No. 33: National Intellectual Property Rights As Barriers to Market Integration in Free Trade Areas: Is International or Regional Exhaustion the Answer?
Abstract
This paper explores the relationship between national rules on the exhaustion of intellectual property rights—primarily patents, trademarks, and copyrights—and the free movement of goods in free trade areas, custom unions, and common markets. This paper first refers to the experience in the EU, which has long prioritized the creation of the EU internal market and adopted a consistent rule of EU-wide exhaustion of intellectual property rights for all Member States. The paper then compares the EU experience with two other regional blocks: the North American Free Trade Area (NAFTA), which leaves the members of NAFTA free to adopt their preferred policies with respect to the principle of exhaustion, but also was never intended to become a common market like the EU; and the Association of South East Asian Nations (ASEAN), which also does not regulate the national policies adopted by the its members, but which (differently than NAFTA and similarly to the EU) aims at creating a common market for goods. The paper concludes by highlighting that any block of countries that desires to promote free movement of goods needs to adopt consistent national policies supporting either regional exhaustion, as in the case of the EU, or international exhaustion.