Parallel importations. New perspectives.*
Parallel import means that patented or marked goods are purchased in a
foreign market and resold in the domestic market. These are known as passive
parallel imports.
Instead, active parallel imports occur when foreign licensees enter the
market in competition with the holder of the patent or of the trade mark1.
There are three kinds of principles that can hypothetically regulate the
parallel importations (known also as gray market).
First, there is the principle of national exhaustion. It means that the patent or
the trade mark holder can prevent the importation of the product in the market
where he is owner of the intellectual property right.
Diametrically contrary is the international exhaustion principle. In this
theory the intellectual property right is consumed as soon as goods are placed in
the market, so that they can freely circulate. In Japan Tokyo High Court (in 1995)
applyed the international exhaustion rule (BBS Kraftfahrzeug Technik AG v.
Kabushiki Kaisha Racimex Japan and Kabushiki Kaisha JapAuto Prods)2. The
sentence turned over the leading case Brunswick (1969, Osaka District Court).
According to the Brunswick case parallel importation was unlawful if goods were
already patented in Japan3. Finally, in 1997, the Japanese Supreme Court didn’t
use the international exhaustion principle, and decided that holder of a patent in
Japan and in another country can’t oppose to importation in Japan of the same
(*) Paper carried out in PRIN research 2007, MIUR, “Enforcement ed effettività delle tutele
nel diritto commerciale” (coord. Prof. V. Di Cataldo).
Lavoro realizzato nell’ambito della ricerca PRIN 2007, cofinanziata dal MIUR,
“Enforcement ed effettività delle tutele nel diritto commerciale” (coord. Prof. V. Di Cataldo).
1
CONLEY, Parallel imports: the tired debate of the exhaustion of intellectual property
rights and why the WTO should harmonize the haphazard laws of the international community, in
Tulane Journal of International and Comparative Law, 2007, 189, 190 s.
2
See MUELLER, JANICE M., An introduction to patent law, New York, 2006, 441. See also
CORREA, CARLOS M., Trade related aspects of intellectual property rights. A commentary on the
TRIPS Agreement, Oxford-New York, 2007, 81, mark 10; FINK, CARSTEN, Entering the jungle of
intellectual property rights exhaustion and parallel importation, in Intellectual property and
development. Lessons from recent economic research, ed. by Fink e Maskus, Washington, 2005,
174 and 185, mark 8.
3
MATSUSHITA, MITSUO, Issues regarding parallel importation of trademarked and
patented products and competition policy in Japan, in Intellectual property: trade, competition,
and sustainable development, ed. Cottier e Mavroidis, Ann Arbor, 2003, 192.
product, except demonstrating that the gray market was contractually prohibited
(and there was evidence on the product)4.
It’s possible to note that in Australia is in force the international exhaustion
principle for trade marks and for patents, but for patents this principle can be
contractually restricted by the patent holder5.
The third solution is the European Union one. In the E.U. is in force the
European Union exhaustion principle. Goods patented (or marked) traded for the
first time in the European Union or in the European Economic Area can be freely
traded inside European Union (or European Economic Area). The patent or trade
mark holder can, instead, opposite to parallel importations inside E.U. or E.E.A. if
good was traded for the first time only outside E.U. or E.E.A.
In U.S.A. the doctrine of exhaustion is accepted by jurisprudence. U.S.
Government, instead, has been always adverse international exhaustion. During
the negotiations of TRIPS agreement U.S. Government expressed his contrary
view (with reference to patents and specially drugs). The U.S. Government
opinion is founded on the need to defend the research’ possibility of enterprises
that want to patent their inventions6.
In this way of thinking parallel importations can harm the research
capability of the enterprises, because this kind of capability needs a suitable
exploitation of the patent and this utilization can be damaged by parallel
importations from countries where the price’ product is lower.
4
MATSUSHITA, MITSUO, Issues regarding parallel importation of trademarked and
patented products and competition policy in Japan, in Intellectual property: trade, competition,
and sustainable development, ed. Cottier e Mavroidis, Ann Arbor, 2003, 193.
5
MASKUS, KEITH E. e CHEN, YONGMIN, Parallel imports in a model of vertical
distribution: theory, evidence, and policy, in Intellectual property and development. Lessons from
recent economic research, ed. by Fink e Maskus, Washington, 2005, 189, 193 s.
6
Trips, sec. 6, set countries free to choose international exhaustion principle, with the only
limit of not discriminating (see CORREA, CARLOS M., Trade related aspects of intellectual
property rights. A commentary on the TRIPS Agreement, Oxford-New York, 2007, 78; WATAL,
JAYASHREE, Parallel imports and IPR-based dominant positiuons: where do India’s interest lie?,
in Intellectual property: trade, competition, and sustainable development, ed. Cottier e Mavroidis,
Ann Arbor, 2003, 201; FINK, CARSTEN, Entering the jungle of intellectual property rights
exhaustion and parallel importation, in Intellectual property and development. Lessons from
recent economic research, ed. by Fink e Maskus, Washington, 2005, 173). Same reasoning is
possible to find in NAFTA (North American Free Trade Agreement) and MERCOSUR (Mercado
Común del Sur): FINK, CARSTEN, Entering the jungle of intellectual property rights exhaustion
and parallel importation, in Intellectual property and development. Lessons from recent economic
research, ed. by Fink e Maskus, Washington, 2005, 173.
The only exception in the U.S. legislation is the common control exception
for trade marks, that allows gray market if the national trade mark holder coincide
with the foreign trade mark holder or if both the holders are affiliated
corporations or are submitted to common ownership or control7. It’s possible to
explain this exception because in case of trade marks it’s really difficult to feel
that need for protection of the research system that it’s possible to find in the
patent field.
The U.S. Government’ position has a kind of confirmation in a study of the
E.U. (NERA 1999). This study states that European Union exhaustion principle
didn’t remove prices’ differences among European Union Countries8. This study
seems to think that parallel importations coming from U.S.A. and Japan could
only reduce enterprises’ profits more than curtail consumers’ prices9.
In theory it seems to be preferable a system based on international
exhaustion principle, because seems a good means to avoid market segmentations,
favouring consumers by lowering prices.
But it’s also true that studies about parallel importations are based on little
empirical evidence. A lot of studies about gray market are anecdotic10.
From a little while we can see some attempts to justify prohibition of
parallel importations, specially for drugs. The most important justification is that
parallel importations can destroy research.
Probably this changing is linked to the recent economic crisis. Like in
almost every difficult period for economy it’s possible to see withdrawals of
antitrust needs in favour of
protectionist mechanisms aimed at defending
enterprises and dynamic efficiency.
7
FINK, CARSTEN, Entering the jungle of intellectual property rights exhaustion and parallel
importation, in Intellectual property and development. Lessons from recent economic research,
ed. by Fink e Maskus, Washington, 2005, 185.
8
See WATAL, JAYASHREE, Parallel imports and IPR-based dominant positiuons: where do
India’s interest lie?, in Intellectual property: trade, competition, and sustainable development, ed.
Cottier e Mavroidis, Ann Arbor, 2003, 206.
9
FINK, CARSTEN, Entering the jungle of intellectual property rights exhaustion and parallel
importation, in Intellectual property and development. Lessons from recent economic research,
ed. by Fink e Maskus, Washington, 2005,182 s. See also MASKUS, KEITH E. e CHEN, YONGMIN,
Parallel imports in a model of vertical distribution: theory, evidence, and policy, in Intellectual
property and development. Lessons from recent economic research, ed. by Fink e Maskus,
Washington, 2005,189, 199.
10
CONLEY, Parallel imports: the tired debate of the exhaustion of intellectual property
rights and why the WTO should harmonize the haphazard laws of the international community, in
Tulane Journal of International and Comparative Law, 2007, 189, 210.
Parallel importations face the problem of moderating two kinds of economic
efficiency: static (in which parallel importations produce a price reduction for
consumers) and dynamic efficiency (that concerns the optimal capability of a
system to produce innovations). It’s clear that these kinds of efficiency are not
always matchable. The only way to have a correct balance is to ensure a suitable
remuneration to the intellectual property holder in the market of first admission of
the product for research and development activity11. At the same time this doesn’t
involve an excessive possibility of exploitation of the market by the patent
holder12.
In the famous case Syfait13 the European Court of Justice found a solution
by not prohibiting parallel importations of drugs, but also allowing the
manufacturer to refuse furnishing medicines to wholesalers when their orders are
abnormal, that is excessive in respect to the normal amounts previously ordered.
I think that in this brief analysis it’s necessary to take into account that
preventing gray market (to make sure enterprises can reach the maximum level of
research) is not a good solution if you don’t value that patent premium and the
curve of the innovation are not always parallel, because often appropriation of
economic advantages coming out from an innovation doesn’t always stimulate
research in a constant way14.
If you consider what said about equilibrium between static and dynamic
efficiency in economy and about re-emergence of protectionist tendencies in a
economic crisis period, seems possible to face the problem in a different way. I
think, indeed, it’s possible to consider parallel importations dangerous for market
not only appraising the difficulties that gray market cause to the single patent
holder in his research activity, but also evaluating if restrictions to the parallel
trading are useful to reach the target of stimulating innovation in a comprehensive
dimension15.
11
V. CORREA, CARLOS M., Trade related aspects of intellectual property rights. A
commentary on the TRIPS Agreement, Oxford-New York, 2007, 89.
12
DESOGUS, Il commercio parallelo disincentiva la ricerca farmaceutica?, in Diritto
industriale, 2008, 341
1057.
13
Court of Justice of the European Communities, may 31, 2005, C-53/03.
14
LEMLEY, Property, intellectual property and free riding, in Texas Law Review, 2005,
Finally, the subject of parallel trading, specially in pharmaceutical field,
meets with necessities of the countries less rich. And it’s not sure that parallel
trading is an advantage for consumers of this countries. Indeed, pharmaceutical
manufacturer could reduce the price differential between markets. Paradoxically
this could lower the price in the richer country and raise price in the poorer
country16.
ENRICO MACRÌ
Faculty of Law
University of Messina
15
DESOGUS, Il commercio parallelo disincentive la ricerca farmaceutica?, in Diritto
industriale, 2008, 345.
16
V. FINK, CARSTEN, Entering the jungle of intellectual property rights exhaustion and
parallel importation, in Intellectual property and development. Lessons from recent economic
research, ed. by Fink e Maskus, Washington, 2005, 184. See also WATAL, JAYASHREE, Parallel
imports and IPR-based dominant positiuons: where do India’s interest lie?, in Intellectual
property: trade, competition, and sustainable development, ed. Cottier e Mavroidis, Ann Arbor,
2003, 206.