Exhaustion of patent and trademark rights in France

9 GERMAN minute read
09 März 2022

Author(s):

In France the question of whether an intellectual property (IP) right (such as a registered trademark or a patent) can be enforced by way of an infringement action against the sale of genuine goods placed on the market in another country and then parallel imported into France, is governed by an area of law called 'exhaustion'.

As a Member State of the European Union (EU), France is within the European Economic Area-regional exhaustion regime established by EU legislation and the case law of the Court of Justice (CJEU). The basic principle is that once goods have been placed on the market in the EU or the European Economic Area (EEA) by the owner of the relevant IP or with their consent, the owner's rights, under intellectual property law, to control subsequent dealings in the goods have been exhausted and so no longer exist. However, the placing of genuine goods on the market outside the EU and EEA does not exhaust the owner's intellectual property within the EU/EEA, which can still be enforced against import or sale of those goods within the EU/EEA.

The EEA-regional exhaustion regime can therefore be considered to have two fundamental features: (1) exhaustion in respect of goods placed on the market in the EU/EEA by the IP right owner or with their consent; and (2) no exhaustion for goods placed on the market outside the EU/EEA by the IP right owner or with their consent.

This approach is recognised in the law in France in respect of both patents and trademarks.

For more detail on the development of, and modern foundations for, the regime governing exhaustion in France for patents and trademarks, please read on below.



Trademarks

In 1974, in Centrafarm v Sterling[1], the CJEU drew upon (what are now) articles 34 and 36 of the Treaty on the Functioning of the EU (TFEU) (i.e. the free movement of goods provisions) and held that putting goods into circulation for the first time in a Member State, either directly or by the grant of licences to third parties, exhausted the trademark owner's rights under trademark law in respect of those goods in other Member States. This introduced in France the first of the fundamental features of the EEA-regional exhaustion regime noted above, in respect of trademarks.

However, in France the notion of exhaustion of rights pre-existed this case law. Before 1974, trademark rights were considered exhausted when the product was introduced on the French market by the owner of the trademark in France or with their consent. In this way, the private property rights in the product in question were not undermined. However, if the trademark owner placed their product on the market abroad, there was no exhaustion of trademark rights in France. The pre-1974 approach in France may therefore be described as a national exhaustion regime.

In 1998, the Court of Justice ruled in Silhouette v Hartlauer[2] that because trademark law was harmonised across the EU, Member States could not choose whether or not to operate international exhaustion; the trademarks Directive was a complete code. This therefore confirmed the approach already taken in France in respect of the second of the fundamental features of the EEA-regional exhaustion regime noted above, in respect of trade marks.

The body of case law from the Court of Justice has additionally addressed legitimate reasons for the proprietor of a registered trademark to oppose further commercialisation of goods, in particular in the context of repackaged pharmaceuticals[3] and where further commercialisation would seriously damage the reputation of the registered mark[4].

Patents

In 1974, in Centrafarm v Sterling[5], the CJEU drew upon (what are now) articles 34 and 36 of the Treaty on the Functioning of the EU (TFEU) (i.e. the free movement of goods provisions), and held that putting goods into circulation for the first time in a Member State, either directly or by the grant of licences to third parties, exhausted the patentee's rights in respect of those goods in other Member States. This introduced in France the first of the fundamental features of the EEA-regional exhaustion regime noted above, in respect of patents.

Before 1978, to justify the legality of subsequent acts of marketing in France of products placed on the French market by the patentee, judges were using the legal fiction of the existence of a tacit licence accompanying the sale of a patent. A law of 1978 introduced into French law the rule of exhaustion, which put an end to the need for using the legal fiction of a tacit licence. In 1993, a further law, the Intellectual Property Code, extended the exhaustion principle recognised in respect of patents so that it applied in respect of goods placed on the market by the owner of the patent or with their consent not just in France but anywhere within (what is now called) the EU (and the EEA). Therefore the first of the fundamental features of the EEA-regional exhaustion regime noted above became recognised in France in respect of patents.

However, in respect of goods first placed on the market outside the EU/EEA, it is noted that CJEU case law has not introduced, specifically in relation to patents, the second of the fundamental features of the EEA-regional exhaustion regime noted above (equivalent to Silhouette v Hartlauer but in respect of patents).

However, in a 1997 judgment[6] the Paris Court of First Instance stated that there is no international exhaustion of rights for patents; and this remains good law in France.

Therefore, in France, the law recognises both the first and second fundamental features of the EEA-regional exhaustion regime in respect of patents.

To conclude, the EEA-regional exhaustion regime governs rules on parallel imports of genuine goods into France – what genuine goods can be imported and from where. If your business is involved in or interested in the movement into France (or the EU) of goods protected by a trademark or a patent, then you need to understand what the law on 'exhaustion' of intellectual property is in France and the EU.

To discuss this article further, or for more on 'exhaustion' of IP rights in France, please contact Céline Bey.

Footnotes

[1] Centrafarm BV & Anr v Sterling Drug Inc (Case 15/74) and Centrafarm BV & Anr v Withrop BV (Case 16/74), 31 October 1974
[2] Silhouette International Schmied GmbH & Co. KG v Hartlauer Handelsgesellschaft mbH Case C-355/96, 28 September 1998 [1999] 3 C.M.L.R. 267, [1998] 9 WLUK 261
[3] For example, Bristol-Myers Squibb v Paranova A/S, Case C-427/93, 11 July 1996
[4] For example, Parfums Christian Dior SA v Evora BV, Case C-337/95, 4 November 1997
[5] Centrafarm BV & Anr v Sterling Drug Inc (Case 15/74) and Centrafarm BV & Anr v Withrop BV (Case 16/74), 31 October 1974
[6] TGI Paris, 5 march 1997, PIBD 1997, III, p. 357


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