Trademark exhaustion and proposals for an improvement of vietnamese trademark law

K eyw ords: IPR exhaustion, tradem ark exhaustion, the TRIPS A greem ent, u s law on trademark exhaustion, EU law on trademark exhaustion, V ietnam ese law on trademark exhaustion, condi

LUND UNIVERSITY HANOI LAW UNIVERSITY

NGƯYEN NHƯ QƯYNH

TRADEMARK EXHAƯSTION AND

PROPOSALS FOR AN IMPROVEMENT OF

VIETNAMESE TRADEMARK LAW

SUPERVISORS: PROF DR KATARINA OLSSON

ASSOCIATE PROF DR BUI DANG HIEU

2011

IPR exhaustion not only signals the end o f an IPR ONvners’ distribution rights regarding a particular product but also serves as the basis for solving many trade-related matters, particularly parallel imports, repairs (and recycling or reconstruction) o f IPR-protected goods, and anti-com petitive practices involving IPRs The settlem ent o f IPR exhaustion- related issues requires the intervention o f policies, intem ational conventions and national laws, and many areas o f law, including at least intellectual property, com petition and contract law Still, the utility o f the exhaustion doctrine and m easures for the exploitation

o f that utility are not always fully recognized, particularly by developing and least developed countries This thesis íòcuses on tradem ark exhaustion and provides a comparison between V ietnam ’s trademark exhaustion rules both in law and in practice and those o f the TRIPS A greem ent, the ư s and EU N otw ithstanding this delimitation, its solutions should be usefiil for developing countries other than Vietnam Its goals are to help those countries to design their tradem ark lavvs (and to some extent, their relevant policies) w ith a view to com plying with the TRIPS A greem ent, íitting their socio- economic contexts, and íòstering economic growth and social welfare

K eyw ords: IPR exhaustion, tradem ark exhaustion, the TRIPS A greem ent, u s law on trademark exhaustion, EU law on trademark exhaustion, V ietnam ese law on trademark exhaustion, conditions triggering tradem ark exhaustion, legal consequences o f trademark exhaustion, parallel imports o f trademarked goods, repairs o f tradem arked goods, and trademark-related contractual restrictions

Looking back after alm ost fiv e h a rd yea rs o f research, I w ould like to record the invaluable help o f the kin d p eo p le enveloping me and m y passions and endeavors This dissertation w ould not have been possible without their support a nd I would like to

express m y deepest gratitude to all who have ever helped me.

First and íòrem ost, I w ould like to offer my vvholehearted thanks to my wonderful supervisors, Professor K atarina Olsson and Associate Professor Bui Dang Hieu, for their insightíul conversations during the developm ent o f the ideas in this thesis and for helpful comments on the text M y supervisors have shared their im m ense knovvledge, experiences, and precious time w ith me whilst allowed me room to w ork in my own way I leam ed from their academ ic, stem but íriendly attitude to students as this encouraged me to put more effort into the research M y supervisors were happy w ith my prelim inary results and were willing to give me their help at any time in dealing with difficulties which arose I

am very fortunate to have them to go w ith me on the rough road during the past years

It is a pleasure to express my special gratitude to the project Strengthen Legal Education

in Vietnam (íunded by the Svvedish International D evelopm ent C ooperation Agency) and the Faculty o f Law, Lund University These organizations have given me the opportunity

1 Ganea, Peter, E xhaustion o f ỈP Rights: ReJlections from E co n o m ic Theory, Institute o f Innovation Research-Hitotsubashi U niversity, Japan, 20 0 6 S ee also G allego, Beatriz C onde, The p rin c ip le o f exhaustion o f righ ts a n d its im p lica tio n s f o r com petition law , International Revievv o f Intellectual and

C om petition Law, IIC 2 0 0 3 , 34 (5 ), pp 4 7 3 -5 0 2

2 This is Thom as C ottier’s observation, cited by Sheckhtm an, Ekaterina and S esitsk y, E vgeniy, Exhauslion

an d P a ra lle l Im portation in th e F ieỉd o f T radem arks, 2 0 0 8 , < http://w w w turin-ip.com /research-

papers/papers-2008/Shekhtm an-Sesitsky.FIN A L pdP>.

to be im the Joint Doctoral Training Program and realize my dreams o f engaging in such study n have beneíited from the magnifícent library and advanced Computer system o f the Faculty' of Law which greatly enrich my dissertation My most fruitful and intensive researclh time has been in this cordial refuge, I would like to thank the proíessors, librariams, and other staff o f the Faculty.

In the course o f my years o f research, I also have had the privilege and pleasure of receiviiag precious support from and spending fruitful time at a number o f excellent educational and research centers, national and intemational organizations, and govemmental oíĩices These are: Suffolk University Law School (Boston, US), WIPO, WTO, Max Planck Institute (M unich, Germany), the European Patent Office and, in Vietnam, the Inspectorate o f the M inistry o f Science and Technology (MOST) the National Office o f Intellectual Property (NOIP) o f MOST, the Competition Administration Department (VCAD) o f the Ministry o f Industry and Trade (MOIT), the Exports and Imports Administration Department o f MOIT, the Drug Administration Department o f the M inistry o f Health, the General Department o f Customs o f the Ministry

o f Finance, and the People’s Supreme Court I greatly beneíìted when the Japanese Patent Offíce published my íirst English article on the Vietnamese law on IPR exhaustion in the magazine o f the IP Com munity (in 2007) A fter its publication, I received many valuable comments which have been useful in the subsequent development o f my dissertation I vvould like to thank W IPO for inviting me to retum to Geneva in 2010 to carry out a research on the use by W IPO M ember States o f exhaustion-related intellectual property provisions to address anti-com petitive practices within the Project on Intellectual Property and Competition Policy The arguments below, particularly those on competition-related trademark exhaustion have been strengthened by my work with the WIPO project Also, I express my sincere gratitude to the Vietnam ese Ministry o f Science and Technology for permitting me to vvrite some parts o f the Circular guiding the Decree No 97/2010/ND-CP

of the Government on sanctioning administrative violations in the domain of industrial

property, also in 2010 Such parts (they are on parallel imports; reuse, recycling, and repaữ o f industrial property right-protected goods; and production and marketing o f industrial property right-protected Products in excess o f the rights granted to industrial property right ow ners) closely link to my dissertation Through discussions with the draíting group, my ideas on these issues vvere improved More importantly, my ideas for improving Vietnam ese law on them have been used in a legal normative document

I would like to grateíully acknowledge the invaluable support o f Hanoi Law University

My university granted me the best conditions for completing this dissertation My special thanks go to the Board o f Rectors, the Departm ent o f íoreign relations, the Personnel Oíĩice, and the Faculty o f Civil Law I am aware and íiilly appreciate that my colleagues

in the Center o f Intellectual Property Law and the Division o f Civil Law have been burdened with additional teaching hours due to my írequent, lengthy absences

On an individual level, many have given their time, knowledge, and experience in assisting my research I have received Professor Christina M ốell’s warm guidance and eíĩective help in both study-related and practical matters, especially in the fírst three years

o f the project w hen I was a very immature PhD candidate I have also been supported in many ways throughout the process o f vvriting up my research by Assistant Professor Bengt Lundell who is one o f the people most involved in the whole program His seasoned

experience and knovvledge o f intemational issues mixed with his understanding o f Vietnamese have helped me out in many puzzles I convey a special acknow ledgem ent to his signiíicant contribution in smoothing my research schedules both at home and abroad.

I would love to em phasize my thanks to Professor H ans H enrik Lidgard W hen I fírst asked him about parallel im ports, I knew nothing m ore than the term s “parallel imports” and “ IPR ex h au stio n ” I w as interested in them but vvorried by their novelty, and I w as very hesitant to select the subjects for the proposal for PhD research Professor Lidgard erased m y hesitancy and triggered my p assion for doing research on trademark exhaustion F urtherm ore, he has given me continuous encouragem ent and been a constructive voice during sem inars even w hen he w as not a m em ber o f the Examination Panels The encouragem ent o f P rofessor L ars-G ốran M alm berg and his sincere regards have íostered m y study since the tim e I was a m aster student at Lund University I fully ap preciate the opinions on com parative m ethod o f Professor Michael B ogdan Those opinions m ade me m ore co n íìden t in using such a method and devoting a w hole chapter o f m y dissertation to com parison

It is a pleasure to pay tribute also to Professor Birgitta N ystrốm , Professor Hans-Heinrich Vogel, Assistant Professor Eva Lindell-Frant, and Dr Tran Le Hong for their constructive criticism and useful íeedback during and after the seminar I gratefully acknowledge their important contribution to im proving my dissertation

I thank Dr N uno Pires de Carvalho for his tireless help in the vvhole process o f my doing research I grateíully thank Dr Christopher Heath, Dr Carsten Fink, Dr Peter Ganea Proíessor M argaret Chon, Associate Professor Jessica Silbey, A ssociate Professor Stephen

M MacJohn, Assistant Proíessor U lf M aunbach, Associate Professor Pham Duy Nghia,

Dr Pham D inh Chuong, Dr Pham H ong Quat, and Mrs Tu V iet Lan for acting as patient intervievvees in m any discussions carried out over long-distance via e-m ails In particular,

many thanks go to Dr Pham Hong Quat, Mrs Le Hong Van, and Mr Nguyên Thanh

Hong for helping me overcom e the difficulties in selecting and accessing the official documents o f the tradem ark exhaustion-related cases in Vietnam Thank to these cases,

my writing on tradem ark exhaustion in law and practice o f V ietnam becomes more convincing I record here the help o f Proíessor Stephen Hicks in arranging and following

up my discussions with scholars o f intellectual property law w hen I was in Boston in the

u s and afterward Also, m any thanks go to Philip H orow itz for his care and patience in reviewing my English

This dissertation w ould not have been existed vvithout my long-suffering family From the bottom o f my heart, I thank my parents, N iet N guyen and Hue Tran, for teaching me and

my younger sister about the importance o f study, giving us the privilege o f being able to study, and raising us w ith their gentle love and care This dissertation is one o f my eíĩorts

to keep them happy w ith the achievem ents o f their tw o daughters I owe much to my parents-in-law and my parents for their support o f my extensive study and their considerate care for my daughter vvhen I was abroad

Words fail me in expressing my indebtedness to the sacriíìce o f my small family Luu Dinh, I fully understand how much difficulty he has experienced when I have been far away from our home His love and other contributions given vvithout complaint have

supported me through all the stress o f every step o f the joum ey D evotion to Titti Quynh Trang, my little daughter, has been a m otivation for me to com plete this dissertation.

In addition, many thanks are due to my friendly and cheerful group o f fellow students We have wholeheartedly shared challenges and pleasures during the years o f our research I hope to keep up our collaboration in the future

Finally, I would like to apologize to all who contributed to the realization o f this dissertation but were not m entioned personally

The law is stated in this dissertation as in force on 15 April 2011

Nguyen N hu Q u y n h

AIPPI The International A ssociation the Protection o f Intellectual

Property

ASEAN A ssociation o f South East Asian Nations

CFI Court o f First Instance (European C ourt o f Justice)

EFPIA European Federation o f Pharmaceutical Industries and

A ssociation (US)

ICTSD International Centre for Trade and Sustainable D evelopm ent

(UNCTAD)

IPR<,) Intellectual Property Right(s)

NERA Study The Study “The econom ic consequences o f the choice o f a

regime o f exhaustion in the area o f tradem arks", undertaken

by N ational Economic R esearch A ssociates-N ERA (EU), 1999

N ational Intellectual Property Offíce (V ietnam )

M inistry o f Industry and Trade (V ietnam )

M inistry o f Science and Technology (Vietnam)

O rganization for Econom ic C ooperation and D evelopm entResearch and Developm ent

The Treaty establishing the European Com m unity

TEEC The Treaty o f the European Econom ic Community

TFEU The Treaty on the Functioning o f the European Union

TRIPS Agreement Agreem ent on Trade-R elated Aspects o f Intellectual

Property Right

TRIPS Council Council for Trade-Related A spects o f Intellectual Property

(W TO)

UNCTAD United N ations Conference on Trade and Development

USPTO The United States Patent and Tradem ark Office

TABLE OF CONTENTS

A B S T R A C T i

PREFACE ii

ABBREVIATIONS vi

TABLE OF C O N T E N T S v iii CHAPTER 1: INTRODUCTION 1

1.1 Background 1

1.2 P u rp o se 3

1.3 D elim itation 4

1.4 M ethods 9

1.5 Previous research and m a te ria ls 14

1.6 O u tlin e 17

1.7 C ontribution 19

CHAPTER 2: T H E O R Y ON IP R EXHAUSTION AND P A R T IC U L A R L Y T R A D EM A R K EXHAUSTION 21

2.1 Theory on IPR ex h au stio n 21

2.1.1 The exhaustion d o c trin e 21

2.1.1.1 The íòrm ation and developm ent o f the exhaustion d o c trin e 22

2.1.1.2 The exhaustion doctrine in relation to the íìrst sale doctrine and the implied license d o ctrin e 27

2.1.2 IPR e x h au stio n 29

2.1.2.1 The concept o f IPR exhaustion 29

2.1.2.2 C onditions triggering IPR ex h au stio n 30

2.1.2.3 Legal consequences o f IPR ex h au stio n 33

2.1.3 Types o f exhaustion re g im e 35

2.1.3.1 N ational ex h au stio n 35

2.1.3.2 Regional e x h a u stio n 37

2.1.3.3 International exhaustion 38

2.1.3.4 Conclusion 41

2.2 Theory on tradem ark ex h au stio n 43

2.2.1 D eíinition and ủm ctions o f trad em ark 43

2.2.2 Features o f tradem ark e x h au stio n 45

2.2.2.1 Tradem ark exhaustion may be íorestalled by the origin indicating and distinguishing íunction o f trad em ark s 45

2.2.2.2 An intem ational exhaustion regime better fits tra d e m ark 47

2.2.2.3 Tradem ark exhaustion signiíicantly affects certain P ro d u cts 49

2.2.3 Trađem ark exhaustion in some com mercial a ctiv itie s 49

2.2.3.1 Parallel im port o f tradem arked goods 49

2.2.3.2 Repair o f tradem arked goods 52

2.2.3.3 Contractual restrictions and tradem ark exhaustion 53

2.3 Concluding rem arks 57

CHAPTER 3: T R A D E M A R K EXHAUSTION UNDER T H E T R IP S A G R E E M E N T 58

3.1 Introduction 58

3.2 International conventions related to tradem ark exhau stio n 58

3.2.1 The Paris C on v en tio n 60

3.2.2 G A T T 62

3.3 An overview o f the TRIPS A greem ent 63

3.3.1 Features o f the TRIPS A g reem en t 63

3.3.2 Principles o f the TRIPS A greem ent 65

3.3.3 The concept o f consistency with the TRIPS A greem ent 67

3.4 Trademark exhaustion-related issues under the TRIPS A greem ent 67

3.4.1 Conditions triggering tradem ark exh au stio n 68

3.4.2 Legal consequences o f tradem ark exhaustion 70

3.4.3 Tradem ark exhaustion regime under the TRIPS A greem ent 71

3.4.3.1 TRIPS ílexibilities and the exhaustion re g im e 72

3.4.3.2 Relevance to the Paris Convention and to G A T T 75

3.4.4 Tradem ark exhaustion in cases o f repair o f trademarked goods 77

3.4.5 Tradem ark exhaustion in cases o f contractual restrictions 77

3.4.5.1 Flexible r u le s 78

3.4.5.2 M inim um stan d ard s 80

3.5 Concluding rem arks 82

CHAPTER 4: T R A D E M A R K EXHAUSTION IN T H E LAW AND PRA CTICE OF THE u s AND THE EU 83

4.1 u s 83

4.1.1 Legal basis for tradem ark exhaustion 83

4.1.2 Conditions and legal consequences o f tradem ark exhaustion 84

4.1.2.1 Conditions o f tradem ark exhaustion 85

4.1.2.2 Legal co n seq u ences 87

4.1.3 Exhaustion regime for tradem ark and parallel im portation 88

4.1.3.1 Continuous efforts to bar parallel im p orts 89

4.1.3.2 A restriction on parallel im portation o f pharm aceuticals 96

4.1.4 Tradem ark exhaustion in cases o f repair o f trademarked goods 98

4.1.4.1 Legality o f repair o f tradem arked g o o d s 99

4.1.4.2 Distinction betw een repair, reconstruction, and recy clin g 99

4.1.4.3 Lawful repair and tradem ark infringem ent 101

4.1.5 Tradem ark exhaustion in cases o f contractual restrictions 103

4.1.5.1 Contractual restrictions and the survival o f trademark exhau stio n 103

4.1.5.2 Tradem ark exhaustion in cases o f breach o f contractual restriction.106 4.1.6 C onclusion 108

4.2 E U 108

4.2.1 Legal basis for tradem ark exhaustion 109

4.2.2 Conditions and legal consequences o f tradem ark exhaustion 111

4.2.2.1 Conditions triggering the regional tradem ark ex h au stio n 112

4.2.2.2 Legal consequences o f the regional tradem ark exhaustion 114

4.2.3 The regional exhaustion regime and parallel im portation 116

4.2.3.1 The regim e o f regional ex h au stio n 116

4.2.3.2 Repackaging o f parallel-im ported pharm aceuticals 119

4.2.4 Tradem ark exhaustion in cases o f repair o f trademarked go o d s 124

4.2.5 Tradem ark exhaustion in cases o f contractual restriction 126

4.2.5.1 Contractual restrictions and survival o f tradem ark exh au stio n 126

4.2.5.2 Tradem ark exhaustion in case o f breach o f contractual restriction 127

4.2.6 C onclusion 131

4.3 Concluding rem arks 132

V CHAPTER 5: T R A D E M A R K EXHAUSTION IN T H E LAW AND P R A C T IC E O F VIETNAM 133

5.1 Introduction 133

5.2 Legal basis o f tradem ark ex h au stio n 133

5.2.1 An overvievv o f V ietnam ’s intellectual property la w 134

5.2.2 The provisions on trademark e x h au stio n 137

5.3 Conditions and consequences o f tradem ark ex h au stion 138

5.3.1 Conditions triggering tradem ark e x h au stio n 139

5.3.1.1 Article 125.2(b) o f L IP 139

5.3.1.2 The Tribeco c ase 141

5.3.2 Legal consequences o f tradem ark exhaustion 144

5.4 Exhaustion regime and parallel im p o rts 145

5.4.1 Decree No 63/C P 145

5.4.2 Circular No 825/2000/TT-BK H CNM T 146

5.4.3 LIP 147

5.4.3.1 International exhaustion for tradem ark 148

5.4.3.2 The Kingm ax c ase 150

5.4.4 Parallel imports o f pharm aceuticals 152

5.4.4.1 D eíinition o f parallel import o f m e d ic in es 153

5.4.4.2 C onditions o f parallel im p o rts 153

5.4.4.3 Speciíìc cases o f parallel im p o rts 154

5.4.4.4 R epackaging and sticking o f auxiliary la b e ls 154

5.5 Exhaustion in cases o f repair o f tradem arked g o o d s 156

5.5.1 Legal b a sis 156

5.5.2 P ractice 157

5.6 Trademark exhaustion in cases o f contractual restrictio n s 158

5.6.1 Contractual restrictions in tradem ark licensing c o n tra c ts 158

5.6.2 Territorial restrictions and tradem ark ex h au stio n 159

5.7 Concluding rem arks 163

C H A PTER 6: T R A D E M A R K EXHAUSTION i n LAW a n d i n P R A C T IC E - A COM PARISO N BETVVEEN VIETNAM AND THE TRIPS AGREEMENT, u s , AND E U 165

6.1 Introduction 165

6.2 Legal basis for tradem ark exh au stio n 165

6.3 Conditions and legal consequences o f tradem ark e x h au stio n 166

6.3.1 Conditions triggering tradem ark exhaustion 166

6.3.1.1 C o n se n t 166

6.3.1.2 Putting on the m a rk e t 167

6.3.2 Legal consequences o f tradem ark exhaustion 168

6.4 The exhaustion regime and parallel im portation 169

6.4.1 TRIPS ílexibility and difference at exhaustion reg im e 169

6.4.2 Justification for the difference 170

6.4.2.1 The u s and the EU: The role o f p o lic y 170

6.4.2.2 Vietnam: A com pliance w ith the socio-econom ic context and p o licy 173

6.5 Tradem ark exhaustion in cases o f repair o f tradem arked g o o d s 181

6.5.1 C om patibility w ith the TRIPS A greem ent 181

6.5.2 Disparities by com parison w ith u s and EU la w s 181

6.6 Tradem ark exhaustion in cases o f contractual restrictio n s 182

6.6.1 C om patibility with the TRIPS A greem ent 182

6.6.2 Disparities by comparison with u s and EU la w s 183

6.7 Concluding rem arks 184

CHAPTER 7: PROPOSALS FOR TH E IM PROVEM ENT O F VIF.TNAMF.SE LAVV ON TRADEMARK EXHAUSTION 186

7.1 Introduction 186

7.2 Purposes and principles 186

7.3 Directions 187

7.4 Specific proposals 190

7.4.1 Legal basis o f trademark exhaustion 190

7.4.2 Conditions, legal consequences and the trademark exhaustion regim e 193

7.4.2.1 Amendments and supplements to L IP 193

7.4.2.2 Amendments and supplements to D ecrees 194

7.4.3 Parallel im portation 195

7.4.3.1 A new Circular on parallel im p orts 195

7.4.3.2 Provisions on the quality control o f parallel imported goods 197

7.4.3.3 Provisions on the price management o f imported goods 198

7.4.3.4 Amendments and supplements to Decision No 1906/2004/QD-BYT 198

7.4.4 Trade mark exhaustion in cases o f repair o f trademarked goods 200

7.4.4.1 Deíỉnition o f repair o f trademarked g o o d s 200

7.4.4.2 Legality o f repair o f trademarked g o o d s 201

7.4.4.3 Repairs o f trademarked goods as trademark infringem ents 201

7.4.5 Trademark exhaustion in cases o f contractual restrictions 202

7.4.5.1 General direction o f the improvem ent 202

7.4.5.2 Supplements to the current legislation 203

7.5 Summary and fmal rem arks 204

A PPEN D ICES 2 0 6 TABLE O F C A S E S 2 15 OPPICIAL DOCUM ENTS 220

BIBLIOGRAPHY 2 2 6

CH APTER1 INTRODUCTION 1.1 Background

IPR exhaustion derives from the exhaustion doctrine that has now been incorporated into the national laws o f many countries as a result o f the implementation o f the TRIPS Agreement, which allows states to do so (Article 6).3 The doctrine was originally created

to put a limitation on the exclusivity o f IPRs as it determined the point at which certain IPRs relating to a speciíic product ended According to the doctrine, IPR exhaustion occurs when the Products are put on the market by or with the consent o f the IPR owners aíìer which they no longer have the right to control the íurther circulation o f the Products The buyers, at least, have their discretion in using, giving, oíĩering for sale, and re-selling these products The right to control imports or exports o f the Products is, in principle, also

so limited when a regional or intemational exhaustion regime is applied

IPR exhaustion is recognized as an extremely complicated issue because o f its linked legal and economic aspects Further, it covers the area where intellectual property law and competition law interact.4 “The relationship between intellectual property protection and competition policy raises complex issues, which have received diíĩerent legislative solutions and produced a controversial and abundant literature.”5 More specifically, the exercise o f exclusive IPRs may cause non-tariff baưiers to consum ers’ access to IPR- protected goods and services and thus to the smooth circulation o f these Products The application o f the exhaustion doctrine aims at balancing the conílict between the interests

o f the IPR holder and those o f consumers and betvveen IPR protection and saíeguarding free market circulation From the point o f view o f intemational trade, the dmdamental purpose o f the exhaustion doctrine is to prevent intellectual property owners from using their exclusive rights to partition the global market IPR exhaustion is at heart, thereíòre, not so much a m atter o f intellectual property as such but rather o f economics It is also diíTicult to assess the effects o f every type o f exhaustion regime The eíĩects o f each exhaustion regime “differ[s] widely among countries, [industries] and across the various forms o f IPRs” 6 W ith respect to countries, the u s favors national exhaustion, the EU opts for a regime o f regional exhaustion while the situation is less clear in certain other developed countries W ith respect to IPR forms, an intemational regime seems to be more suitable for tradem arks than for patents and copyrights

With respect to intem ational legal Instruments, the TRIPS Agreement is the most important legal tool dealing with IPR exhaustion in general and trademark exhaustion in

3 The TRIPS A greem ent is A nn ex 1C o f the Marrakesh Agreem ent Establishing WTO, signed in Marrakesh,

M orocco on 15 A pril 1994, <http://www.wto.org/english/tratop_e/trips_e/t_agm O_e.htm >.

4 On the interaction betvveen intellectual property law and com petition lavv, see Anderman, Steven D (ed.),

The /n ter/a ce b etw e en IPRs a n d C om petition Policy, Cambridge U niversity Press, 2008; Pham, A lice,

C om petition L aw a n d In tellectu a l P roperty Rights: C on trollin g A bu se o r A busing C ontrol? CUTS

International, Jaipur, Inida, 2 0 08; Hart, Tina & Fazzani, Linda & Clark, Sim on, Hart, Tina & Fazzani, Linda

& Clark, Sim on, ỉn te lle c tu a l P ro p e rty Law, 5lh edn., Palgrave M acm illan, 2009.

5 U N C T A D -IC T S D Prọịect on IPRs and Sustainable D evelopm ent, Resource Book on TRIPS and

D evelopm en l, Cam bridge U niversity Press, 2005, p 571.

6 Fink, Carsten and M askus, Keith E (eds.), Intellectual P roperty a n d D evelopm ent: Lessons from recent econom ic research , A co-publication o fth e World Bank and Oxford University Press, 2005, p 172.

particular This Agreem ent reílects intemational efforts to eliminate all barriers to intemational trade and affirms that exhaustion is one o f the most important trade-related aspects o f IPRs Besides some minimum standards, the TRIPS Agreement provides ílexibilities for the WTO Member States in designing the laws relating to IPR exhaustion From the standpoint o f intemational intellectual property rules, each country is permitted

to adopt its own policies and rules with respect to exhaustion o f rights - and to parallel importation as well Due to these TRIPS ílexibilities, disparities in the legal framework for trademark exhaustion o f the WTO Member States still exist, ju st as they did beíbre the establishment o f the TRIPS Agreement

W ith respect to Vietnam, and in line with the dramatic change o f legal framework resulting from the promulgation o f a new Constitution in 1992, IPR exhaustion - an issue contains trade aspects - was initially covered in the Civil Code 1995 (at Article 803.2)7 and exhaustion o f trademarks was first provided for in Decree No 63/CP (at Article 53.3(b)).8 Since that landmark stipulation, the concept o f exhaustion o f rights has been recognized in Vietnam, although the word “exhaustion” is not to be found in Vietnamese legal normative documents even though it is in Article 6 o f the TRIPS Agreement ưnder Vietnamese law, it is explicitly stated that an intemational exhaustion regime applies to trademarks (as provided at Article 125.2(b) o f LIP)9 and parallel importation is lawfìil with respect to medicines (as provided at Decision No 1906/2004/QD-BYT)10 Despite this, “Vietnam is still a country in transition and there are claims by both Vietnamese and íoreign scholars that the legal framework is inconsistent and incomplete at least where trade is concem ed.” 11 This observation is completely correct in the area o f trademark exhaustion law where some provisions are still unclear and many provisions needed for dealing with trademark exhaustion are insuffícient or absent The issue o f exhaustion has

only been treated by administrative agencies in a handũil o f cases (particularly, Tribeco and K ingm axỸ2 and has not so far been referred to in any court decisions Generally,

issues conceming IPR exhaustion are stiil new to Vietnam These shortcomings existed

earlier and continued to arise when Vietnam became the 150th WTO member in 11 January 2007 The question is how the country follows the TRIPS minimum standards and takes advantages o f the TRIPS ílexibility on the IPR exhaustion by utilizing the options available thereof “to the íullest” 13 to implement its provisions in a manner that is

7 The C ivil C ode o f the S ocialist Republic o f V iet Nam passed by the National A ssem bly in Oct 1995 and

e íĩec tiv e from 1 Jul 1996.

8 D ecree N o 63/C P 24 Oct 1996 o f the Government on detailed regulations con cem ing industrial property This D ecree was invalid sin ce the C ivil Code 2005 took the effect on July 1, 2006.

13 Matthews, Duncan and M unoz-T ellez, Viviana, P a ra lle l Trade: A U ser's G uide (In Krattiger, Anatole,

M ahoney, Richard T and N elson, Lita (eds.)), ỉn tellectu al P ro p erty M anagem ent in Health and

A gricu ltu ral Innovation: A H andbook o f Best Practices, p 1433.

consistent with its interests and strategies.14 As already shown by the practice of other countries, those obligations and rights are not easy to implement.

IPR exhaustion p er se is, undoubtedly, a complicated íìeld o f law When effectively used, IPR exhaustion becomes a useful instrument for curbing anti-competitive practices as well

as meeting the interests o f both consumers and IPR holders The use o f exhaustion to address anti-competitive practices is workable with any exhaustion regime irrespective of national, regional or intemational exhaustion A national exhaustion prevents intellectual property holders to expand the scope o f certain rights; impose anti-competitive restrictions

on purchasers; and segment domestic market A regional or intemational exhaustion prevents intellectual property holders to expand the scope o f certain rights and bar them to segment regional and intemational markets.15 As a result, exhaustion helps to íòster economic development and social welfare

Trademarks, because o f their origin indicating and distinguishing function, limited ability to create m arket pow er, and ability to enjoy an unlim ited period o f protection (particularly in com parison w ith patents and copyrights), is differently treated where exhaustion is concem ed to the way other intellectual property objects are treated and this remains a controversial issu e.16 Nobody questions exhaustion o f patents and copyrights whereas an application o f tradem ark exhaustion is still seen as contentious Furthermore,

an intem ational exhaustion regime seems to better fit tradem ark law vvhereas a national exhaustion regim e is generally applied to patents and copyrights Repair o f trademarked goods (and, adm ittedly, o f patented goods) is relatively com m on whereas it does not really apply in the case o f copyrights Also due to the characteristics o f trademarks, competition rules are som etim es unnecessary to intervene in contractual restriction involving trad em ark s.17

The complexity o f tradem ark exhaustion and the current situation o f V ietnam ’s law on

trademark exhaustion attracted the author’s special attention The subject “Trademark

exhaustion a n d proposals f o r an im provem ent o f Vietnam ese trademark law ”, has thus

been chosen as the topic o f this research

1.2 Purpose

This research has two aims: the íirst is to scrutinize and clarify certain aspects o f ưademark exhaustion and the second is to draw the implications for an improvement o f Vietnam’s tradem ark law

4 Correa, Carlos M , ỈPRs, th e iVTO a n d D evelopin g Countries: The TRIPS A greem en t a n d P olicy Options, Zed B ook s Ltd., 2 0 0 0 , p 225; Durán, Esperanza and M ichalopoulos, Constantine, IPRs a n d D eveloping Countries in th e W TO M illennium Round, The Joumal o f World Intellectual Property, V ol 2, Issue 6, 1999,

m 871-872.

N guyen, Nhu Quynh, N guyen, Nhu Quynh, Exhaustion as a to o l to address abu sively anti-com pelitive

p ractice uses o f in tellectu a l p r o p e r ty rights, IP&Competition P olicy/C D IP /S tu d y/02/2011, The WIPO

Prọịect on Intellectual Property and Competition Policy, N ov 2010.

* In this dissertation, trademark exhaustion is mainly compared to the exhaustion o f patents and o f copyrights.

7 The d iíĩeren ces betvveen trademark exhaustion and exhaustion o f other intellectual property objects

(particularly patents and copyrights) w ill be clarified in infra Part 2.2.

In order to achieve the íìrst aim, it explores the theoretical, legal, and practical aspects o f trademark exhaustion Speciíĩcally, the theory o f trademark exhaustion is introduced by focusing on both the íorm ation and development and the contents o f the exhaustion doctrine, the three types o f exhaustion regime (national, regional, and intemational exhaustion), argum ents for the applicability o f the exhaustion doctrine to trademarks, the characteristics o f tradem ark exhaustion, and trademark exhaustion in some commercial acts (parallel im portation o f trademarked goods, repair o f trademarked goods, and contractual restrictions involving trademarks) The legal and practical aspects o f trademark exhaustion are then clarifíed by examining the following issues: trademark exhaustion as addressed in the TRIPS Agreement, trademark exhaustion in the law and practice o f the us, EU, and Vietnam, the consistency betvveen Vietnamese lavv on trademark exhaustion and the TRIPS Agreement, and differences and similarities betvveen Vietnamese law and practice relating to trademark exhaustion and their counterparts in both the u s and the E ư

Based on conclusions that being drawn from careíiilly investigating the exhaustion doctrine in general and trademark exhaustion in particular as well as from considerations

o f V ietnam ’s socio-econom ic context, this research makes proposals for an improvement

o f Vietnamese law on tradem ark exhaustion This is its second purpose The improvement

is intended to make the lavv on trademark exhaustion more comprehensive, consistent, and viable Beyond this, the aim is to protect and balance the respective interests o f trademark owners, producers o f trademarked goods and consumers; remove barriers to trade; and foster healthy com petition The ultimate target is to strengthen economic development and social welfare

This second goal is achieved by reviewing cuưent Vietnamese law on trademark exhaustion in the light o f the State’s general direction for improvement o f the country’s

legal system, as found in the Strategy fo r the Development and Ịmprovement o f Vietnam 's Legal System to the Year 2010 and Direction fo r the Perìod up to 2020,18 The current law

on trademark exhaustion is assessed by examining many issues such as its compatibility with the socio-economic context o f Vietnam, consistency with the TRIPS Agreement and

by covering cases arising in practice

1.3 Delimitation

This research does not go further than an exploration o f trademark exhaustion and trademark exhaustion-related implications for an improvement o f V ietnam ’s trademark law Its boundaries are ủirther determined as follows:

First, the research scrutinizes trademark exhaustion rather than IPR exhaustion in general or exhaustion fo r other fo rm o f IPRs It is worth noting that this dissertation only

íòcuses on tradem ark exhaustion The first reason is that trademark exhaustion contains many questionable points Many questions conceming trademark exhaustion are controversial as will be seen below (in Part 2.2.2.) Some have even queried whether the exhaustion doctrine can apply to trademarks at all by reíerring to the reward theory, the origin function o f tradem arks, and the exclusivity o f IPRs Besides this, other issues are

iS See Resolution N o 4 8-N Q /T W o f th e Politburo o f the Comm unist Party o f Vietnam o f 2 4 May 2005 on

the S tra te g y f o r th e D evelopm en t a n d Improvem ent o f Vietnam's L egal S yslem to the Year 2010 an d the

D irecíion f o r the P e r ìo d up to 20 2 0 , <the translation can be found at http://w w w m oj.gov.vn>.

still on the table such as vvhether an intemational exhaustion regime can be applicable to ưadem arks or only national and regional rules; and how to deal with the complex issu es

arising from practices such as repair o f trademarked goods and the application of competition rules to restrictive provisions in trademark license contracts

For Vietnam, an investigation o f trademark exhaustion will be o f considerable interest to policymakers, enterprises, and consumers Although ambiguities remain in Article 125.2(b) o f LIP, tradem ark exhaustion has, to some extent, been provided for more clearly than for other forms o f IPRs In Vietnam, as in many other countries, trademarks are the

m ost popular industrial property object (For full details, see Appendix 1) In addition, the complaints and disputes over IPRs brought to the competent State agencies for resolution are almost all trademark cases

IPR exhaustion in general will still be brieíly introduced (in Part 2.1.1.) as the background to

a better understanding o f trademark exhaustion Also, references to patent and Copyright

exhaustion or exhaustion o f other categories o f IPRs will still be made for the purpose of comparison It should be noted that this research focuses on questions o f physical Products and exhaustion in the digital environment is outside its scope

Second, the research explores trademark exhaustion under the TRỈPS Agreement rather than all international conventions relating to the topic It should be stressed that there are

no intemational conventions - including the TRIPS Agreement - speciíìcally dealing with trademark exhaustion Additionally, the TRIPS Agreement is not the only multilateral agreement on IPR exhaustion The Agreement, however, is the most important pillar o f

W TO covering intellectual property It obligates WTO M ember States to implement

m inimum standards o f protection o f all categories o f intellectual property, namely Copyright, tradem ark, geographical indication, plant breeders’ rights, industrial designs, patent, layout design o f integrated circuits, and undisclosed iníormation These

standards are enforced by a special mechanism, the so-called Dispute Settlement

Understanding By establishing this unit, WTO requires its m em ber states to íòster IPR protection at both the national and international levels Hovvever, in practice, the Dispute Settlem ent U nderstanding is used by developed countries to threaten to withdraw, or actually w ithhold, trade benefits in other areas o f economic interest to the targeted developing cou n tries.19 From 1995 to 2007, the u s brought six cases to the Dispute Settlem ent U nderstanding against selected developing countries and the E ư did so once.20 The TRIPS A greem ent effectively became a legal tool allovving developed countries to crush developing ones for purposes other than IPR enforcement

In terms o f IPR exhaustion-related issues, the TRIPS Agreement provides both the minimum standards and ílexibilities for the WTO Members (as vvill be analyzed in Chapter 3) The TRIPS Agreement precludes disputes concem ing the question o f IPR exhaustion from the WTO dispute settlement system (Article 6) A WTO Member, thus, can not bring a case before a WTO panel against another M ember based on the reason that the latter applies an exhaustion policy that cause detrimental consequences to the former However, the TRIPS Agreement itselí does not clarify the concept o f exhaustion Nothing

19 See D eere, Carolyn, The Im plem entation Game: The TRIPS A greem en t an d the G lo b a l P olitics o f Intellectual P ro p e r ty Reform in D evelopin g Countries, Oxford U niversity Press, 2009, pp 156-157.

(1996), U S v A rgen tin a { 1999), U S v B razil (2000), U Sv China (2007) Ibid, p 157.

prevents parties from requesting a WTO panel to clariíy this concept inscribed in the TRIPS A g re em en t/1 In practice, moreover, the exhaustion policy adopted by a WTO

M ember State may become a disputed subject in bilateral trade relations betvveen the related WTO Member States IPR exhaustion turns out to be One o f the key issues that developed countries expect to see included in bilateral trade agreement with developing countries if they are to secure TRIPS-plus reíòrm.22

Because o f the above-mentioned reasons, WTO Members must consider TRIPS in designing, implementing law on IPR exhaustion in general, and trademark exhaustion in particular The Members follow the TRIPS-minimum approach by complying with the TRIPS-minimum requirements o f IPR exhaustion-related issues On the other hand, they should take advantages o f the TRIPS ílexibility on the IPR exhaustion in a manner that is consistent with its interests and strategies.23

Third, the research /ocuses on the ỉaw and practice o f trademark exhaustion o f Vietnam, the u s and the EU rather than those o f other countries The u s Supreme Court was the

íirst court in the world that touched on the issue o f IPR exhaustion and the íìrst sale doctrine was bom in the u s , vvhile the terminology o f “exhaustion” was bom in the EU

u s law is characterized by a national exhaustion regime, whereas EU law is the key example o f a regional regime Both the u s and the EU are very used to resolving exhaustion cases in general and trademark exhaustion cases in particular The u s is well- known for the use o f the “material difference” exception to prevent parallel importation and also has much experience in dealing with very complicated matters relating to trademark exhaustion (and IPR exhaustion in general) such as repair o f trademarked goods and restrictive provisions in trademark license contracts The EU law on trademark exhaustion, in general, also reaches an advanced level Both the EU ’s statutes and case law on the conditions triggering trademark exhaustion, the legal consequences o f such exhaustion, and restrictive provisions in trademark license contracts are well developed The EU has also resolved the problems arising in pharmaceutical parallel imports cases in its own impressive manner Repackaging o f pharmaceuticals usually happens in the course

o f parallel trade o f these Products and the E ư has much experience in dealing with this complex activity As well as looking at the u s and the EU, the experiences o f and lessons taught by other developing countries such as ASEAN members and India will be referred

to but these will not be scrutinized in detail It is important to keep in the mind that

21 D avey, W illiam J and Zdouc, W em er, The Triangle o/T R IP S , G A TT a n d GATTS, (in Cottier, Thom as and M avroidis, Petros c , In tellectu al P ro p erty Trade, C om petition, an d S ustainable D evelopm ení, World Trade Forum, V ol.3.), The U niversity o f Michigan Press, 2003, p 66; Abbott, Frederick M., The D oha

D eclaration on the TRỈPS A greem en t a n d Public Health: Lighling a D ark C orner at the WTO, Joumal o f

International Econom ic Law, V ol 5, 2002, p 493.

22 See Fink, Carsten, E ntering the J u ngle o f IPRs Exhaustion an d P a ra ỉle l Importation, (in Fink, Carsten and Maskus, Keith E., supra note 6), The International Bank for Reconstruction and DevelopmerUAVorld Bank,

2005, p 184; Swanson, Tait R., C om bating G ray Market G oods in a G lobal Market: C om parative A nalysis o f Intellectual P roperty Laws an d R ecom m endedStrategies, Houston Joumal o f International Law, Vol 22, 2000; Carolyn, Deere, supra note 19, Table 5.1, p 152 Forthe case o f Vietnam, the question o f IPR exhaustion was

haggled during the process o f negotiating the Bilateral Trade Agreement o f u s and Vietnam.

B Correa, Carlos M , su pra note 14 In the recommendation for developing countries in the TRIPS

implementation, Durán and M ichalopoulos put TR1PS ílexibility as the íìrst o f the priority list o f suggestions and one o f the ílexib ilities that developing countries should exploit is parallel importation See Durán,

Esperanza and M ichalopoulos, Constantine, supra note 14, pp 871-872.

“ [t]here is no one-size-fits all model o f law.”24 The development and improvement o f the Vietnamese law on tradem ark exhaustion must, above all, be based on the country’s specifíc context Intemational examples o f law making and implementing are important but should be carefully reviewed.

Fourth, the research emphasizes the fìv e fo llo w in g matters rather than other trademark exhaustion-related matters They are: (i) condiíions triggering trademark exhaustion; (ii) legaỉ consequences o f tradem ark exhaustion; (iii) the exhaustion regime and parallel importation o f tradem arked goods; (iv) repair o f trademarked goods; and (Vj contractual restrictions involving trademarks The first and second are basic matters o f trademark exhaustion (and IPR exhaustion in general) They are regarded as the basis for an interpretation o f all other matters relating to trademark exhaustion The conditions triggering tradem ark exhaustion help determine the exhaustion regime itself and the legality o f parallel trade in trademarked goods The permissibility o f the repair o f trademarked goods is seen as one o f the legal consequences o f trademark exhaustion For instance, under Article 7.1 o f Directive 2008/95/EC (also Article 13 o f Regulation (EC)

No 207/2009), tradem ark exhaustion occurs at the point goods “have been put on the market in the Community” by the trademark ow ner or with his consent By this provision, the regime is seen as one o f regional exhaustion Also under Article 7.1 o f Directive 2008/95/EC (and Article 13.1 o f Regulation (EC) No 207/2009), aíìter putting trademarked goods on the EU market, the tradem ark owner no longer has the right to prevent the use o f such a trademark in relation to the goods As an evident consequence o f this, the repair o f trademarked goods is lawful under EU law

Parallel trade, obviously, is only one o f many consequences when a regional or intemational exhaustion regime is applied In other vvords, parallel trade is only allovvable vvithin the framework o f an intemational or regional exhaustion rule Hovvever, parallel trade, especially parallel importation, is the m ost problematic consequence o f exhaustion due to its direct effects on the interests o f a nation and its enterprises and consumers Parallel imports will, therefore, be mentioned throughout this research even it does not explicitly focus on the issue

This research also has an emphasis on pharmaceutical parallel importation and its relation

to the trademark exhaustion issue Although the legitimacy o f parallel trade was established in the TRIPS Agreement and re-affirm ed in the Doha Declaration, parallel trade in patented pharmaceuticals has so far been one o f the most heatedly debated topics Multi-national pharmaceutical companies com plain that parallel trade o f patented pharmaceuticals denies them adequate protection o f their patent rights and prevents them from recouping the costs o f pharmaceutical developm ent including R&D, regulatory approval as well as the amortization o f the cost o f unsuccessful drug developm ent In contrast, the developing (and least developed) countries, suffering from the burdens o f high disease levels and lacking resources to pay for high priced medicines,25 support

24 N guyen, Thanh Tu, C o m petitiotĩ Law in Technology Transfer under the TR/PS A greem ent: ỉm plication s

f o r D evelopin g C ou ntries, doctoral dissertation, Lund U niversity, Svveden, 2009, p 351.

25 Recently, as currently reported by WHO, access to essential m edicines remains a challenge for most people in d evelopin g countries (as vvell as in least d evelop ed countries) Researchers have found that the reasons for this result from the low availability and unaffordable prices o f m edicines w hile, at the sam e time, people in those countries are seriously affected by devastating diseases in 2008, an estim ated 33.4 m illion

l:iberalization o f the parallel trade in patented pharmaceuticals to fulfill basic human needs

In addition, developing countries have a greater focus on consumer interests, social

w elfare and health care policy concems One difficulty is thus that “ [d]espite the use o f parallel imports [ ] being consistent with TRIPS, a nuniber o f governments and the research-based pharmaceutical industry strongly objected to their use in some developing countries.”26 The question is how these countries, which include Vietnam, can get the

m ost beneíit from the ílexible provisions on parallel trade Pharmaceutical parallel importation, therefore, has been a topic o f non-stop discussion among developed, đeveloping, and least-developed countries

In regard to Vietnam, parallel importation o f medicines tied to the prevention and cure o f hum an diseases is expressly permitted by virtue o f a specific legal document, namely Decision No 1906/2004/QD-BYT Despite this, the price o f life-saving medicines is still high in comparison even to other developing countries; quality is also a worrying problem

in the Vietnamese market Additionally, the volume o f parallel imported pharmaceuticals into Vietnam is very small and the authorities that deal with parallel import o f medicines face many difficulties The issues relating to the parallel import o f pharmaceuticals are therefore worth discussing with a view to fmding the best solution for the country

T he last two m atters covered, namely repair o f tradem arked goods and contractual restrictions involving tradem arks, are more com plicated areas o f trademark exhaustion law They require review not only o f intellectual property law but also o f the interaction betvveen intellectual property law and other relevant laws such as those relating to

im port and export, quality control, price management, com petition, and contract laws in general In V ietnam , recent trademark exhaustion-related cases in these areas reveal their complexity The Vietnam ese laws and regulations regarding them are insuffícient

o r lacking The improvem ent o f the laws and regulations on such matters is undoubtedly

p eop le w orldw ide vvere infected vvith HIV and that year som e 2.7 m illion people becam e infected with the virus N otably, more than 95% o f all H lV -positive people are in lovv-and m iddle-incom e countries In the sam e year, there w ere 24 7 m illion cases o f malaria (resulting in nearly one m illion deaths) o f which most are children living in A írica, and an estim ated 1.3 m illion people died from tuberculosis for w hich the greatest

number o f deaths was in the South-East A sia Region S ee W HO, E ssen tial M edicines: Biennial Report

2 008 -2 0 0 9 , < http://w w w w h o.irư /m ed icin es/sl6822e.p df>; A Cameron, M Ewen, D Ross-Degnan and D Ball, R Laing, M edicine prices, availability, a n d affordability in 36 develo p in g an d m iddle-incom e

< http://w w w w ho.inưm edicines/technical_briefing/tbs/lancetm edprices.pdf>; WHO & HAI (Health Action

International), M easuring m edicin e p rices, availability, affordability a n d p r ic e com ponents, 2 nd edn., 2008,

<http://w w w w ho.int/m edicines/areas/access/O M S_M edicine_prices.pdP>; W HO, HIV/AIDS Programm e:

H ighlights 2008-09, < http://w hqlibdoc.w ho.inưpublications/2010 /9 7 8 9 2 4 1599450_en g.pd f>; WHO,

M a laria F act S h eel N o94, April 2010, <http://w w w w ho.int/m ediacentre/factsheets/fs094/en/print.htm l>;

http://w w w w ho.inưm ediacentre/factsheets/fsl04/en/> Regarding d eveloping countries’ vievvs on parallel

trade o f pharmaceuticals, see: N guyen, Nhu Quynh, P a ra lle l Trade o f P a te n te d Pharm aceuticals: A

D isc u ssio n /ro m D ev elo p in g C ou ntry P espective, 23 Feb 2011, < http://ssrn.com /abstractH 767823>.

26 R offe, Pedro & Tansey, G e o ff & V ivas-Eugui, David (ed s.), N egotiatin g Health: /n tellectu al P roperty

a n d A ccess to M edicines, Earthscan, 2006, p, 16 (words omitted) A typical exam ple is the three-year

cam paign against parallel imports (and com pulsory licensing) o f pharmaceuticals in the South African court, claim ing that the South African 1997 M edicines and Related Substances Control Amendm ent Act violated the TRIPS Agreem ent and vvould destroy patent protections by givin g the health minister overly broad powers to produce, or import more cheaply, versions o f drugs still under patent.

mecessary It should be noted that matters relating to the recycling and reconstruction of ttrademarked goods are outside the scope o f this research.

ỈFinally, this research is lim ited to proposals fo r an improvement o f Vietnam 's law on ttrademark exhaustion rather than those o f any other country The proposals are also

liimited to V ietnam ’s law on trademark exhaustion, not those on IPR exhaustion or imtellectual property law in general

\With respect to the us, a common law country, the source o f law is “predominantly ífounded on a system o f case law or judicial precedent.”29 Additionally, the us trademark exhaustion-related legislation (acts, regulations, and guidelines) is scrutinized This ssecond source is generally “derived from case law and judge made lavv.”30 This research

conly deals with ưs federal law, not State law The E ư legal framework being a hybrid

system with the characteristics o f both common law and civil law, the issue o f trademark esxhaustion in fact originated in the case lavv but is govemed by both statutory and case llaw Thus, both case law and legislation (such as regulations, directives, and decisions o f tthe EU Commission and Council) are described and analyzed As vvith the ưs, EU law is iregarded as the law o f the vvhole the EU and the lavvs o f the EU M ember States are not considered except in some certain cases (in Part 4.2.4., for instance) Differing in this from teoth the us and the EU, Vietnam belongs to the civil law system and statutory law is the imain form o f law.31 Thus, cuưent legal normative documents on trademark exhaustion-

2 7 Regarding this m ethod, see R esearch M eíhodology, Doctoral Course in Research M ethodology and Legal

\Writing, 1 Sept to 19 Oct 2 0 0 6 , Faculty o f Law, Lund University, Sweden; Banakar, Reza and Travers,

ỈMax (eds.), Theory a n d M eth o d in S ocìo -L eg a l Research, Hart Publishing, Oxíòrd and Portland Oregon,

2 0 0 5 ; N guyen, N g o e D ien, M ột s ổ vấn đ ề lý luận về cá c phưomg p h á p p h à n tích lu ật viết, [Som e theoretical

iissues o f analytical m ethods o f vvritten law s], Judicial Publishing House, 2006,

2!8 In the V ietnam ese system , the term “traditional legal m ethod” is not used Hovvever, the methods o f cdescription and analysis (as w ell as com parison) are vvidely used in legal research.

29 Cruz, Peter de, C o m paratìve la w in changing world, 2 nd ed., Cavendish Publishing Limited, 1999, p 44.

C iv il Code 20 0 5 See Bui, Xuan Phai, P háp luật X ã hội chù nghĩa [Socialism Law], (in N guyen, Thi Hoi

an d Le, V uong Long (eds.), N ội du ng cơ bán cùa Môn học Lý luận Nhà nước và P háp luật [The Main

C ontents o f the Subject o f State and Law Theory]), The Transportation Publishing House, Hanoi, 2008, pp

2 3 3 -2 3 4 ; N guyen, N goe D ien, su p ra note 27, pp 10-11.

related issues will be what are analyzed here,32 In addition to this, some relevant cases resolved by administrative agencies will also be discussed but these are not sources of

V ietnam ese law In addition to national and regional law, intemational treaties speciíically the TRIPS Agreement, as also scrutinized as a source o f law In term of hierarchy, trademark exhaustion-related provisions in the TRIPS Agreement overrides national laws on the issue and the national laws must be designed in compliance with the

TRIP Agreement according to the “pacta sunt servanda ” principle (as addressed in Article

26 o f the Vienna Convention on the Law o f Treaties 1969).33 The TRIPS Agreement and the us and EU laws (including case law and legislation) used in this doctoral research are

in English and mostly found in the official and highly prestigious legal vvebsites of WIPO,

W TO, us, and EU.34 With respect to very early cases (for instant, Adams V Burke),35 the

description and analysis may be based on seconđary sources such as books and articles Vietnam ese legal stipulations relating to trademark exhaustion (and IPR exhaustion in general) were mainly translated into English by the author (this will be clearly indicated in the íòotnotes to the next chapters) Besides that, the author also exploits the English version o f such stipulations as are published on the WIPO vvebsite

It is vvorth noting that cases relate to exhaustion o f other intellectual property objects, particularly patent, Copyright and industrial design exhaustion, are also explored even if the research focuses on trademark exhaustion In some cases, the aim is to compare trademark exhaustion to exhaustion o f other intellectual property objects.36 In others, patents, industrial design, and Copyright exhaustion are investigated if there is an absence

o f trademark cases on the issue, if seminal cases relate to exhaustion o f other intellectual

32 According to the Law N o 17/2008/Q H 12 o f 3 Jun 2008 on Enactment o f legal normative documents, the hierarchy o f legal normative documents in V ietnam ’s legal system is as follow s; ( I ) constitution, laws (cod es), and resolutions enacted by the National A ssem bly; (2) ordinances and resolutions enacted by the Standing C om m ittee o f the National A ssem bly; (3) orders and decision s enacted by the President o f the State; (4 ) decrees enacted the Government; (5) decisions enacted by the Prime Minister; (6) resolutions enacted by the Council o f Supreme P eop le’s Court judges and circulars enacted by the C h ief Judge o f the Supreme P eop le’s Court; (7 ) circulars enacted by the Director o f the Supreme P eop le’s Prosecutorate; (8) circulars enacted by a m inister or a c h ie f o f a m inistry-equivalent agency; (9 ) decisions enacted by the Auditor General o f the O ffice o f State Audit; (1 0 ) joint-resolutions co-enacted by either the Standing Com m ittee o f the National A ssem bly or the Government and political-social organizations; (11) joint- circulars co-enacted by the C h ief Judge o f the Supreme P eop le’s Court and the Director o f the Supreme

P eop le’s Prosecutorate, or by m inisters/chiefs o f ministry-equivalent agen cies and the C h ief Judge o f the Supreme P eop le’s Court, the Director o f the Supreme P eop le’s Prosecutorate, or by minister, and by

m inisters and/or chiefs o f m inistry-equivalent agencies; (1 2 ) legal normative docum ents enacted by People’s Com m ittee at the local levels.

33 Article 26 o f the Vienna Convention o f the Law o f Treaties provides that “[e]very treaty in force is

binding upon the parties to it and must be performed by them in good faith.” See The Vienna Convention o f the Law o fT re a tie s, < http://untreaty.un.org/ilc/texts/instrum ents/english/conventions/l_l_1969.pdP>.

<http://w w w oam i.eu.int >(B U ).

R esearch In ternational, 523 U.S 135 (1998)] and certain patent cases are referred to in order to clarify the

difference betvveen the conditions triggering trademark exhaustion and those triggering exhaustion o f copyrights or patents.

property objects and those cases are applicable to trademark issues,37 Speciíically, with respect to the u s and EU, the investigated non-trademark cases may well be precedents and cited in trademark cases The common law, differing here from civil law, is based on

the doctrine o f precedent, or stare decisis (which means standing by things previously

decided).38 “The Central idea o f precedent derives from a basic notion o f justice: that like cases should be treated alike.”39 Accordingly, later cases must follow earlier cases when they are regarded as analogous As stated in the Staníbrd Encyclopedia o f Philosophy:

“[a]n analogical argument in legal reasoning is an argument that a case should be treated

in a certain way because that is the way a similar case has been treated.”40 Generally, the

case at hand is regarded as similar to the decided case when two cases are analogous in term o f their facts Sets o f facts are not analogous in the abstract, but in the context o f a legal issue.41 Admittedly, the requirement o f analogy is met if both cases are relevant to a doctrine or to two doctrines that relate to the same legal issue.42 Given that, patent,

Copyright, and other intellectual property cases may be cited in trademark cases when they all

relate to the exhaustion doctrine and are based on the same or similar underlying principles.43The sources o f law are íirst described and analyzed in terms o f the literal or plain meaning

of court decisions and stipulations Also, the context in which the court decisions are issued or statutes are promulgated, the purpose o f such issuance or promulgation, the legislative history, and the relation o f such laws to other laws (both earlier and current law) are taken into account Theoretical, legal, and practical knowledge and experience subsequently play an important role in the interpretation o f a law and the underlying reasons thereoí “ [I]t is important that the rules o f interpretation be relatively predictable, stable, and determ inate.”44

Intellectual property law and IPR exhaustion p er se contain trade-related aspects.45

Trademark exhaustion, thus, “is a subject demanding the econom ist’s investigation”.46 In

37 For instance, in infra Part 4 ,1 5 1 , the rulings o f u s courts in som e patents cases, namely Q uanta [Quanta Computer, Inc V LG Electronics, Inc., 128 s Ct 2109 (2008)], TransC ore [TransC ore, LP a n d TC License, Ltd., V E lectron ic Transaction C onsuỉtants C orporation , u s Court o f A ppeals for the Federal Circuit, 2008-

1430, decided 8 Apr., 20 0 9 ], K e eler [K eeler V S ta n d a rd F olding Bed, 157 U S 659 (1985)], and G eneral Talking P ictu res [G en eral Talkirtg P ictures Corp V W estern E lectronic Co., 304 U S 175] are explored to

help in understanding contractual restrictions and surviva! o f trademark exhaustion under the u s lavv.

51 Bix, Brian, Ju rispru den ce: Theory a n d Context, Thomson S w eet & Maxvvell, 4 ,h edn., 2006, p 146; Hondius, Evvoud (ed.), P reced en t a n d the law (R eports to the XVIIth C on gress International A cadem y o f

C om parative Law U trecht, Jul 16-22, 2006), Bruylánt Bruxelles, 20 0 7 , p 11.

39 Bix, Brian, ibid , p 147.

41 Stanford U niversity (the U S), Stanford Encyclopedia o f Philosophy, P receden l an d A nalogy in Legal Reasoning, < http://plato.stanford.edu/entries/legal-reas-prec/>.

41 Ibid.

42 Ibid In this article, common law systems’ legal reasoning conceming analogy vvas broadly understood as follows:

So knives may be analogous to guns if the issue con cem s vveapons, but knives may also be analogous to teaspoons if the issue con cem s cutlery Duress may be analogous to provocation if the issue con cem s defen ses, but duress may also be analogous to incitement if the issue concem s com plicity.

43 In infra Part 5.3.1.2, the Tribeco case (settled by the V ietnam ese administrative authorities) regarding

industrial design is analyzed to clariíy conditions triggering trademark exhaustion under Vietnamese lavv and practice.

■’4 Bix, Brian, su pra note 38, pp 155-156.

13 With regard to the econom ics o f IPRs and com petition, see Landes, W illiam M., and Posner, Richard A.,

^he E conom ic S tructu re o f Intellectu al P ro p erty Law, The Belknap Press o f Harvard University, 2003;

Qther words, one cannot avoid using economic description and analysis in this research

N onetheless, it must be noted that it will not employ a purely econom ics analysis

Law reflects economics and economics help to explain law at the deepest level.47 Based on this notion, economic analyses will be used to explain the formation o f the exhaustion doctrine in Chapter 2 In addition, also in Chapter 2, economic analyses help to investigate the economic consequences o f the application o f particular exhaustion rules In other words, two-sided effects o f each exhaustion regime (on availability and quality o f goods, price, íòreign direct investment and technology transfer, and trade and competition) are drawn out by analyzing relevant economic research Furthermore, the suitability o f an intemational exhaustion regime for trademark exhaustion is assessed in Chapter 6 by calculating and analyzing official statistics o f the Vietnam economy such as those relating

to exports and imports and the average Auctuation amplitude o f the price consumer index

A cost-benefit analysis48 will also be used in this research As Matthevv D Adler and Eric

A Posner put it, the application o f a cost-benefĩt analysis tests the efficiency o f a policy or legal norm “In particular, do the benefits o f the policy [or legal norm] to society exceed the costs?”49 In Chapter 6, the author uses a cost-benefit analysis in arguing that for Vietnam, the beneíĩts o f an intemational exhaustion regime for trademark outweigh the costs thereof A costs and beneíits test will also be implemented before making proposals for the improvement o f the Vietnamese law on trademark exhaustion

Additionally, the comparative method is used in my research in many places In the legal íield, the comparative method is brieíly described as that method o f study, vvhereby two or more legal systems or legal subject matters are investigated with a view to better understanding the differences and similarities between them Thanks to the application of the comparative method, the general and the special in different legal systems, the relations o f one legal system with other legal systems, the character o f these relations, and

reasons for similarities/differences are revealed.50 Furthermore, the legal comparative

method is also used when studying íoreign laws in comparison with domestic laws with the aim o f providing solutions for domestic problems From this perspective, the comparative method plays an important role in the adaptation o f one socio-legal system to another and facilitating law reform as Peter de Cruz maintained:

Maskus, Keith E., The WTO, IPRs a n d the K n ow ledge E conom y (ed.), Edward Elgar Publishing Limited

(UK ), 2004.

46 Cole, Daniel H and Grossman, Peter z , Principles o fL a w a n d Economics, Pearson Prentice Hall, 2004, p 55.

47 In order to understand this observation, see Cooter, Robert and Ulen, Thom as, Law a n d Econom ics, 3rd edn., A ddison-W esley, 2000; C ole, Daniel H and Grossman, Peter z , ibid \ Le, V uong Long, “Nguồn gốc, bàn chất, chức năng, kiểu, hình thức pháp luật” [Origin, nature, íunction, and forms o f law], G iáo trình Lý luận Nhà nước và P h áp lu ật [T h e Textbook o f S tate a n d L aw Theory], The Publishing House o f Public Security, 20 1 0 , pp 109-110; Le, Minh Tam, “Pháp luật Xã hội Chủ nghĩa” [The Socialism Lavv] G iáo trình

Lý luận N hà nước và P h áp lu ật [ Textbook o f S ta te a n d L aw Theory], The Publishing House o f Public

Security, 20 1 0 , p 480.

48 For further details o f cost-benefìt analysis, see Adler, Matthevv D., and Posner, Eric A (ed.), Cosl-Benefu Analysis: Legal, Econom ic, a n d P h iỉosoph icaỉ P ersp ectives, The University o f C hicago Press, 2001, p 17.

ỉ b i d

-50 See Cruz, Peter de, su pra note 29, p 9 and p 22; Kiekbaev, Djalil I., C o m p a ra tive law: Method, Science

or E du cational D isciplin e? EJCL, Vol 7.3 Sept 2003, < http://w w w.ejcl.org/73/art73-2.htm l>; M.A Glendon, M w Gordon, and Ch O sakw e, C om paralive L egaỉ Traditions St Paul, Minn., 1994, pp 7-8.

[The method helps to select] vvhich laws might be adopted and adapted to particular local needs and conditions In this way, the comparative law method will assist in informing any efforts aimed at improving the law in these countries

so that their people may be the ultimate beneíìciaries

The core comparison in this research is the comparison o f trademark exhaustion under the TRIPS Agreem ent as well as in law and practice o f the ư s and the EU with that of Vietnam The TRIPS Agreement, us, E ư , and Vietnam are regarded as the legal systems

in this comparison Moreover, as already indicated in the delimitation, the comparison will not focus on all the trademark-related issues but only on the fíve following legal subject matters: (i) conditions triggering trademark exhaustion; (ii) legal consequences of trademark exhaustion; (iii) exhaustion regime and parallel importation o f trademarked goods; (iv) repair o f trademarked goods; and (v) contractual restrictions involving trademarks Each legal system is investigated in separate chapters, namely Chapters 3, 4, and 5 and they are compared in Chapter 6

Some may argue that this comparison gives an overlap betvveen Chapter 3, 4, and 5 and Chapter 6 and that the comparative method is used in Chapter 6 only However, in my view, the selected comparison mode is the best for the following reasons First, a subject matter-based comparison is not easily applied and could not be used effectively in this research vvhere many legal systems and legal subject matters are dealt with Second, the selected comparison mode in this research is highly eữĩcient as it combines a subject matter-based comparison and a legal system-based comparison Due to the differences among the legal systems (particularly as Vietnam is a civil law country whereas the u s is

a common law country, and the EU applies a combined legal system with important roles attaching to both statutory and case Iaw), an independent chapter is need to clarify the íive subject matters relating to trademark exhaustion o f each legal system This vvriting allows discussing non-legal aspects such as history and policy for a full interpretation o f these legal systems The differences and similarities o f these legal systems are pointed out and explained when the subject matters o f such legal systems are put together for a comparison in a separate chapter This mode makes the comparison more intensive and comprehensive Third, an overlap between Chapter 3 ,4 , and 5 with Chapter 6 is prevented when the author íbresees the problem and keeps in mind in the writing Finally, although the word o f “comparison” is included in Chapter 6 ’s title only, the comparative method is used in the whole dissertation In particular, the method is applied to clariíy the exhaustion doctrine, the first sale doctrine, the implied license doctrine, and the relationship o f these three doctrines (in Chapter 2) The method is also used to compare the three exhaustion regimes i.e national, regional, and intemational ones and to distinguish trademark exhaustion from exhaustion o f patents and copyrights (also in Chapter 2) At this point, comparison enables us to fmd a reasonable answer to the questions o f whether the exhaustion doctrine is applicable to trademark and which exhaustion regime is the most suitable for them The íindings o f the commonalities and diíĩerences in the laws and practices govem ing trademark exhaustion in the us and the EU are drawn out in a comparative study (in Chapter 4) Moreover, the current Vietnamese laws and regulations

on trademark exhaustion are clariíied by comparing the current position with the pre-LIP stipulation on the issue (in Chapter 5) The comparative method is thus comprehensively

51 Cruz, Peter de, ib id , p 24.

used to compare trademark exhaustion in the law and practice o f Vietnam with those of the us and EU as vvell as to assess Vietnamese law ’s consistency with the TRIPS Agreement on trademark exhaustion (in Chapter 6) All the above-mentioned comparisons are to ansvver the following question: what are the lessons for Vietnam in handling trademark exhaustion-related cases and in improving its laws on the matters.

In order to reach an accurate and effective comparison, my research not only explores the w ordings o f statues and cases but also takes into consideration relevant aspects o f legal history, socio-econom ic developm ent, and policy.32 Thus, besides the similarities and differences as such, the underlying reasons for these sim ilarities and differences are also revievved

To conclude, the traditional legal method and the comparative method are the two main tools applied independently or in combination in this research

1.5 Previous research and materials

As already indicated at the outset, IPR exhaustion is quite a new subject in Vietnam, and there seems little vvritten on it by Vietnamese authors or in Vietnamese.53 There is abundance o f English materials on exhaustion-related issues Nevertheless, no book or article deals comprehensively and effíciently with the exhaustion doctrine or trademark

exhaustion p er se:'3' Recent works have íocused on some aspects o f IPR exhaustion such

as parallel trade,55 exhaustion regimes,56 and the exhaustion o f rights in the TRIPS Agreement,57 M ost o f the available materials focus on the us and/or the EU situation and

is written from a us or EU viewpoint Research on trademark exhaustion (and IPR exhaustion in general) in relation to developing countries is very limited Musungu and Oh

52 Regarding the com parative role o f these aspects, see Bogdan, M ichael, C om parative Law, Kluwer Norstedts Juridik Tano, 1994, p 77; N guyen, Quoc Hoan, (ed.), G iá o trình Luật so sảnh [Textbook o f

Comparative Law ], The Publishing H ouse o f Public Security, 2008, p 43.

53 Until now , there have been only a few articles on exhaustion and parallel import by Vietnamese authors

For instance, N guyen, Thanh Tam, P h áp luật vê' s ở hữu công nghiệp tron g hoạt độ n g thương m ại [Industrial property law in trade], (in G iá o trình Luật thương m ại [ The Textbook on Trade Law], N guyen, Viet Ty (ed.)), V ol 2 , The Public Security Publishing House, 2006, p 330; N guyen, Nhu Ọuynh, Lý thuyết hết quyền và vấn đ ể nhập khấu so n g son g [The exhaustion doctrine and the issue o f parallel importation], The Jurisprudence Joum al, N o 1/2006, pp 47-53; N guyen, Nhu Quynh, Pháp luật về hét quyền s ở hữu tri tuệ và nhập khẩu so n g son g ờ m ột s ố nước ASEAN [Exhaustion o f IPR.S and parallel imports in some ASEAN

countries], The Jurisprudence Joumal, N o 12/2009, pp 28-36.

54 In 2008, Ekaterina Shekhtman and Evgeniy Sesitsky issued a paper on the topic but it mainly íocused on parallel importation o f trademarked goods in EEA and the North American Free Trade Area (NA FTA ) See

Sheckhtman, Ekaterina and Sesitsky, Evgeniy, su pra note 2.

55 For instance, Farquharson, M elanie and Smith, Vincent, P a ra lle ỉ Trade in Europe, Svveet & M axell, 1998; Hays, Thom as, P a ra lỉe l Im portation U nder European Union Law, London: Svveet & Maxvvell, 2004; Stothers, Christopher, P a ra lle ỉ Trade in Europe: ỉn telỉectu al p roperty, C om petition a n d Regulalory Law, Hart Publishing, 2007; Hiebert, Timothy H., P ara llel Im portation in u s Tradem ark Law, Greenvvood Press, 1994; Richman, Steven, Shades o f G ray: C urrent L egal Issues R egardin g P a ra lle l Im ports in the u s an d Latin A m erica, Nevv Jersey Lavvyer M agazine, Oct 2003.

56 For instance, K eeiing, David T., IPRs in E U Law, Vol I - Free M ovem ent and Com petition Law, Oxford University Press, 2003; Fink, Carsten and Maskus, Keith E., su pra note 6.

Tradem arks a n d D esigns, Kluvver Law International 2006; Correa, Carlos M., Trade R elaied Aspects o f IPRs - A C om m en tary on the TRIPs Agreem ent, Oxíòrd University Press, 2007.

surveyed exhaustion regimes in sixty-two developing countries.58 They did not, hovvever, explore other legal matters relating to exhaustion Based on economic research, Carsten Fink and Keith E Maskus tried to make proposals for both developed and developing countries when setting exhaustion and parallel import policy.59 Their conclusion for developing countries, regretíully, was that “there are no easy solutions for policy”60 and

“no systematic evidence exists to assess the effects o f parallel imports and parallel exports

in developing countries.”61

In terms o f trademark exhaustion, there are the considerable contributions o f Timothy H Hiebert62 and Marc Stucki63 Based on historical, political and legal reasoning, Hiebert íocused on concem s surrounding parallel imports in us law while Stucki confined his attention to EU law and the WTO Agreements all in the light o f the principle o f free movement o f goods Other articles have looked at the issue o f exhaustion in particular

contexts, such as the Silhouette case64 and the First Council Directive 89/104/EEC o f 21

December 1998 to approximate the laws o f the M ember States relating to trademarks (now Directive 2008/95/EC dated 22 October 2008).65

In undertaking this research, the author faced a scarcity o f materials on repair of trademarked goods The Guideline and the Resolution o f AIPPI on trademark exhaustion

on in cases o f recycling and repair o f goods,66 and the research o f the Institute o f European Studies o f M acau (IEEM) on spares and repairs o f IPR-protected goods provide some good hints towards exploring the issue.67

This research does not depend on these earlier works; however, it could not have been completed without using these valuable resources The materials I do use have mainly been gathered from books, published articles, monographs, and electronic resources Statistics and the íindings o f some reports and surveys are used in this dissertation The statistics are oíĩĩcial and already published; the reports and surveys were implemented by

prestigious and widely recognized individuals and organization.68

A ccess to M edicines?, W HO Study on IPRs, lnnovation and Public Health, Geneva: WHO and South

Centre, 2006, p 99.

59 For íurther details, see Fink, Carsten and Maskus, Keith E., su pra note 6.

60 lb id , p 9.

61 Ibid., J5.ll.

62 For íurther details, see Hiebert, Timothy H., su pra note 55.

63 For ủưther details, see Stucki, Marc, Tradem arks an d F ree Trade, Svviss Papers on European lntegration,

Printed in Switzerland, 1997.

64 Carboni, Anna, C ases abou t S pectacles a n d Torches: Now, can w e se e the Light?, [1998] EIPR.

65 0 ’Toole, Franis and Treannor, Colm , The European U nion's Trade M ark Exhausíion R egim e, World Competition 25(3): 279-302, 2002; Ohly, Ansgar, Trade M arks a n d P a ra lle l Im porlation - Recent

D evelopm ents in European Law , IIC, V ol 30 (1999).

66 AIPPI, Working G uidelin es, Question Q 205, Exhaustion o f IPRs in cases o f recyclin g a n d repair o f goods,

<h ttp ://w w w aip p i-china.org/w tyj/w t/200905/P 020090506505343653399.pd f>; AIPPI, Resolution, Q ueslion Q205, Exhaustion o f IPRs in cases o f recyclin g an d repair o f g o o d s, Congress Boston 2008,

<https://w w w aippi.org/dow nload/com itees/205/R S205E nglish.pdfX

67 See Heath, Christopher and Sanders, Anselm Kamperman (eds.), Spares, R epairs a n d IPRs, Kluvver Lavv

International, 20 0 9

68 For exam ple, in ìnfra Part Ó.4.2.2, the statistics on Vietnam ’s exports and imports are used to explain the diíĩerences in the trademark exhaustion regime betvveen Vietnam and both the u s and the EU A lso in infra

Additionally, the results o f more than 40 intervievvs (with 21 people have been interviewed) are part o f the input to this research The intervievv is widely recognized as a useful tool in collecting data and supporting certain observations.69 In order to gather trademark exhaustion-related materials and interpret trademark exhaustion-related matters, the author intervievved many experts and representatives from intemational organizations, universities, State agencies, and law íĩrms (for the full list o f interviews, see Appendix 2) These intervievvs were semi-structured,70 almost all were face-to-face and they vvere effected during the whole time I was working on this research The list o f intervievv questions were prepared so as to be suitable for each intervievvee and the interviews were recorded by way o f written notes by the author.71

Finally but signifícantly, the sources o f international and national laws are indispensable input o f this research They are intemational legal instruments, particularly the TR1PS Agreement and the statutes and cases o f the u s, E ư , and Vietnam as already explained in Part 1.4

Regarding EU law, it should be noted that, as the consequence o f the entering into force of the Treaty o f Lisbon on 1 December 2009,72 new terms (including names o f courts and articles in TEC) were introduced For the purpose o f uniíormity and consistency, in this dissertation, the new terms are used In particular, Article 28 is now Article 34, Article 30

is now Article 36, Article 81 is now Article 101, Article 82 is now Article 102, CFI is now General Court, Community is now Union, European Community is now Union, and common market is now intemal market.73 The pre-Lisbon Treaty terms, hovvever, still exist in citations and some discussions o f previously ruled cases by ECJ It should be noted that though the ECJ's oíĩìcial name was changed from the "Court o f Justice o f the

Part Ó.4.2.2, the WHO survey on the application o f exhaustion regim es in d evelopin g countries is reíerred to

in order to support the argument that an intemational exhaustion regime is selected by most developing countries.

m ethods, Boston: A llyn and Bacon, Inc, 1982 (cited by H oepíl, Marie c in C h oosin g Q uaỉitative Research:

A P rìm er Ị o r T echn ology E ducation R esearchers, Joumal o f T echnology Education, V ol 9, N o l, 1997,

<http://scholar.lib.vt.edu/ejoum als/JTE /v9nl/hoepfl.htm l>) Regarding the role and method o f intervievvs,

see also Gubrium, Jaber F and H olstein, James A , (eds.), H andbook o f in íerview research: context & method, Thousand Oaks, CA: Sage, 2002; Punch, Keith F., Introduction to S o cia ỉ Research: Q ualitative and

Q uan titative A pproach es, London: Sage, 1998; Wadsworth, Y oland, D o It Y o u rsel/ S o cial R esearch, 2nd edn., St Leonard, N SW : A llen & Unvvin, 1997; B ell, Judith, D oin g Your R esearch P rọịect, 2 nd edn., Buckingham: O pen University Press, 1993; Rubin, Herbert J and Rubin, Irene s , Q ualitative lnterviewing: The A rt o f H earin g D ata Thousand Oaks, CA: Sage, 1995.

70 Sem i-structured intervievvs are conducted with a number o f prepared questions and new questions are

brought up during the intervievvs as a result o f what interview ees say See Patton, M Q., Q ualitative Evaluation a n d R esearch M ethods, 2"d edn., Newbury Park, CA: Sage Publications, Inc., 1990; Lindlof, T.R and Taylor, B.C , Q u aỉitative C om m unication R esearch M ethods, 2"d edn., Sage Publications,

Thousand Oaks, CA (2002).

71 The author has kept all the memoranda o f the intervievvs.

72 The Treaty o f Lisbon am ends the Treaty on European Union and the Treaty establishing the European Community 2 0 0 7 , OJ 2007/C 306/01 The Treaty establishing the European Comm unity was renamed the Treaty on the Functioning o f the European Union (OJ 2010/C 83/01).

73 Regarding the new numbering o f Articles 2, 30, 80, 81 o f TEC, see the Tables o f equ ivalen ces referred to

in A rticle 5, the Treaty o f Lisbon, OJ 20/C 306/01 Regarding the changes o f “Court o f First Instance",

“com m unity”, “European Com m unity”, and “com m on market”, see Section A H orizontal Am endments o f the Treaty o f Lisbon, ibid.

European Communities" to the "Court o f Justice", term ECJ continues to be used because

in English it is still most common to refer to the European Court o f Justice.74

1.6 Outline

This work is divided into seven chapters Chapter 1 contains general remarks on previous research on the topic, on the purposes, delimitations, methods, and materials used in the research, and on its value Chapter 2 scrutinizes the theoretical aspects o f IPR exhaustion and trademark exhaustion in particular First, an overview o f the exhaustion doctrine is provided Speciíically, a justification for the íormation o f the exhaustion doctrine and the development o f the doctrine are introduced In addition, comparisons between the exhaustion doctrine and both the fĩrst sale doctrine and the implied license doctrine are made N ext is a section on IPR exhaustion with special reference to the concept o f IPR exhaustion, the conditions triggering IPR exhaustion, the legal consequences o f IPR exhaustion, and the types o f exhaustion regimes Three types o f exhaustion as well as the social and econom ic effects o f each type are clarifíed Chapter 2 is also devoted to a theoretical consideration o f trademark exhaustion Because o f the differences in the function and tim e lim it o f trademark protection in comparison with other IPR objects (patents and copyrights, for example), trademark exhaustion contains distinguishing marks besides the com m on features o f IPR exhaustion Thus, the deíìnition and function o f trademarks are viewed as fundamental Views o f the applicability o f the exhaustion doctrine to trademarks are discussed and certain features o f trademark exhaustion are also considered Finally, theoretical aspects o f trademark exhaustion in three commercial activities are clariíìed They are trademark exhaustion in the cases o f parallel importation o f trademarked goods, the repair o f trademarked goods, and trademark-related contractual restrictions

Chapter 3 deals with trademark exhaustion under the TRIPS Agreement A short introduction to intemational conventions relating to IPR exhaustion and an overvievv of

the features and principles o f the TRIPS Agreement are mentioned first After that,

speciíĩc m atters relating to IPR exhaustion in general and trademark exhaustion in particular are analyzed The flexible provisions and minimum standards o f trademark exhaustion under the TRIPS Agreements are analyzed To some extent, the TRIPS provisions on th e issue are put in the relation w ith the Paris C onvention and GATT The ob jective is to clarify how tradem ark exhaustion is covered by the TRIPS

A greem ent

In Chapter 4, tradem ark exhaustion in the law and practice o f the us and the E ư respectively are scrutinized In addition to statues, landmark cases relating to trademark exhaustion in the us (for instance, Kmart,75''Lever I," Lever Bros Co V us,76 "Lever II," Lever Bros Co V u s , 77 Champion Spark P ỉ u g m Karl Storz,79 Quanta,80 and

74 The Court o f Justice o f the European Union includes the Court o f Justice, the General Court, and

lì L ever Bros Co V u s (L ever Ị), 877 F 2d 101ÍD C Circuit 1989).

11 L ever B ros Co V U S (Lever íl), 981 F 2d 1330 (D.c Cir 1993).

80 Quanta, su p ra note 37.

TransCore81) and the EU (for instance, Grundig-Consten,82 Peak Holding,83 Zino Davidoff,84 and Silhouette8S) are taken into account Although there are differences in

rulings, stipulation, and the level o f sufficiency o f the laws on IPR exhaustion (and tradem ark exhaustion in particular) between the us and the EU, the issue derived from and has long existed in both the us and the EU and their lavvs are well developed These can be regarded as helpful references for Vietnam in improving its lavvs and regulations on tradem ark exhaustion

Chapter 5 explores trademark exhaustion in the law and practice o f Vietnam Based on an uniíìed structure, as were the previous chapters (and the subsequent ones), the Chapter scrutinizes the conditions triggering trademark exhaustion, the consequences o f trademark exhaustion, the exhaustion regime for trademarks, the repair o f trademarked goods, and contractual restraints involving trademarks Current law on trademark exhaustion-related issues and some relevant administrative cases are also discussed To assist in providing a com prehensive interpretation, some invalid legal normative documents86 relating to trademark exhaustion are mentioned in this Chapter (Decree No 63/CP, for instance).87 The core legal íindings are that the staple issues o f trademark exhaustion are provided for relatively ciearly Shortcomings, hovvever, still exist in current regulations on trademark exhaustion (and industrial property right exhaustion in general) and do not íully cover all trademark exhaustion-related issues arising in practice

Chapter 6 considers the consistency o f Vietnamese law on trademark exhaustion in the light o f the provisions o f the TRIPS Agreement A comparison between trademark exhaustion in the law and practice o f Vietnam and those o f us and EU is also dravvn In any case, Vietnam is at the centre o f the comparative research The underlying reasons for any disparities will, to some extent, be explained by reíerring to VietnarrTs legislation, policy, and socio-economic circumstances As a result, V ietnam ’s current law on trademark exhaustion is fully assessed In addition, helpủỉl references for Vietnam from the lavvs and practices o f the us and the EU vvill be pointed out

Based on the íindings in the previous chapters (particularly chapters five and six), the author submit a set o f proposals for an improvement o f the Vietnamese law on trademark exhaustion in the fmal chapter 7 Before considering the detailed proposals, the purposes and principles o f the improvement are stated The general proposals that are considered as the ground for the speciíic proposals in this íìnal section are then introduced afterward

85 Case 355 /9 6 , S ilh ou ette In ternational S ch m ied v H artlauer H an delsgesellschaft, [1998] ECR 1-4799.

86 A ccording to A rticle 81 o f Lavv on Enactment o f Legal Norm ative D ocum ents, 2008, N o 17/2008/Q H 12, legal normative docum ents shall becom e fully or partially invalid in the follow in g cases: (i) the periods o f validity expire as stipulated in legal documents; (ii) legal docum ents are am ended, revised or replaced vvith new legal docum ents o f the sam e State agencies that issued those legal docum ents in the íìrst place; and (iii) legal docum ents are abrogated or abolished by means o f an offícial document o f a State competent agency.

87 Decree N o 63/C P, su pra note 8 H owever, the Civil Code 1995 has been replaced by the Civil Code

2005 See The R esolu tion o f Im plem entation o f the C ivil C o d e 2 0 0 5 , N o 4 5 /2 0 0 5 /Q H 1 1.

The heart o f the proposals is an amendment to certain unsound provisions and an addition relating to certain absences in the current Vietnamese law on trademark exhaustion (that having being already shown in the previous two chapters) Finally comes a general conclusion to the research.

1.7 Contribution

As already mentioned in the previous sections (especially the sections on background and delimitation), trademark exhaustion and the trademark exhaustion-related matters discussed in this dissertation closely link to IPR protection, consumers' interests, free market circulation, healthy competition, and both national and intemational trade Moreover, a comprehensive review o f trademark exhaustion and trademark exhaustion- related matters, as indicated in the section on earlier research, is quite new in Vietnam and

to some extent even at the intemational level It is hoped, thereíòre, that to some extent, this research will contribute to legal Science, legal reíòrm, and practice relevant thereto.Fist, the research is intended to enrich legal Science by virtue o f its discussion of the theoretical aspects o f IPR exhaustion, trademark exhaustion, and trademark exhaustion-related speciíic matter and the analyses and comparisons o f the trademark exhaustion regimes under ứie TRIPS Agreements and in the law and practice o f us, E ư, and Vietnam

Second, the research may help to improve the Vietnamese law on trademark exhaustion This research presents both general directions and speciíĩc proposals for an improvement

o f Vietnamese law on tradem ark exhaustion with a view to better complying with the TRIPS m inim um standards and íìilly utilizing the TRIPS ílexibilities on trademark exhaustion-related issues; fitting the country’s circumstances and intemational practice; and establishing a comprehensive, consistent, and eníòrceable law on trademark exhaustion Vietnam ese legislative agencies may use the outputs o f this research in making legal normative documents on trademark exhaustion (and IPR exhaustion in general), particularly the conditions and legal consequences o f trademark exhaustion, the exhaustion regime and parallel importation o f trademarked goods (including parallel importation o f pharmaceuticals), trademark exhaustion in cases o f repair o f trademarked goods and tradem ark exhaustion in cases o f contractual restrictions As a result, not only intellectual property law but also other relevant laws such as competition, contract, export- import, quality control, and price management laws could be improved Furthermore, it is hoped that this research will be valuable for Vietnam by way o f making known its trade policies relating to trademark exhaustion as there is always a close link betvveen IPR exhaustion and trade

Third, V ietnam ’s judicial agencies may wish to refer to the discussion o f the theoretical aspects o f IPR and tradem ark exhaustion and my analyses and comparison o f trademark exhaustion under the TRIPS Agreement as well as under the different legal systems considered, and the proposals offered by this research in solving trademark exhaustion- related issues likely to appear in practical cases Also, if Vietnamese law and policy makers wish to accept certain proposals o f this research, the practical contribution is indicated In particular, such legal improvement may have an effect on the practice

relating to tradem ark exhaustion In this sense, my research seeks actively to effect Vietnam’s practices relating to trademark exhaustion.

Finally, other countries may find this research valuable It is hoped that it will provide useful references not only for Vietnam but also for other developing countries Moreover, the author’s com m ents on policy, legislation, and case law o f u s and EU relating trademark exhaustion may be o f interest to them

To conclude, the theoretical and practical values and contributions o f ửiis research are not very diíficult to recognize However, it should be stressed that as a social research, the real meaning

of these contributions heavily depends on who accepts them and to what extent and how they are accepted It goes íurther ứian the author’s ability to be able to predict this

CHAPTER2 THEORY ON IPR EXHAƯSTION AND PARTICULARLY TRADEMARK EXHAUSTION 2.1 Theory on IPR exhaustion

Basic theoretical questions on IPR exhaustion and trademark exhaustion in particular

w ill be explored in this C hapter.88 The theoretical basis o f exhaustion helps interpret the law and practice o f different countries (and regions) vvith respect to both IPR and tradem ark exhaustion and helps us to make proposals for the improvement o f

V ietnam ese tradem ark law In this Chapter, the term inology relating to IPR and tradem ark exhaustion will be deíined.89

This section deals with the basic theoretical questions relating to IPR exhaustion Those questions concem the concept o f IPR exhaustion; the íòrm ation and development o f the exhaustion doctrine; the relation betvveen the exhaustion doctrine and the fírst sale doctrine as well as the implied license doctrine; the conditions triggering IPR exhaustion; the legal consequences o f IPR exhaustion; types o f exhaustion regimes; and the social and economic effects o f each regime

2.1.1 The exhaustion doctrine

The exhaustion doctrine is a legal doctrine90 arising in the íield o f intellectual property law which aims at determining the limits o f the exclusivity o f IPRs The intent is to balance:

88 Thẹory plays a very important role in determining the relevant practice and their relation is correlative, The thẻory derives from and applies to the practice Through such application, the theory is then períected

Regarding this observation, se e N go, Doan Vinh, Bàn v ề vấn đ ề lý luận, [A discussion o f theory], National

Political Publishing H ouse, 20 0 9 , pp 141-142.

89 This Chapter is based on the follow in g main sources: Ganslandt, Mattias and M askus, Keith E„ IPRs,

P arallel Im ports a n d S tra te g ic B ehavior, IFN Working Paper N o 704, 20 0 7 , Research Institute o f Industrial Econom ics, Svveden; K eeling, D avid T., su pra note 56; Anderman, Steven D , su pra note 4; Ganea, Peter,

su pra note 1; Heath, Christopher, P a ra lỉe l Im ports a n d International Trade,

< w w w w ipo.int/edocs/m docs/sm e/en/atrip_gva_99/atrip_gva_99_6.pdÊ >; Carvalho, N uno Pires de, supra note 57; Heath, Christopher (ed.), P a ra lle l Imports in A sia, Kluvver Law International, 2004; Gamer, Bryan

A (ed.), B lack's L aw D iction ary, 8'h edn., Thomson W est, 2004; W ehmeier, Sally (ed.), O x fo rd A d va n ce d

L ea rn er’s D ictio n a ry o f C u rren t English, 6 ‘hedn., Oxford University Press, 2000; Fink, Carsten and Maskus, Keith E., su pra note 6; Abbott, Frederik M., P arallel Im portation: E conom ic a n d so c ia l w elfare dimensions,

<http://ww w.iisd.org/pdf/2007/parallel_im portation.pdf>; Valetti, Tom asso and Szym anski, Stefan, P arallei Trade, In ternational Exhaustion a n d IPRs: A w elfare Analysis, Joumal o f Industrial Econom ics, 2006, 54: 499-526; M askus, Keith E and Chen, Yongm in, Vertical P rice C on trol a n d P a ra lle l Imports: Theory a n d Evidence, R eview o f International Econom ics, 2004, 12:551 -70>; Goldstein, Paul and Reese, R Anthony, Copyright, Patent, T radem ark a n d R ela ted State D octrines: C ases a n d M aterials on the Law o f Intellectual

P roperty, Foundation Press, 6 lh edn., 2008; AIPPI, W orking Guidelines, su pra note 66; AIPPI, Resolution, supra note 66; N im m er, Raymond T., Breaking Barriers: The Relation B etw een C on tract an d Intellectual

< http://www.ftc.govA)cp/workshops/wauanty/com m ents/nim rnerraym ondt2,pdf> ; The NERA Study.

90 Doctrine, from Latin doctrin a, m eans “a code o f b e lie f ’, “a body o f teaching”, or “ instruction”, taught

principles or positions, as in the body o f teaching in a branch o f know ledge or belief For the details o f legal

(i) IPR protection against safeguarding market circulation and fair competition and (ii) the IPR holders interest against the consumer’s interest The substance o f the exhaustion doctrine is that IPR owners no longer have the right to control fưrther distribution o f the IPR-embodied product once it has been placed on the market by themselves or with their consent.

A s a legal doctrine, the exhaustion doctrine was built up by legal scholars and established through precedents It plays an important role in interpreting the law, indicating the policies underlying legislation, guiding courts in making decisions placing court decisions

in their proper perspective The exhaustion doctrine is especially important for common law systems in supporting both policy and law relating to intellectual property and competition With respect to countries that belong to the common law system, the exhaustion doctrine is itself classiíiable as a source o f law However, vvith respect to countries that belong to the Civil law system, “ [t]he doctrine is not a recognized source of law but it has exercised a great iníluence in the development o f law.”9 In order to be applied to practice, the doctrine must íirst be enacted in statutes

2.1.1.1 The íormation and development of the exhaustion doctrine

As already mentioned, the doctrine was formed to limit the legal monopoly o f IPRs, balance IPR protection and market circulation as well as effective competition and balance IPR holders’ interests and consum ers’ interests The starting point o f the argument is the need to protect IPRs by granting IPR holders a “bundle o f rights” including certain exclusive rights The exercise o f these rights may lead to barriers to the free movement o f goods and services on the market, distort competition, and prevent consumers having access IPR-embodied Products In other words, there is a potential conílict betvveen IPR protection and both the free movement o f goods and services and the existence of effective competition The application o f the exhaustion doctrine is one o f the solutions for minimizing those barriers and conílicts

The necessìty o f 1PR protectìon: For a long time, Creative Products have been recognized

as a very important elem ent in promoting economic developm ent and enhancing social welfare Both classical and m odem economists agree that economic grovvth process is

íòstered by two sources: (i) Capital and labor; and (ii) technology (in which intellectual

property is included).92 The correlation o f these sources has gradually changed Kamil Idris - the íòrm er General Director o f WIPO - concluded that tangible property such as land, labor, and Capital used to be standards for comparing economic situations This is no

doctrine, see Northvvestem U niversity-School o f Law (Chicago, the U S), L aw a n d P o siiive P olitical Theory Conference: L egal D octrin e a n d P o lìtica l C on trol, Apr 29-30, 2005; Zahle, Henrik, Legal D octrine behveen E m pirical a n d R h eto rica l Truth A C rìtic a ỉ Analysis o f Alt R o ss' C on ception o f L egal Doctrine,

EJEL (2003), V ol 14, N o 4, 801-815 According to a V ietnam ese D ictionary, doctrine is a system o f ideas

and theoretical interpretation in a certain area See Từ điên Tiêng Việt [V ietnam ese Dictionary], the

Institution o f Language, Danang Publishing House, 2003, p 98 D octor N g o Doan Vinh asserts that a doctrine must reílect system o f ideas and vievvs vvith respect to a certain subject o f research, be veriíied, and

contain truthfulness S ee N g o , D oan Vinh, su pra note 88, pp 146-147.

Law 4 19, 22 8 (1 9 6 6 -1 9 6 7 ), cited by James G Apple and Robert P D eyling, A Prim er on the Civi!-Law System ,< http://w w w Q c.gov/public/pdf.nsf/lookup/C ivilL aw pdf/Sfile/C ivilL aw pdf>, p 19.

See Mayer, Jorg, Technology Diffusion, Human Capital and Economic Growth, United Nations Coníerence on Trade and Devèíopment, No 154, Jun 2001, < http://w w w unctad.org/en/docs/dp_l54.en.pdf>; F actor Contríbutions to E ast A sian E conom ic Growth, < http://www.galbithink.org/topics/ea/account.htm l>.

longer true anymore Nowadays, the new powerhouse o f prosperity is knowledge-based property.93 Thus, IPR protection becomes indispensable Intellectual property protection aims at encouraging creation, allocating and using these properties effectively, and harmonizing creators’ interests and these o f other individuals and organizations There are different theses that have been used to argue for the need to protect IPRs.94 These arguments share a common point: exclusive rights must be granted to IPR owners for at least a certain period.

According to the theory o f national rights, as mentioned by M de Boufflers, deputy to the French National Assembly in the report that introduced the patent statute o f 1791, “the patent [and IPR protection in general] would not do more than recognizing a property that

is “personal, independent and prior to every transaction”, because it consists o f the acknowledgement o f the existence o f a piece o f knowledge - something that exists only in the mind o f the inventor and that is, since its inception, recognized as his own property.”95 Simply put, rights to intellectual property are natural, they pre-exist the law because they result from knovvledge which is something that lies inside our heads

The main point o f the reward theory96 is that the creation o f literary, artistic, scientifíc works and industrial property objects is their creator’s contribution to society It is

recognized as necessary to revvard IPR holders for their Creative endeavor or the acquired

goodvvill in their product by giving them monopoly rights for a certain period

According to the incentive theory, innovators invest their time, efforts, and money in creating literary, artistic and scientiíìc works and other industrial property objects; thus, it

is necessary to grant them exclusive rights for a limited time to encourage them to continue to innovate and produce new Products To some extent, this thesis is similar to the revvard thesis However, the key o f the reward thesis is granting exclusive rights to creators as a com pensation for their invention and creativity; vvhereas the key to the

incentivẽ thẽ§i§ is that granting exclusive rights to creators encourages for their future

innovation and creativity

Proponents o f the disclosure thesis assume that vvhen innovators disclose their

information, society benefits from their Creative results; in exchange society must

recognize and protect the innovators’ rights upon intellectual property

93 Kamil Idris, S ở hữu tr í tuệ: M ột côn g cụ đ ắ c lực đ ể p h á t triển kinh tế, Tố chức S ở hữu tr i tuệ th ế giới,

[Intellectual Property: A Power T ool for Econom ic Grovvth], WIPO Publication, p 55.

94 Silbey, Jessica, The M yth ical B eginnings o f Intellectual P ro p erty , G eorge Mason Law Review, Vol 15, Winter 2 0 0 8 , Num ber 2; R égibeau, Pierre and Rockett, Katharine, The relation sh ip betw een intellectual

p ro p e rty la w a n d com petition law : an econom ic approach, pp 5 0 8 -5 1 0 fm Anderman, Steven D., supra note 4); N guyen, Thanh Tu, su p ra note 24, pp 38-39.

95 Carvalho, N uno Pires de, A E strutura dos S istem as de P atentes e d e M arcas - Passado, Presente e Fuíuro [“The Structure o f the Patent and Trademark System s - Past, Present and Future”], Lumen Juris, Rio

de Janeiro, 2 0 0 9 , p 73 The English translation was prepared by the author.

96 See Hovvells, John, The M an agem ent o f Innovaíion a n d Technology: The Shaping o f Technology and Institutions o f T h e M arkeí Econom y, Sage Publication Ltd, 2005; K eeling, David T., su pra note 56; Ganea, Peter, su pra note 1; Landes, VVilliam M and Posner, Richard A , su p ra note 45, p 4; Drahos, Peter, A

P hilosophy o f In tellectu al P ro p e rty , Dartmouth Publishing, Aldershot, 1996, pp 72-91.

In addition to these theses, researchers also suggest there is an economic basis for IPR exclusivity.97 The reason is that the íìxed costs (Capital, engineering) needed for creating

an intellectual asset and adapting it to commerce (organizing production facilities, testing, labeling, marketing, and distribution) is very high “Hovvever, once these íĩxed costs are paid and the good is ready for market, the actual marginal production and distribution costs are com paratively small.”98 Creators, thus, are granted exclusive rights “in order to support prices above marginal distribution costs, thereby eaming a retum that compensates for the costs o f investing in new ideas, cultural goods, and reputations.”99

The barriers caused by IPR exercise: Intellectual property law confers on an IPR holder a

“bundle o f rights” One crucial objective is to create incentives for investors since they are able to receive revenue as compensation for their investment and efforts.l00A patent grants

an inventor the right to prevent others from making, using, selling, offering for sale, or importing the invention without his or her consent Copyright grants its holder the right to prevent others from reproducing or distributing the work A trademark grants its holder the right to prevent others from using identical or similar signs for goods or services that are identical or similar to those in respect o f vvhich the trademark is registered where such use is likely to cause consumer coníusion The existence o f these legal monopoly rights as such never harm s the market or the consum er.101 Hovvever, the exercise o f this exclusivity,

on the other hand, causes a negative impact on consum ers’ access to and the smooth circulation o f goods and services and on competition its e lf102 as David T Keeling states:

I f the owners o f IPRs could rely on those rights in order to prevent íurther

dealing in goods which they had marketed, those ovvners would have a

m agniĩicent tool for dividing up markets, practicing differential pricing, stiíling

intra-brand competition and generally engaging in anti-competitive behavior 103

The exercise o f IPRs may create barriers to both domestic and intemational trade as

Govaere observed: “IPRs were widely recognized to be indispensable barriers to trade.”104

Market circulation may be jeopardized if IPR ovvners have the right to control movement o f the IPR protected Products With regard to intemational trade, the principle o f free movement shows that there is a customary conílict between the exercise o f IPRs and such a principle.105 Free m ovem ent is widely understood to mean that Products can circulate intemationally

97 See Ganslandt, Mattias and M askus, Keith E., su pra note 89.

98 Ibid , pp 5-6 T he marginal cost o f an additional unit o f output is the cost o f the additional inputs needed

to produce that output Marginal cost and average cost can diíĩer greatly For exam ple, suppose it costs

$1000 to produce 100 units and $10 2 0 to produce 101 units The average cost per unit is $10, but the marginal cost o f t h e lO lst unit is $20, < http://w w w econm odel.com /classic/term s/m c.htm >.

" i M

100 Korah, V alentine, An In trodu ctory G uide to E C C om petitìon Law a n d P ra c tic e , 9 ,h edn., Hart Publishing,

Oxford and Portland, 20 0 7 , pp 335-336.

101 See S ev ille, Catherine, E U Intellectual P ro p erty L aw a n d P o lic y, Edvvard Elgar Publishing Limited,

2009, pp 3 2 1 -3 2 4 ; G rundig-C onsten, su pra note 82.

102 About the existen ce/exercise dichotom y, see G rundig-C onsten, ibid; Jones, A lison and Suírin, Brenda,

E C C om petition Law, 3 rd edn., Oxford University Press, 2008, pp 781-784.

103 Keeling, D avid T., su p ra note 56, p 75.

104 Govaere, Inge Dr, The U se a n d A buse o /IP R s in E c Law, Svveet & Maxvvell, 1996, p 25.

105 W ilkinson, Rorden, M u ltilateraỉism a n d the W orld Trade O rganisation: The A rchitecture an d Extension

o f In ternational Trade Regulation, Routledge, 2000; W oods, Loma, F ree M ovem ent o f G oods an d Services within the E u ropean Com m unity, Ashgate, 2004.

in the same way as dom estically There should be no or as little as possible hindrance barring a product’s way from m arket A to market B There should be no obstacles at the place o f exportation, at national borders, or at the destination that would make the circulation o f Products im possible, more expensive, or slower IPRs are territorial in character and are essentially based on national law, vvhereas the free movement principle

as incorporated in international law aims at reducing or even abolishing barriers to trade arising from the fact that Products are Crossing national boundaries In addition, IPR owners exercising their exclusive rights may cause barriers for free trade, The exhaustion doctrine, hence, needed to be created as a balance between IPR protection and the free m ovem ent o f goods and services both nationally and internationally

The exercise o f the legal m onopoly created by an IPR does not itself limit competition

N ot all IPRs are m onopolies and nor do all exercises o f IPRs cause negative effects on com petition O nly abusive exercise o f these rights, namely abuse o f IPRs (and misused

o f IPR s)107 may cause anti-com petitive practices N onetheless, it should be stressed that not all IPR abuses are IPR-related anti-competitive practices.108 D etermination o f vvhich types o f practices are anti-com petitive and which anti-com petitive practices constitute a violation o f antitrust law vary am ong national laws and even are different from case to

case Certain practices may be vievved as p er se illegal while others may be subject to

rule o f reason Resale price m aintenance, for example, is viewed in most jurisdictions as

b ein g p er se illegal w hereas exclusive dealing may be subject to rule o f reason.109

IPR-related anti-com petitive practices can be coordinated conducts (such as cartels, collusion, conspiracy, mergers, predatory pricing, price discrimination and price íixing agreements) and unilateral conducts by intellectual property holders (such as reíusals to license and tying)

IPR protection also relates to consumers’ interests In case o f over-protection or under-

protection o f IPRs, m arket circulation is not guaranteed, competition is distorted, and consumer welfare will be affected They are prevented from accessing and beneíĩting from

Creative activities and their end-products.

The exhaustion doctrine - A baỉancing soỉution: There are many ways to balance IPR

holders’ interests and those o f consum ers’ and safeguard the smooth circulation of goods and services.110 Exam ples are a provision allovving compulsory licenses o f a patent; the use o f published works where permission and payment o f royalties and/or remunerations are not required and vvhere permission is not required but the payment o f royalties and/or other remuneration is required; and provisions on competition relating to IPRs.111 In

106 This observation is supported by the establishment and implementation o f the GATT and OATS agreements.

107 Although there are som e minor diíTerences between “abuse o f IPRs” that is com m on use in EU and

“m isuse o f IPRs” that is preferred to use in the u s , the former is used in this study In the TRIPS Agreement, only the íòrm er is used (see A rticles 8.2 and 40.2).

10 Regarding the concept o f IPR-related anti-com petitive practices, see N guyen, Nhu Quynh, su pra note 15.

109 OECD, G lo ssa ry o f S ta tistic a l Terms, <http://stats.oecd.org/glossary/detail.asp?ID=3145>.

110 See N guyen, N hu Quynh, Tổng quan về quyền s ớ hữu tr í tuệ [An overvievv o f Intellectual Property Rights, in Le, Dinh N gh i and Vu, Thi Hai Yen (eds.), G iáo trình s ở hữu tr í tuệ [Text book on Intellectual

Property], The V ietnam ese Education Publishing House, 2009, pp 41-42.

111 See A rticles 3 l(b ), 13, 8.2, and 40 TRIPS Agreement.

addition, doctrines have been íormed to ensure the desired end is achieved and one of them is the exhaustion doctrine.112 The doctrine is designed to foster effective competition

am ong producers, and to beneíìt consumers IPR exhaustion limits the legal capacity of producers to control the movements o f goods and services after the first sale or lawful placing on the market, and reduces the potential for trade-restrictive (including anti- competitive) behaviors The flow o f goods and services across borders is significantly aíĩected by the exhaustion regime that a country adopts Under a national doctrine, the movement o f goods and services may still be blocked by IPR holders Under a fully intemational doctrine, goods and services flow íreely across borders after they have been first sold or placed on the market under certain conditions anywhere in the world

Concem ing its developm ent, it is widely accepted that the íìrst signs o f the exhaustion

doctrine appeared in the u s In the patent case Adams V Burke,113 the u s Supreme Court

discussed the issue o f exhaustion o f IPRs for the íirst tim e.114 This case involved an attempt by the holder o f a patent on a funeral casket lid to impose teưitorial restrictions on

a purchaser’s resale o f caskets incorporating that lid The Supreme Court held that the patent holder’s control over the invention was exhausted on the first sale The Supreme Court concluded that:

“ [I]n the essential nature o f things, when the patentee, or the person having his rights, sell a machine or instrument vvhose sole value is in its use, he receives the consideration o f its use and he parts with the right to restrict that use The article,

in the language o f the court, passes vvithout the limit o f the monopoly That is to

say, the patentee or his assignee having in the act o f sale received all the royalty or

consideration vvhich he claims for the use o f his invention in that particular machine or instrument, it is open to the use o f the purchaser vvithout further restriction on account o f the monopoly o f the patentees.” 15

The word “exhaustion” (Qrschởpfung in German) “has been first used by the Court of the

German Em pire [ ] in a number o f judgm ents in the early years o f the twentieth

century.” 116 As early as 1902, the German Reichsgericht11 ỵ held that “if the patentee has

marketed his Products under the protection o f a right that excludes others, he has enjoyed the beneĩits that a patent right confers on him and thereby consumed his right.” 118 Based

112 The fair use doctrine also puts a limitation on m onopoly IPRs This doctrine allovvs the use o f copyrighted works and trademarks without permission o f the Copyright and trademark owners in certain cases.

case, the u s Suprem e Court explained that “when the m achine passes to the hands o f the purchaser, it is no

longer vvithin the lim its o f the m onopoly.” B loom er V M cQ uew an, 55 U S (14 How.), 539 (1853)

Hovvever, not until 2 0 years later was the fìrst sale/exhaustion doctrine ruled on by the u s Supreme Court in

a “more typical exhaustion ca se”, namely A dam V Burke See Stem , Richard H„ Quanta C om puter Inc V

LG E lectronics ỉn c - com m en ts on the reajfirm ation o f the exhaustion doctrin e in the u s , European

Intellectual Revievv, E.I.P.R 20 0 8 , 30(12), pp 527-528.

116 K eeling, D avid T., su p ra note 56, p 75.

117 In English, Reichsgericht m eans Court o f the German Empire See Federal Court o f Justice Celebrates 5Ơh

A m iversary, German Law Joumal, < http://ww w germ anlaw joum al.com /index.php7pageID = i l& artID=10>,

118 51 RGZ 139-Duotal, cited by Christopher Heath, P arallel Imports an d International Trade, supra note 89.

on this, the exhaustion doctrine “is generally considered to be a creature o f German law [and its] patem ity is ascribed to the German jurist Joseph Kohler.” 119

Originally, the exhaustion doctrine was created by the industrialized countries and was first applied to patents with a view to putting a “restriction on account o f the monopoly of

the patentees.” 1 0 It was first referred to in judgments rather than in statutory law.

The role of ứie exhaustion doctrine has been increasingly recognized Countries have acknowledged the doctrine in case law or/and statutory law with at least the application o f a national exhaustion regim e.121 An exception to this did occur in France in the 1960s French courts allowed the proprietor o f a trademark to control the use and distribution of a trademarked product until it reached the end-user In ửie late 1980s, however, French courts changed ửiis view and exhaustion has now been íòrmally recognized in French law.122

The terms “exhaustion” or “exhaustion o f IPRs” are not usually used in statutory law but have been applied in case law However, besides court judgments, the issue o f exhaustion can be recognized by provisions on the rights o f ứie IPR owner or provisions on parallel trade (the concept o f parallel trade will be defined in Part 2.2.3.1.) “Most advanced legal systems have attained that essential minimum, [namely national exhaustion] because [n]o country has any reason to permit the portioning o f its domestic market on the basic o f IPRs.” 123

Furthermore, the object o f application o f the exhaustion doctrine has been widened The exhaustion doctrine was first applied to patents Its applicability has now been expanded

to cover many other IPRs, such as industrial design, trademark, Copyright and analogous rights, and plant variety rights

New developm ents o f the exhaustion doctrine are shown by its appearance within regional and intemational agreem ents The typical illustrations for this are EU statutory law and the case law on the regional exhaustion and W IPO/W TO-administered agreements on exhaustion o f IPRs These will be discussed below

Nowadays, legal scholars, economic researchers, and judges have reíìned and developed the exhaustion doctrine The doctrine has long proved its academic and practical value and has becomes one o f the m ost important issues in the intellectual property and competition policy o f many countries

2.1.1.2 The exhaustion doctrine in relation to the íĩrst sale doctrine and the implied license doctrine

According to the íirst sale doctrine, IPR owners forfeit the right to control íiirther distribution o f the IPR-protected product once the product has been íirst sold by them or vvith their consent The core o f the implied license doctrine is that without any tenritorial restriction in the license contract, the IPR-protected product can move íreely and an 1PR owner has no right to intervene in the subsequent circulation o f the product For example,(i) if the license contract contains clauses on territorial restriction and requires the licensee put the notices on the product such as “Not for sale in the licensor’s country” or “For use

119 K eeling, D avid T , su p ra note 56, p 75.

m A dam s V Burke, su p ra note 35.

121 K eeling, David T , su p ra note 56, p 78.

122 Ibid., p 79.

123 Ibid., p 78.