the idea that the exclusive right enjoyed by the holder of an intellectual property right is exhausted once the product protected by that right has been put into circulation. This principle prevents the holder of the right from subsequently restricting the sale, distribution or use of the product in question once it has been put on the market.

There are three types of exhaustion of rights.

1. National exhaustion
   • Exhaustion of rights is limited to the national territory where the product has been put into circulation. Once a product is sold in that country, the holder of the rights can no longer oppose the resale or use of that product within that same country.
   • However, this principle does not necessarily extend to other territories, and the holder may prohibit the entry of this product into other countries.
2. International or Community exhaustion (depending on the applicable legislation)
   • In some jurisdictions, particularly in the European Union, the exhaustion of rights may be international or community-wide. This means that once a product has been put into circulation in a Member State of the European Union, the holder cannot prohibit the sale of the product in another Member State, even if the product was not introduced into that market by the holder.
   • Community exhaustion has been confirmed by the case law of the Court of Justice of the European Union (CJEU) in cases such as Van Doren (1987), where it ruled that intellectual property rights do not extend to products put into circulation in the EU.
3. Relative exhaustion
   • Exhaustion can also be relative, which means that it can apply differently depending on the type of product or rights involved. For example, in the case of copyright, exhaustion generally applies to physical copies of the work, but does not necessarily extend to digital copies.

For the exhaustion of rights to apply, several conditions must generally be met:

1. Lawful distribution : The product must have been lawfully distributed, i.e. the right holder (or an authorized distributor) must have consented to the first sale or first making available of the product.
2. Tangible product : Exhaustion of rights applies mainly to physical products (e.g. a book, an electronic device, etc.). This does not always apply to services or intangible goods (such as digital works, software, etc.).
3. Absence of restrictive contractual conditions : Exhaustion may be limited by contractual conditions or specific agreements (for example, exclusive distribution licenses or contracts prohibiting the resale of the product). In this case, the right is not exhausted if the product is resold in violation of these conditions.

It should also be noted that this theory has limitations and exceptions.

• Anti-competitive practices : Exhaustion of rights aims to prevent the abuse of power by intellectual property rights holders. However, there are exceptions where the application of the principle could lead to anti-competitive practices or behavior that would harm the market (for example, excessive resale or fraud).
• Different territories : The exhaustion of rights does not necessarily extend to all countries. For example, a product put into circulation in one country may still be protected by an intellectual property right in another country where the exhaustion of rights is not recognized.

Conclusion

The theory of the exhaustion of intellectual property rights prevents the holder of an exclusive right from exercising permanent control over a product once it has been lawfully put into circulation. It applies mainly to physical products, but may vary according to the type of rights and the jurisdiction. This theory aims to promote trade and the circulation of goods, while limiting anti-competitive practices, but it must be reconciled with competition rules and consumer rights.