- Parallel Imports / International Exhaustion
Background: European law does not allow firms to use trade mark or copyright law to prevent their goods sold in one EEA Member State from being imported and resold in another Member State — i.e. they are not able to segment the EU market. However European law does allow the use of trade mark and copyright law to restrict the imports to EU Member States of goods sold outside the EEA. It also specifically inhibits EU Member States from legislating to remove such import restrictions at the national level — so called “international exhaustion” of trade marks or copyright. There has been a good deal of debate, both here in the UK and at EU level, about the costs and benefits of removing restrictions on parallel imports. There is a further issue of firms taking advantage of variations in prices on pharmaceutical products across the EU and repackaging drugs bought cheaply elsewhere within the EEA to resell within the UK.
(a) Has your company been affected by parallel trade?
(b) What would be the impact on your organisation of a change in the current rules?
(c) What evidence is there of the costs and benefits, both for consumers and firms of the current rules?
Gowers Review of Intellectual PropertyAt the Enterprise Conference on 2 December 2005, the Chancellor of the Exchequer announced that, as part of the Pre-Budget Report 2005 package, he was asking Andrew Gowers to lead an Independent Review to examine the UK's intellectual property framework. The Open Rights Group has been formally invited to participate. We are currently drafting our submission and wish to include your thoughts and opinions. We have reproduced the Call for Evidence below and invite you to contribute - just hit 'respond' next to the paragraph you wish to comment on. Many of the questions asked by Andrew Gowers in this review are very focused, but you should feel free to comment on the issues and the wider implications rather than feel obliged to provide specific answers. If you want to talk about issues not raised by this call for evidence, please do - just leave your comments on the Introduction. |
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April 19th, 2006 at 02:27
The abuse of trademark law to legally control what one does with their own possessions is quite frankly abhorrent to the principles of a free market system. I would have mentioned this in my prior submission to your review, but this issue had completely slipped my mind until just now.
Recently, a major electronics gaming manufacturer decided to prosecute all UK merchants selling official products that were imported from other markets (namely the US and Japan). The company in question won their cases and forced at least one of the merchants to surrender their stock lest the company have major damages awarded against them. I find this unacceptable in a modern society, let alone a global market one. The right of an individual to do as they wish with their own property is paramount. Once a sale has occurred, it belongs to the customer and the merchant has no right to restrict its use without a seperate legal agreement in place. Imagine if car manufacturers such as Ford, Vauxhall and Honda et al. started this behaviour with used car dealerships, preventing people from buying second hand cars, hoping ot inflate their markets. It doesn’t happen because people would not stand for it. It is simply ridiculous that this apparent legalised extortion can be allowed to occur, just because it occurs in a segment of the market which most members of the public are unaware exists.
These various corporate entities have shown that they cannot be trusted not to artificially segment the market with various legal and technological devices with the primary aim of driving up prices. DVD region coding was found to be illegal in Australia a few years ago, and may indeed have been declared so elsewhere. Yet upon the recent release of the product in question (with it’s proprietary media and many years after the Australian case), the company has once-again implemented the hated region-coding present on DVDs to achieve market seperation (though games are not currently region-coded, though for how long remains uncertain as the facility is present, I suspect it was at the behest of the movie industry before they would allow its content to be used).
If these companies want to flaunt the laws of the free market and restrict the benefits of globalisation to themselves whilst employing technological measures to enforce artificial market separation then they need to be stripped of the surplus legal protections they enjoy. the law must be changed to prevent the abuse of a trademark to restrict sale (or indeed resale) of official goods, wherever they may be sourced from.