Chapter 4 Evolution of Exhaustion: Patent Exhaustion in Different Jurisdictions

In: Patent Exhaustion and International Trade Regulation
Author:
Santanu Mukherjee
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Exhaustion or non-exhaustion of iprs in general and patents have developed in different ways in different jurisdictions. For academic research, this book has analysed the evolution of the exhaustion doctrine and as well the contracts-based alternate in four main jurisdictions, the UK, Germany moving into the EU position, the US and Japan. Subsequently it has also elaborated a group of developing countries that have similar position on iprs and are all emerging economies with similar economic problems.

The UK is studied since it established common law principles not only in its own territories but also in all its colonies and distinctly developed a contracts-based practice. The German practice of exhaustion is important to note since this was the country of origin of the doctrine before gradually spreading to other countries through judicial interpretations of their courts. As European countries came together to form the EU, the German position changed to adapt to the regional exhaustion position – a hybrid of national and international exhaustion, established by the ecj. Based on the doctrine of exhaustion, US courts developed the ‘First Sale doctrine’, an international exhaustion doctrine with the possibility of contractual intervention like doctrine of implied license. Japan is one of the rare countries so far that has managed to move up the ladder from a developing country to an industrialised country while remaining highly advanced in ip-based technological innovation. Hence Japan is the other industrialised country studied in this book.

Finally, the group of developing countries analysed in this book are Brazil, China, India and South Africa. This is a group of countries with significant participation in international trade, a group that has gradually moved into contemporary iprs laws and policies. They are part of similar group of negotiating bloc in different international negotiations (e.g. G20 in wto, basic in unfccc). They have similar socio-economic problems and takes similar positions in different international trade issues including iprs. Often, they use iprs as a policy tool to address health and other public issues, hence considered worth analysing.

4.1 The United Kingdom and the Doctrine of ‘Implied License’

Patent right is a territorial right in all Anglo-Commonwealth jurisdictions thus they are limited to the territory of the jurisdiction granting the patent. This means that a patent granted in one jurisdiction would not automatically be honoured outside this jurisdiction.128 Historically the patent system was first codified as early as 1624 as, ‘The Statute of Monopolies’ and granted exclusivity to inventions for 14 years. It is worth noting that the inventor who was accorded protection also included importers of the invention, hence the importers were authorised to apply for patents in their own name in their countries.129

In Britain the relation between the patent holder’s rights and the right of distribution of the patented goods were predominantly contractual and the doctrine of exhaustion was unknown. The rights to distribute after the first sale depended on whether the owner of the patented product was contractually allowed to do so under a license agreement.130 Hence, historically, before the doctrine of exhaustion was known due to joining the European Single Market and the EU, Britain followed the ‘doctrine of implied licence’.131 Under this doctrine it is considered that once a certain good is sold or distributed legally by the original owner, it is ‘implied’ that along with the product the owner also ‘licences’ all rights attached to the product. This obviously includes iprs, subject to the condition that the sale of the product does not include any specific pre-condition, whereby the said implied licence would then be nullified.

Later, the effect of this principle was confirmed by the English case Betts v Willmott where the doctrine of implied licence was upheld, although often it is erroneously referred to as an example of ‘doctrine of exhaustion’.132 In this case, it was held that if the British patent holder himself marketed his patented goods abroad, he could prevent their importation back to Britain only if there was an express embargo attached to the sale by way of contract.133 The implied licence regime was now established in the UK, wherein the owner of the iprs in UK could restrict entry of product manufactured by the licensee situated outside the country only if the license agreement restricted it specifically. Hence, if the license agreement restricted the licensor to produce and sell/market the product only in the foreign country or in a pre-defined market, that did not include the originating (ipr owner/licensor’s) country, then the iprs owner/licensor could restrict entry of the product. If there was no express limitation in the license agreement, then the licensee could not be restricted from exporting the product to the licensor’s country.134

A case in point is the famous Tilghman’s case, wherein the territorial nature of the patent rights was in question.135 In this case, Tilghman who held patents for cutting and grinding hard substances, also used to make frosted glass lamps in England and Belgium, had granted license to the plaintiff to manufacture glassware in the patented process in Belgium. The plaintiff ignored the contractual restrictions imposed on it and not only sold in Belgium, but also started selling the glassware products in England. Tilghman then sent ‘Cease and Desist’ notice that was responded by an application for interim injunction against Tilghman from sending such notices. The notices were alleged to be uncalled for, since they intended to settle the dispute through the arbitration dispute resolution provision in the license contract.

The High Court refused injunction based on the English and Belgium patents held by different entities. Further, the Court of Appeal refused the injunction on ground that given the different owners of the Belgian and English patents, the license under the former is distinct from the latter. Hence the patent holder of the English patent is authorised to restrain the import of the patented glassware into England. Here the most important factor was that the patented glassware was sold by the licensee who was licensed only to manufacture and not sell. Had the English patent holder sold the patented product without express restrictions and the purchasers re-sold it or exported it to England, the patent holder would not have been able to enforce the patent. In this case, Tilghman could not excuse the clear terms in the license contract.136

In most cases the practice was governed more by contract law and later it was codified under the Sale and Goods Act 1893 (of the UK), establishing that the buyer of goods would also be guaranteed the enjoyment of the goods in all forms. But as mentioned earlier it was possible for the seller of the goods to restrict further distribution of goods covered by the iprs by way of placing a notice to the purchaser (maybe in the sale voucher or on the package or on a label placed on the body of the product), which would restrict the doctrine of implied licence to take effect. Thus, Britain did not practice exhaustion in its literal term. In fact, there was never a case of automatic exhaustion, rather the approach varied with the subject matter and in all cases the patent holder’s licences determined the treatment.

This practice of implied licence was followed in the UK all through, even after the doctrine of exhaustion became well established in Germany and some other countries of continental Europe. It will be noticed that there was hardly a case when the patent holder sold the patented goods without placing such notice (thus although implied licence could be evoked, parties managed to avoid it). Since with the sale of the patented goods, further use, sale or distribution of the patented goods could be contractually restricted, the restriction bound not only the purchaser of the goods, but also all recipients of the goods.

Two prominent cases in point are, Dunlop v Longlife and Goodyear v Lancashire Batteries.137 In the first case the court held that where the licensee of a patent held only limited licence, the licensee had to follow the limitations imposed by way of the licence. Hence if a certain retail price were marked then selling below the marked price would be considered as an infringement of the patent. In the second case that dealt with selling automobile tyres at price below the marked price, it was held that since it was expressly mentioned in the contract that the selling price should not be below the marked price, it was a case of infringement. Thus, it can be noted that in both cases it was possible to limit the nature of the licence by way of contract.

After this, the practice of the doctrine of implied license was influenced by the Resale Prices Act 1964. Few years later the House of Lords passed their judgment in the Beecham case which put checks on what would be implied in the license contract.138 In this case, Bristol-Myers had a patent license from Beecham covering whole world excluding the British Commonwealth. ‘International Products’ bought Penicillin covered by Bristol-Myers in US and imported it into Kenya (a Commonwealth member) violating the restrictions imposed through the license contract. This infringement case initially decided by the High Court in Kenya, held that the moment a patented product was sold, it was from the restrictions imposed by the patent and hence,
  1. (a)a sale by the agent of a patent holder acting within the scope of his authority confers on the purchaser the same rights as a sale by the patent holder, but
  2. (b)in the case of a sale by a licensee, the extent of the release depends on the scope of the license agreement.

In this case there was no confusion as to the terms of the license hence the interim injunction was granted.139

The Patents Act 1977 addressed infringement provisions in Section 60 in sub-section (1) and sub-section (4). It was considered to give effect to regional exhaustion in compliance with the Community Patent Convention 1975. It is however interesting to note that even before Section 60(4) could come into effect as soon as there was a possibility to take the provision out under the Community Patent Convention, it was removed in the Patents Act 2004 (effective from 2005).

In a later case, United Wire Ltd. v Screen Repair Services (Scotland) and others, the House of Lords decided that a patent holder cannot restrict any third party to conduct repair on a patented product. However, such repair of the patented product cannot be to such extent that it becomes equal to a new product. Such repairs would not be allowed on the basis that the patent rights have been exhausted or such repairs would result in patent infringement.140 The practice of implied licence gradually gave way to regional exhaustion, with UK joining the European Economic Community (eec). The Treaty of Rome bound the UK along with its continental neighbours by the decisions of the ecj that all members needed to adhere to. However, it will be very interesting to note that the conservative attitude of the English Courts continued with the old practice of implied licence as long as it was possible. We still find examples of cases where the rights were still not exhausted with the sale of the goods since restrictions could be placed through the licence agreement and would likely be considered in violation of the EU requirements.

4.2 Patent Exhaustion in Germany and Some Countries in Continental Europe

The credit of introducing the principle of exhaustion goes to Josef Kohler of Germany. His view differed from that of implied licence practised in England and in different papers written by him he stated that with the first sale of every single copy of a product legally, the owner relinquished his right over the intellectual property embedded in the product.141 Kohler regarded that the common proprietary right of the owner of a product should prevail over the ip right of the product. Closely following this development published by Kohler, the Reichgericht in Germany (former German Imperial Supreme Court) used the term ‘Konsumtion’ in the Duotal case in 1902 and thus was responsible for the conceptual doctrinisation of the exhaustion Principle.142 The doctrine stated that the first time when the holder of an iprs sold his product, he immediately lost his right to restrict the buyer from enjoyment of that product through enforcement of the iprs in the product.

The fundamental difference between ‘implied licence’ and ‘exhaustion of the rights’ is that in the former, there is no exhaustion of the iprs but with the distribution of the physical product, the iprs embedded is also licensed to the buyer unless such implied license is expressly barred through contract. In the case of the latter, the effect is rather automatic as soon as the iprs embedded product is put into any distribution channel, i.e. the right to enforce the iprs is exhausted irrespective of any contractual bindings. In fact, this was perhaps the first time when the right of the consumer found precedence over iprs through indoctrination. It is also noted that even at that time when the phenomenon was introduced, the lookout was to remove barriers to trade within the German federated states (later known as ‘Länders’).143

It is interesting to note that although Germany had a tradition of following exhaustion within the federated states, it has changed to the EU regional exhaustion in the present day.144 The scope of exhaustion is crucial since it defines the limits of the patented product in circulation. While any mode of distribution of the patented product would be considered legitimate, unauthorised manufacture of the patented product would be considered as an infringement. The scope of exhaustion also brings into its ambit the effect of repairs, maintenance and replacement of spare parts subject to wear and tear. It is regarded that even when the entire product with all its parts is patented, repairs, maintenance and replacement of parts would be allowed so far it is within the scope of permissible repairs and replacement based on the exhaustion doctrine.145

The practice of the doctrine of exhaustion propounded by Kohler became well established not only in Germany but also in some other countries like Switzerland, Austria, Netherlands and some other Nordic countries. Switzerland followed its own mode of exhaustion since it was not part of the EU. As far as the exhaustion issue is concerned in Switzerland, there are five cantonal decisions (cantons are sovereign geographical territories like states or provinces within the Confederation) out of which two were in favour of international exhaustion while the other three were not. However, jurisprudence set the path on exhaustion and the most noteworthy is the Kodak case by the Commercial Court of Zurich Canton that favoured international exhaustion later overruled by the Federal Court of Switzerland.146

In this case, the Swiss supermarket Jumbo imported Kodak films and single use cameras from England instead of buying it from the authorised Swiss licensor of Kodak photographic goods. Since there was no specific treatment of the exhaustion in the Swiss Patent Act, the Commercial Court of the Zurich Canton chose to decide in favour of the parallel importation from England, allowing international exhaustion. This decision was appealed before the Federal Supreme Court of Switzerland where the court differentiated trademarks and copyrights from that of patents and favoured the mode of national exhaustion in case of patents. In effect the Court stated that patent rights are for shorter period than copyright and trademarks and it was more expensive to maintain patents, hence the patent right needed to be stronger than the other forms of iprs. This differentiated approach was adopted also in consideration of the interests of the research-based pharmaceutical industry in Switzerland.147 After this judgement, Switzerland followed the mode of national exhaustion in cases of patents whereas international exhaustion for other iprs.148

Here it must be mentioned that Swiss patent law governed Liechtenstein and as such, they followed a unique bilateral exhaustion with Liechtenstein for patents. The practice of differentiated exhaustion for different iprs continued even after Switzerland joined the eea. It changed to regional exhaustion within the eea with the revision of the Swiss Patent law in 2009. The amended patent law explicitly states,
  1. 1.If the proprietor of the patent has placed patent-protected goods on the market in Switzerland or within the European Economic Area, or consented to their placing on the market in Switzerland or within the European Economic Area, these goods may be imported and used or resold commercially in Switzerland.149

This means that if the point of first distribution of the patented product is outside the eea, importation of such product into Switzerland would infringe the patent law. There are however certain exemptions from regional exhaustion in certain specific cases where national exhaustion prevails, or where the patented products have been subjected to price control through government interventions.150

Although the principle of common market and free movement of goods within the EU gradually took precedence, initially there was no clear policy on the issue of exhaustion and different countries of the EU carried on their individual ‘exhaustion’ regimes. This became a growing problem as iprs became a non-tariff barrier to trade, prompting the ecj to introduce the regional exhaustion policy through its decisions and a common exhaustion policy popularly referred to as ‘Regional Exhaustion’ was established.151

4.3 Patent Exhaustion in the United States of America

In the US, exhaustion flowed from judicial decisions interpreting a blend of patent, antitrust and common law principles.152 The exhaustion of patent rights is practised based on the doctrine of ‘first sale’ where the rights to distribution of the patented product gets transferred to the buyer of the patented property with the first sale of the product. The rationale for the first sale doctrine is the same in any conventional exhaustion doctrine where the right of the patent holder to exclude others from exploiting the patent ends since he has already been rewarded with the first sale of the product. The only possible difference between the doctrines of ‘first sale’ and ‘exhaustion’ is that while the former is controlled by laws of contract for sale while the latter establishes out-right exhaustion without any possibility of opt-out.153 Finally, whether in case of exhaustion doctrine or that of implied license, the practice of these doctrines emphasize the need to impose necessary market bound restrictions on the patent rights beyond the legislative requirements of patent law, namely ‘enabling disclosure’ and limited monopoly.

The principle of first sale in patent law was developed in the US through case law as early as 1873.154 In one of the early cases the patent holder, Merrill & Horner had assigned all rights, title and interest pertaining to the patent (for improvement of coffin lids) to Lockhart & Seelye of Cambridge in Middlesex County, Massachusetts but was restricted to manufacture, use and sell the patented products within a radius of ten miles of Boston. Lockhart & Seelye again assigned their patent right to a person named Adams.

Here the defendant, Burke was an undertaker in the business of arranging and supervising burial of the dead and preparation of graves in the town of Natwick (which was approximately 17 miles from Boston, hence outside the mentioned circle). As a part of his work Burke often bought coffins from suppliers and sold them to the personal representatives of the deceased person who instructed him for organising the burial. In this case, he bought coffins and used the same for his work on payment by a party. The plaintiff, Adams found this and got hold of a Bill of costs confirming the sale of the coffin by Burke and produced the bill to file a case before the court alleging infringement of the patent right by the defendant Burke (since he sold the coffin with the patented coffin-lid). The defendant pleaded before the court that he had not used or sold any coffin that contained the patented invention and claimed that he had bought the coffins from Lockhart and Seelye (who had been assigned the patent right by the original patent holder hence the product was not a counterfeit). The Circuit Court had dismissed the plaintiff’s claim that took the case to the Supreme Court on appeal.

It must be noted here that an earlier case Bloomer v McQuewan, confirmed the right of the purchaser to use the patented product after he bought it, relinquishing the patent rights of the seller. In this case Mr. Chief Justice Taney had stated that when the machine (whether covered by a patent or free from patents) passed hands and went to the hands of the purchaser, it was no longer within the limits of the patent.155 Adams v Burke was a step ahead of Bloomer v McQuewan, while delivering the opinion of the Supreme Court Mr. Justice Miller was of the opinion,

When the patentee, or the person having his rights, sells a machine or instrument whose sale value is in its use, he receives the consideration for its use and he parts with the right to restrict that use. The Article, in the language of the court, passes without the limit of the monopoly. That is to say, the patentee or his assignee having in the act of sale received all the royalty or consideration which he claims for the use of his invention in that particular machine or instrument, it is open to the use of the purchaser without further restriction on account of the monopoly of the patentees.156

Although the Supreme Court affirmed the decision of the Circuit Court dismissing the plaintiff’s bill, there were dissenting views among the other judges on the bench. In a way this was the first case of parallel trade of patented goods decided by the US judiciary. Although the right of Lockhart & Seelye to manufacture, sell and use the coffin-lids was limited to a particular area (restricted within a circle of ten miles around Boston), it was made clear in this judgment that a purchaser who had purchased a single coffin from them did not only purchase the coffin but the right to use the coffin and all rights which came with it. Specifying the rights acquired by the purchaser, it was stated that as the patent holder had received his consideration the product was no longer within the monopoly of the patent. Determining the doctrine of ‘exhaustion’ or the first sale’ doctrine very clearly, the judgement was stated that imposing a limitation on the sale of the patented product would be extension of the monopoly beyond its statutory mandate. It also mentioned that even if the patent holders might subdivide their patents territorially and restrict further manufacture or sale within a specified area contractually, as in this case, if such products are manufactured or sold legally, even such contractual limitations would not hold good once the product was sold.

In the case of Holiday v Mattheson where the patents were held by Holiday in US and the UK, the patents of Holiday were considered exhausted based on the doctrine of ‘first sale’.157 In this case, the importer bought the patented product from a third party who had purchased the same in England (which was on sale without any specific restriction as to the market in which it was to be sold), imported it to US and sold it. The court emphasised on the fact that since the patent holder had not imposed any contractual restriction, the patent holder was unable to restrict the sale of the product based on the patent right. There was abject clarity in the decision as to international exhaustion where the sale of the patented product in England, exhausted the patent rights in US and the patent holder was not allowed to stop the defendant from using or selling the product in the US.158

It was in 1890 that the nature of exhaustion in the US was reconfirmed by the Boesch v Graff case.159 In this case there were three issues in conflict but the one which was relevant from the perspective of the doctrine of exhaustion was the question as to whether a dealer residing in the US could buy patented products from a legitimate seller in another country (from a licensee) and import and sell them in the US (where there was an existing patent on such product) without any further licence or permission from the US patent holder. The Court opined that foreign law could not control US patents. Hence, following the territoriality principle, it decided that if an existing patent in the US protected a product, the US dealer could not import and/or sale the patented product without a permission or licence from the US patent holder. This was a clear case of limiting exhaustion within the national boundaries thus establishing the mode of national exhaustion.

A few years later in a case in which the patent owner restricted the assignee’s rights to a great extent through different assignment contracts (which the defendant alleged to be in violation of the act of congress) the court discussed in detail the act of congress and allowed a defence on the part of the defendant but decided that the contracts were not in violation of the said act of congress.160 Thus, the Supreme Court allowed restrictions to be imposed by way of contract (both through assignment and licence). In such cases, the patent holder could control the ambit of their patents contractually if such limitations were not illegal in nature and provided the licensee agreed to the contract.161 This was again a turning point from earlier case law where a pure form of exhaustion was established to a practice that was more in the nature of an ‘implied licence’.

Another important decision by the Supreme Court of US in favour of the first sale doctrine effectively establishing the exhaustion of patent rights is United States v Univis Lens Co. Inc.162 In this case, Univis Lens Company Incorporated (Univis), owned the method and product patents on multifocal optical lenses. Univis sold these patented multifocal optical lenses as lens blanks and licensed both wholesalers and retailers to grind and polish them, as required to sell them as prescription lenses for correction spectacles. The District Court had earlier held while deciding patent infringement of the Univis Lens that if the patent over an unfinished product requires certain essential features to be completed by the licensee without violation of the patent as such, then the patent holder exhausts his/her rights over the patent and the licensee’s actions would not be considered an infringement of the patent. The Supreme Court upheld the decision of the District Court as the lens blanks manufactured by the patent owner, Univis could only be used as prescription glasses for which it was essential to be grinded and polished. It is interesting to note that the case was brought in as a violation of the Sherman Act (Antitrust Law), where the question raised was that the license contract was anti-competitive. This decision is a distinct example of a case in which imposing restrictions to the first sale doctrine by way of binding the purchaser through a contract did not hold ground since it was proved to be anti-competitive.

It is found that with the passage of time, the principle of first sale became an established rule in the US by virtue of case law. But at the same time the Courts decided the eligibility of the restrictions imposed on the exhaustion of patent rights on case-by-case basis. Hence the Court allowed contractual restrictions in cases where such restrictions were not in violation of any competition law. It is important to mention that although case law established the principle of first sale, the mode of exhaustion national or international was not yet decided. In the unique case of Sanofi S.A. v Med-Tech Veterinarian Products Inc. decided by the US District Court of New Jersey, it was held that although the foreign patent holder owned a product patent in US, it could not restrict re-sale of the patented products in the US. This was because it did not put any restrictions in the sale contract by way of notice and it sold its products in a country where it did not have any patent over its products.163

This case established that in case of unrestricted first sale by the patent holder or the licensee outside the US, the US patent holder would exhaust his rights.164 However, if the first unrestricted sale was not by the US patent holder or his licensee, then it would not exhaust. In this case the patent holder had drawn out an exclusive licence in favour of a company (American Home Products Corporation) in the US. As an exclusive licensee it had the right to injunctive remedy against any unauthorised distribution of the patented goods in the US. In case of the patented goods being imported from abroad (parallel imports), the licensee could treat them as unauthorised and considered as infringed goods. The verdict of this case enabled the licensee to restrict the sale of the imported goods. As a matter of fact, different courts in the US started following this line and although in principle they follow the doctrine of first sale, they allowed the patent holder to impose restrictions. In most cases it was noticed that there was a clear indication since 1988 towards national exhaustion in cases of process patents while interpreting Section 35 usc Sec 271(g).165 Thus, if any patented product is manufactured outside the US by its licensee and then imported into the US, it will be treated to be an infringed product (even if it is manufactured by a subsidiary). Here it is important that the process in which it is made needs to be covered under a process patent in US. Thus, process patents will not exhaust internationally but only nationally.

In 1998, the US Supreme Court judgement on Quality King relating to the exhaustion of copyrights caused a good amount of introspection that it might even influence other modes of ip, including patents. The judgement was contrary to the US government’s much advocated national exhaustion policy taken in global trade negotiations. In this case the Court held that if the US copyrighted products were exported, they could be freely imported back. This meant that international exhaustion was accepted and thus parallel import in the form of re-import was allowed. Here it is worthy of note that the US government not only strongly advocates a national exhaustion policy, but this is its position beyond its boundaries. Recently it influenced five small countries (Cambodia, Ecuador, Sri Lanka, Tobago and Trinidad) into treaty obligations to provide protection against parallel imports.166 The first such instance was the US – Morocco Free Trade Agreement.167 Further this is evident from the position taken by the office of the ustr, which strictly advocates the position of national exhaustion, well reflected in all their representations at the wto and all other international bodies. The ustr’s position against parallel imports is not based on any analytical study but because of industry pressure.168

It must be carefully noted that although the US Supreme Court had decided in favour of the international exhaustion mode in copyright related matter, a later judgement by the US Court of Appeals for the Federal Circuit was against international exhaustion in a patent related matter.169 In this case Fuji Photo Film Company owned US patents in different inventions related to single use disposable cameras sold by the company and its licensees. After the film was completely exposed, the photo processor (in the studio) opened the plastic shell of the camera, removed the film for processing and discarded the shell. Fuji did not intend to use these camera shells again, however third-party firms in China started obtaining and refurbishing large number of such cameras for re-use. In this particular case a company named ‘Jazz Photo’ bought such refurbished cameras and re-imported them into the US for resale attracting infringement action. Such act of refurbishing could not qualify as repair of the cameras since they were basically re-constructed without permission of the patent holder.

Here the dispute was whether the doctrine of exhaustion should apply or it would be considered infringement of the patent. Further Fuji also argued that it had imposed contractual restrictions on reuse of the camera. In its contention it argued that the doctrine of exhaustion did not apply to process claims and was restricted only to apparatus claims under the US laws and as such the process and design claims of Fuji’s patent was infringed. It is interesting to note that the Federal Circuit Court did not find Fuji to have effectively imposed any contractual restriction on the re-use of the camera and also the defence of repair of the camera would apply not only to the apparatus claims but also to the process, design and utility claims.

The Court raised a different issue, ultimately deciding in favour of national exhaustion.

Fuji states that some of the imported … cameras originated and were sold only overseas, but are included in the refurbished importations by some of the respondents. The record supports this statement, which does not appear to be disputed. United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent law. Our decision applies only to [cameras] for which the United States patent right has been exhausted by first sale in the United States. Imported [cameras] of solely foreign provenance are not immunized from infringement of United States patent by the nature of their refurbishment.170

Two recent judgements by the US Courts are of utmost importance for considering patent exhaustions. The first, a landmark judgement by the Supreme Court of USA, Quanta v. LGE.,171 where the court not only decided in favour of the first sale doctrine but also established exhaustion of patents in specific terms. It further clarified that conditional sale was disallowed and contractual restrictions were annulled. In this decision, the court relied heavily on a previous case, United States v. Univis Lens Co., (discussed earlier).172

In Quanta, lge alleged infringement of three of its method patents on computers that lge had licensed to Intel Corporation (Intel). Intel makes and sells semiconductor chips at multiple levels of the supply chain and as is often the practice, lg executed a portfolio license in favour of Intel. Equipped with the license agreement, Intel manufactured computer systems embedding chips that were made under patent license from lg and sold them without restrictions to third parties from further using the chips in combination with non-Intel products.173 In a separate Master Agreement, Intel mentioned to its customers that the Intel product was under license from lge it did not violate any of its patents. However, it was also mentioned that it did not cover any combination that combined Intel’s product with any non-Intel product, although that would not breach the contract and result in termination of the Patent License.174

Quanta purchased microprocessors and chipsets from Intel and combined them with non-Intel memory and buses and although it did not modify Intel’s components, it worked the lge patents. At this, lge filed a complaint against Quanta alleging infringement of its three patents since it combined the Intel and non-Intel products. Quanta pleaded defence of non-infringement based on the doctrine of exhaustion, claiming that the lge patents had exhausted. The District Court held in its interim judgement that lge forfeited the rights to infringement action based on exhaustion, since Quanta was a legitimate purchaser of the Intel Products. In a subsequent order limiting the interim judgement, the court however decided that since lge patents included method claims, exhaustion would not apply. According to the court, exhaustion applied only on products and not to process,

patent exhaustion applies only to apparatus or composition-of-matter claims that describe a physical object, and does not apply to process, or method, claims that describe operations to make or use a product.175

On appeal at the Court of Appeals for the Federal Circuit, the earlier decision was affirmed in part and revised in part where the court agreed that the exhaustion doctrine did not apply to process claims. At the same time concluded that the exhaustion did not apply in the Quanta case because lge did not license Intel to sell the Intel products to Quanta for use in combination with non-Intel products.

The Supreme Court relied on the earlier Univis judgement and opined that the licensed products sold by Intel did not infringe the patents even if they had read on the patent claims. It would have exhausted irrespective of the contractual restrictions since there were no other non-fringing alternatives, it is only those combinations with non-Intel products that were infringing. The court held that although it is true that patented process might not be sold in the same way as a patented product, but since the patented process is embedded in the product itself, the sale of such patented products/devices would exhaust the patents. Hence it is erroneous to state that only product patents would exhaust while process or method patents would not exhaust (internationally).176

The court went on further to lay down the reasoning behind such decision,

Eliminating exhaustion for method patents would seriously undermine the exhaustion doctrine. Patent holders seeking to avoid patent exhaustion could simply draft their patent claims to describe a method rather than an apparatus. Apparatus and method claims ‘may approach each other so nearly that it will be difficult to distinguish the process from the function of the apparatus’. By characterizing their claims as method instead of apparatus claims, or including a method claim for the machines’ patented method of performing its task, a patent drafter could shield practically any patented item from exhaustion.177

In the second contention between the parties as to whether by combining the Intel and non-Intel products, there was infringement of the lge patents, the court found similarity with Univis. In Univis it was found that the lenses could only be used as prescription lenses after they were grounded and polished, hence grinding and polishing the lenses were essential features, and working them did not result in infringement of the patents. In this case it was established beyond doubt that the Intel microprocessors and chipsets could work only if they were attached to memory and buses and Quanta did not modify Intel’s products in any manner by combining them with non-Intel products. Here it must be noted that lge could not provide any alternate use of Intel’s microprocessors and chipsets manufactured by the patented method other than that used by Quanta.

The Intel products were specifically designed to function only when memory or buses were attached; Quanta was not required to make any creative or inventive decision when it added those parts. Quanta had no alternative but to follow Intel’s specifications in incorporating the Intel Products into its computers because it did not know their internal structure, which Intel guards as a trade secret.

Hence the court established that Intel’s products embedded the patents.

Finally, the court considered the nature of the license agreement between lge and Intel and found that the agreement did not specifically bar Intel to sell its microprocessors and chipsets to any purchaser who intended to combine their products with those are not their products. Further, although there was a provision requiring notice to Intel’s purchasers barring them from combining Intel products with non-Intel products, the agreement did not mention that breach of that agreement would constitute breach of the License Agreement between lge and Intel. As a result, although Quanta used Intel products in combination with non-Intel products thus in violation of the notice provided by Intel, that did not disturb the master agreement between lge and Intel. There were no conditions imposed on Intel to sell the patented products, hence, with lge licensing Intel to use the patented processes to manufacture the microprocessors and chipsets, lge had exhausted its rights to restrict any third party from using Intel’s products manufactured under the patented process under license from lge. The court also held that the issue of notification of restriction against implied license does not hold ground since Quanta has claimed exhaustion of patents as defence and has not raised the defence of implied license. The Supreme Court reversed the judgement of the Court of Appeals and established a clear case of exhaustion of patents in US jurisprudence. Given the fact that the court dwelt on whether there were contractual conditions imposed by the patent holder, the influence of the doctrine of implied license cannot be ignored.

Following Quanta, a more recent case, Bowman v Monsanto178 decided by the Supreme Court, dealt with exhaustion of patents without allowing restrictions through contractual terms. In this case, Monsanto restricted the purchasers of its genetically modified, pesticide resistant, soya bean seeds from planting the seed beyond one season; from supplying the seed to any other grower for planting; from saving the crop for replanting or transfer to a third party for replanting; from using it for the purpose of research; and crop breeding or crop production. Bowman, a farmer, obtained second generation soya bean seeds from grain elevators and planted them to be sued by Monsanto of patent infringement of two patents on type of gene and synthase before the US Court of Appeals for the Federal Circuit.179

Bowman claimed that the patents have exhausted on sale, based on the Quanta decision but the Federal Circuit rejected the defence. The Federal Circuit stated that the exhaustion doctrine would not apply to self-replicating technologies since it would result in re-use. Exhaustion permitted reselling but not copying of patented technology, which Bowman did by growing third generation plants from the seeds. Bowman contended that Monsanto’s seeds had all future generation seeds hence embodying the patents hence the only reasonable and intended use was to replant them to create new seeds. However, the Federal Circuit disagreed with Bowman and held that reproduction of a new plant from the seed created a new Article hence infringement of the patent. It also stated that the only intended use could not be to replant them to make new seeds since it can be used as livestock feed. The Court also rejected the exhaustion defence on grounds that this is a special technology that recreates itself hence creating an exception from Quanta for sui-generis technologies hence deciding in favour of Monsanto. However, the Court did not address the exhaustion claim 15 on ‘method’ or process enabling natural propagation given that there is no clarity as to how process patents would exhaust.180

On appeal before the Supreme Court, Bowman still could not defend the infringement suit. However, the most important is the analysis of the Supreme Court on exhaustion, the Court held that if Bowman not just consumed the seeds as livestock feed, but had resold the patented soya bean seeds that he had purchased from the grain elevator, there would not have been any infringement. The doctrine of exhaustion as enumerated through a number of case laws in US is restricted to re-distribution and would not allow him to make additional patented soya beans. Hence the Supreme Court still held that contractual terms and conditions would not defeat the doctrine of exhaustion.181

Usually, the trend in the decision of the US courts have been to follow the doctrine of first sale where parties can restrict international exhaustion contractually, however, in the most recent Supreme Court decisions like Quanta v LGE Inc. and Bowman v Monsanto Co. have shown that parties might not be able impose contractual restriction to stop parallel importation. Thus, establishing exhaustion of patent rights in its purest form.182

It is Important to note that specific Insertions were made to the US Patent Act through The Uruguay Round Agreements Act 1994183 followed by the US President’s Statement on Administrative action which includes the exhaustion issue by its mention of parallel imports.184 Here it can be stated that ‘import’ means importation of licensed products to the country of patent holder. The above study of the juridical practice on exhaustion in the US shows that the tendency is to allow international exhaustion through the ‘first sale’ doctrine unless it is not restricted contractually. This has been discussed in this book and needs to be mentioned that it’s in dilution. In other non-physical ip goods like digital products, the US has shown tendency to follow international exhaustion. A case in point is the recent decision of the US International Trade Commission (itc) affirming that electronically transmitted information constitutes an ‘Article’.185 Hence, as patent protection would be available for inventions that are transmitted via electronic medium, e.g. digital models that can be 3D printed, the exhaustion principle would similarly be applicable.186

In one of the recent cases, Impression Products v. Lexmark International, the US Supreme Court decided in favour of international exhaustion of patents. In this case, Impression Products Inc. bought used ink cartridges of Lexmark, refilled and replaced the microchip on it and resold them. Lexmark alleged infringement of their patent rights over the ink cartridges and won the lawsuit at the Federal Circuit. On appeal before the Supreme Court, international exhaustion was established as defence and the sale was considered legitimate and not an infringement of the patents. However the Court did not bar the possibility of enforcing any contractual limitations over marketing of the products separately as a breach of contract and not as patent infringement.187 The two important take-away from the Supreme Court judgment reversing the Federal Circuit’s decision, decided in interpretation of statute alone without taking into account international law were, i) violation of a contractual restriction on purchaser’s right to reuse or resell the patented product would not be considered a patent infringement and ii) patents exhausted by sale of the patented products outside USA.188

As discussed earlier in this book, in certain products (e.g. pharmaceuticals), US still tries to impose a ban on parallel imports of patented products through other laws. In this regard, the foremost law to impose such ban is the Prescription Drug Marketing Act, 1987. This law imposes restriction of imports of counterfeits as well as parallel imports on health grounds and also restricts re-importation. It is difficult to understand how drugs manufactured by a US patent holder and exported outside the country can be a health hazard if re-imported. The argument is based on the premise that parallel imports often are difficult to distinguish from counterfeits hence parallel trade also fosters the import of counterfeited products. However, the same argument can be made that the counterfeits are difficult to distinguish from the original imports of patented products. This prompts an argument that the ban is actually a disguised protection to the local pharmaceutical industry rather than a health issue.

It is also interesting to note that although judicial interpretation in US has tilted towards international exhaustion, the US Federal government tends to push for national exhaustion as government policy, including in their free trade agreements (fta) with other countries. Typically, US would restrict parallel importation through imposing national exhaustion or through contractual restrictions. E.g. Article 16.7(2) of the Singapore United States Free Trade Agreement (susfta) 2003. The susfta allows the patent holder to restrain parallel trade contractually.189

4.4 Patent Exhaustion in Japan

In Japan the post war laws reflect exhaustion of patents in Articles 2(3) and 68 of the Japanese Patent Act (April 1959). Initially the practice of Patent exhaustion was specifically national in nature and the rule of territoriality was followed in letter and spirit. E.g. A Japanese patent owner or exclusive licence holder could initiate the Customs Bureau to issue a sanction on parallel imported products patented in Japan. However legal history shows that the Japanese legislation never had to deal with the issue of parallel imports as primary concern, although statutory provisions were there to restrict parallel importation based on national exhaustion of patents. Some other Japanese legislation that addresses the issue of exhaustion are Article 21 of the Customs and Tariff Law, Article 113(1) of the Copyright Act prohibiting infringement, Article 1(2) of the Unfair Competition Act prohibiting unauthorised use, Article 23 of the Antimonopoly Act and Article 6 of the Unfair Competition Act.190

Irrespective of the above statutes and different provisions which could have been interpreted as to the exact mode of exhaustion, the clarity is provided through case law and hence exhaustion in Japan is often identified as judge-made law.191 As far as case law is concerned, there are only two court cases concerning parallel imports of patented products. One is the Brunswick case in which the Japanese court addressed the parallel importation of patented goods regarding automatic installing device for bowling pins. In this case, Brunswick was the owner of patents for the product in Australia as well as in Japan. A sub-licensee sold the products in Australia and the defendant purchased twenty-two products in Australia and imported them into Japan. The matter was decided by the Osaka District Court strictly on the principle of territoriality, which treated the issue of parallel import as a matter of infringement and rejected the principle of international exhaustion.192 Here it must be noted that in the field of Trade Marks the scenario in Japan had already changed with the Parker case, wherein international exhaustion was followed (parallel imports of Parker pens from Hong Kong was allowed).193 Later this became a usual practise and the Court followed international exhaustion in another case setting the trend that was picked up by the other decision in trademark law.194

The second and the most prominent case related to the issue of exhaustion of patents is the bbs Aluminium Wheel case. In this case, bbs Kraftfahrzeug Technik A.G. held both a German and a Japanese patent on one of its products, aluminium hubcaps for automobile wheels. bbs manufactured and sold these products as well as licensed another company named Rorinser to manufacture the products in Germany through a licensed dealership. The defendant, a Japanese company, Jap Auto Products Kabushiki Kaisha (K.K.) and Lacimex Japan K.K. bought these products in Germany from Rorinser and then imported them in Japan for sale. bbs alleged that this was a case of infringement and filed an injunction suit before the Tokyo District Court claiming damages. Similar to the Brunswick case the District Court refused to admit international exhaustion and found the parallel importation as infringement of the patent law of Japan.195

Aggrieved with the decision of the High Court, the defendant appealed before the Tokyo High Court and in an interesting manner the decision was overturned.196 The Tokyo High Court over-ruled the District Court’s decision and allowed parallel import of patented products. In its judgement the High Court held that there could not be any specific distinction between the distribution of a patented product within the country or outside and thus if the patented product is of the same make, on importation it would not be treated as infringed product. The most important point to be noted in the decision is the Court’s acceptance of the fact that bbs had received a royalty for the patented products once and so, in the court’s opinion they should not be allowed to receive a second royalty for the same product only because it is imported by traders of another country.

The High Court opined that once the products were sold and the patent holder was duly compensated, the patent holder did not have any right over the action over the third party that bought the patented products which should be treated as legitimate goods and not infringed ones (thus established international exhaustion). However, the Court also mentioned that in case any limitation was imposed on the ip (e.g. by way of compulsory licence, etc.), then the exhaustion of the right would depend on the case and the treatment of the goods might differ depending on the circumstances. As such there should not be a ‘one size fit all’ approach but must be regarded on a case-by-case basis. The High Court decision supports those who are of the opinion that patent law aims at providing incentive for innovation that is attained by its first sale. Here they also stress that in such cases parallel importation can be allowed only when there is an existing patent and the owner of the patent had freely set the price of the patented goods first sold (there was no government control or other manipulative measure to influence the price against the will of the patent holder in this case).197

Later the matter was appealed before the Supreme Court where in a landmark judgement the Supreme Court of Japan, upheld the decision of the Tokyo High Court strongly establishing international exhaustion in Japan even for patented products.198 In this case the Supreme Court however acknowledged the fact that parallel importation could be avoided by way of an explicit agreement between the buyer and the patent holder specifying the markets where the concerned patented products were to be sold (that is binding by restrictions imposed through contract). Thus, once the patent holder who held a patent in another country in addition to one in Japan (over the same invention), sold the patented product (even outside Japan), the purchaser of the product would be allowed to import the product into Japan unless it was barred by an express notice to the purchaser in the other country.199 In other words, the Supreme Court allowed conditional exhaustion that is more in line with the doctrine of implied license than exhaustion.

The Supreme Court found it reasonable to support a policy of implied license because of the international nature of the business wherein legal stability was important. Hence it can be noticed that although it is often cited as a case of international exhaustion, the Supreme Court did not establish a pure form of international exhaustion. Sometimes this reasoning of the Supreme Court, leading to the possibility of superseding the exhaustion principle as a doctrine of iprs through contracts, is criticised.200

International exhaustion provides the necessary incentives to the patent holder as well as allows the consumers of the patented product to access the products at a reasonable price. Thus, this limited exclusivity of patents through international exhaustion, balances between the interest of the patent holder and that of the public since such limited exclusivity will invite more parallel imports, resulting in lower price. The judgement is indeed appreciated by those who support international exhaustion but one is unable to reason why the Supreme Court placed the exception to international exhaustion through a contractual clause. It might be that since the issue of parallel importation is not just an iprs issue but also involves international trade, obviously controlled through contracts between the patent holder and the licensee, the court preferred to allow the patent holder an option to control distribution through contracts.

At times it is also questioned whether following international exhaustion affects the patent system negatively since the patent holders might prefer not to license the patents in Japan. However, the approach of the Supreme Court while reviewing the decision of the High Court makes it clear that this was not the case. The court seemed to consider the interest of the patent holder in a highly industrialised country like Japan where technology-based industries rule the scenario and allowed the doctrine of implied license condition the mode of international exhaustion.

In this case there were no such contractual restrictions imposed by the patent holder, hence the patent rights should be deemed to have exhausted. However, it might not have been exhausted had the patent holder restricted the entry to defined markets in the license contract. It is important to mention that Japanese government’s representations at the international forums (e.g. the wto) always adhered to the exhaustion framework provided by their domestic courts.

4.5 Patent Exhaustion in Some Developing Countries

Many of the developing countries of today were colonies of different industrialised countries and their municipal laws were usually modelled on the laws of their colonial rulers. The UK practice of ‘implied licence’ was exported to their colonies where they ruled and that became a conventional practice in many other common law countries until some countries changed the practice in course of time.

The divide among developing countries in adoption of implied license, one or the other mode of exhaustion or absence of it can be observed in many Asian and African countries where the Spanish or French colonies ruled. In these countries usually there was no mode of exhaustion or implied licence as were popular in erstwhile English colonies where it was exported. Further, the other reason why any such practice was never promoted was mainly because it would have not served the colonial rulers. They would never want their rights to exhaust in any manner whatsoever since that would be detrimental to their business interests. It is much later that some of these countries moved to form international associations and became bound to treaties and agreements that motivated them to adopt specific modes of exhaustion.

As elaborated in the case of South Africa, many developing countries have amended their patent laws to allow international exhaustion and some are in a process of doing so to enable parallel importation. There is a strong belief that blocking parallel importation will be unfavourable to developing countries. It will maintain high price of the patented products since multiple royalties will be charged resulting in patents acting as non-tariff barriers to trade.201 Parallel imports entering the country would help to keep the price of patented products low under competition and parallel exports of patented products manufactured under license would allow making use of the comparative advantage of manufacturing the product in a low-cost developing country.

Practice of exhaustion of patent rights in some of the fast-growing developing countries leading the group of twenty countries (G 20) bloc in the wto,202 are enumerated hereunder:

4.5.1 Brazil

Brazil’s patent law dates to 1809, a founding member of the Paris Convention in 1882, since then Brazil had always been a member. The present patent law Brazilian Federal Law 9.279/96, came into effect in 1997 after Brazil’s obligation to the trips Agreement was incorporated into the law.203 Brazil allows both civil and criminal action for patent infringement but parallel imports are not considered infringement from criminal action perspective hence can be addressed only by civil action.204

According to Article 42 of the patent law the patent holder can restrict importation by third parties of a product that is made by the patented process and according to Article 43 the patented product can be restricted from being imported by third parties without the consent of the patent holder in Brazil. This clearly shows that Brazil follows the mode of national exhaustion.205 However there are two exceptions wherein parallel imports are allowed. Under Article 68 Sections 3 & 4 of the law, to check abuse of market power if cl is granted under which the person holding the cl imports the patented product from abroad, third parties can also parallel import simultaneously.206

Article 68 (4) states,

In the event of importation, in order to exploit a patent or importation in the preceding paragraph, third parties shall also be allowed to import a product manufactured according to a process patent or a product patent, provided it has been placed on the market directly by the patent owner or with his consent.

This shows that parallel imports can be restricted under national exhaustion mode while international exhaustion can be adopted as a remedy against abuse of market power. Further, parallel imports are also allowed if manufacturing of the patented product under patent would not be economically viable for Brazil.207

In addition to following national exhaustion of patents, it is also possible to restrict parallel imports contractually. In such a case the licensing agreement needs to specifically define the market in which the licensee is authorised to distribute the patented product produced under the licensing agreement. Thus, if the licensee exports the patented product in violation of the licensing agreement, it will be a breach of contract and will not be considered a breach of ip law or an infringement.208 Here it must be noted that unlike many common law countries where similar cases fall under the doctrine of implied licence and a specific notice as to the applicable market in which the patented product is to be given, there is no such requirement under the Brazilian law.209

4.5.2 China

In China, the issue of patent exhaustion has witnessed changes as the Patent Act has been amended from time to time. The present Chinese Patent Act 2008 in its third revision allows international exhaustion of patents. The State Intellectual Property Office (sipo) of China confirmed it,

Article 69(1) Chinese Patent Act provides that where the sale of a patent product or products directly obtained from a patented process is made by the patented or under the authorisation of the patented, any other person may use, offer to sell or import that product.

The provision of international exhaustion has been specifically introduced to address availability of pharmaceutical medicines at lower price. It has never been a matter of contention.210

Historically, the Patent Act of the People’s Republic of China was adopted in 1984 and became effective from 1985. Later it was replaced with the Patent Act of 1992 that again got amended by the Patent Act of 2000. The Patent Act of 1985 or of 1992 did not explicitly prescribe any mode of exhaustion or determine whether parallel imports would be allowed. In Patent Act of 2000, Section 62 that determined patent exhaustion by reference to treatment of parallel imports was not deleted. It was changed to Sections 63 and 11 was revised again to delete paragraph 3 and the subject content of this paragraph incorporated in paragraphs 1 and 2. It read,

After the grant of the patent right for an invention or utility model, except as otherwise provided for in the law, no entity or individual may, without the authorisation of the patentee, exploit the patent, that is, make, use, offer to sell, sell or import the patented product; or use the patented process or use, offer to sell, sell or import the product directly obtained by the patented process, for production or business purposes.

After the grant of the patent right for a design, no entity or individual may, without the authorisation of the patentee, exploit the design, that is, make, sell or import the product incorporating its or his patented design, for production or business purposes.

The above language led to confusion as some interpreted it in favour of national exhaustion since importation without authorisation was not possible, while others interpreted it as international exhaustion since if it was legitimate in the country of source it could be imported.211 Further, Section 12 required a written license contract between the patent holder and the licensee, where the licensee of the patent needed to draw up a contract for the particular jurisdiction, thus international exhaustion was rather difficult to establish in reality. However, the presence of Section 63 related to parallel trade continued causing anomaly and confusion as to the exact exhaustion mode followed in China.212

The Chinese Patent Act of 2008 clearly introduced international exhaustion of patents as an exemption from infringement. It states that patented products or products made by patented process can be imported once such products are sold by the patent owner or its authorised companies or individuals without being considered as infringement of the patent.213 It is only very recently on 28th March 2018 in a landmark judgment deciding Iwncomm v Sony, the Beijing High Court confirmed that exhaustion of patent was applicable only for product patents. In this Standards Essential Patent (sep) related infringement case it ruled against international exhaustion defence raised by Sony even when explicit language of the same was in the Patent Act 2008.214

4.5.3 India

India’s Patent Law dates to 1856 when it was introduced by the British and later modified by the legislation of 1911.215 Subsequently after India attained independence there were number of studies commissioned by the Indian government that resulted in the Patent Act of 1970.216 This patent law focused on developing a strong indigenous pharmaceutical industry to cater to the needs of the huge Indian poor population. Backed by the Indian drug policy of 1978, the patent law achieved its goal by successfully establishing a strong generic pharmaceutical industry and provide easy access to medicines.217 In the past 15 years there have been some amendments to the Patent Act 1970 to cater to the industrial needs of the country and to bring it in line with the nation’s commitment to international rules, regulations and treaties.

Under the Patent Act 1970 that came into effect in 1971, India did not have any specific exhaustion regime since the law was inherited from the British where there was no practice of the exhaustion of iprs. However, since the Indian Patent law of 1970 was similar to the English Patent Act of 1949, it can be presumed that the doctrine of implied licence as practiced in UK would have prevailed in India too. It is not possible to ascertain the mode of exhaustion, since there is no precedent related to exhaustion under this patent law. The first amendment to the Indian Patent Act 1970, in 1999 was mainly done to introduce the exclusive marketing rights (emr) for product patent applications in line with India’s trips commitment. There was a strong opinion persisting in the country that pharmaceuticals would cost more once product patent was introduced.218 By the time India moved The Patent (Second) Amendment Bill of 1999, international public health issues were being debated in the country as well as in the international forums. The Bill was referred to a joint select committee of eminent professionals, academics and it also solicited views from the general public at large.219 There were long and serious discussions before India finally passed the Bill.

Meanwhile the wto ministerial meeting at Doha had already come out with the Doha Declaration on Public Health that confirmed number of flexibilities that are available to the wto members.220 One such discussion was on the exhaustion doctrine that applied to patents and the members confirmed the possibility of using any mode of exhaustion that the country deemed fit. Subsequently, the Patents (Amendment) Bill 2002 introduced specific provision for following international exhaustion. The concerned clause that introduces international exhaustion is Section 107A(b) and it states,

importation of patented products by any person from a person who is duly authorised by the patent holder to sell or distribute the product, shall not be considered as an infringement of patent rights.

The Patent (Second) Amendment Act 2002 got the President’s assent on 25th June 2002 and after operationalisation of the Patent Rules it became effective from 2003.

It must be noted that the wording of this particular section of the law being restrictive, it went against the purpose of the provision, practically making it impossible to allow international exhaustion in letter and spirit as was intended. Let us consider a hypothetical case of why it would have been impossible to allow international exhaustion under the given language of the statute. ‘A’ holds the patent for a particular product in India and Nepal and sells the patented product at Rs. 500 in India and through its authorised licensee in Nepal at Rs. 100. To enable ‘Max Bazar’ a retail store in India, buy the product in Nepal at the local price at Rs. 100 and then import it to India to sell at a price less than Rs. 500 at which it was being sold by the patent holder in India under this provision of the Indian law, Max Bazar would need to buy it only from the seller authorised by the patent holder (importation of patented products by any person from a person who is authorized by the patent holder). It is obvious that as soon as the patent holder realised that its patented product was being sourced from its authorised licensee in Nepal at a lower price, it would restrict the licensee from exporting it to India. If a third party bought the patented product from the Licensee in Nepal and exported to Max Bazar for sale in India, that would not qualify under Section 107A (b) since the third party would not be a person ‘authorized by the patentee’.221 Since the law did not specify who was a ‘duly authorised’ person it would lead to unnecessary confusion and the above analysis was the only legal analysis that would perhaps deem merit.

To address this problem, Section 107A(b) was amended in the Patents (Amendment) Act 2005 and the language was changed to give effect to international exhaustion and enable parallel importation. Post amendment of the Act, Section 107A(b) read,

importation of patented products by any person from a person who is duly authorised under the law to produce and sell or distribute the product, shall not be considered as an infringement of patent rights.

This clearly denotes that the third party need not be compelled to buy the patented product from the patent holder or his authorised representative but any third party who can legally sell it in the country.222

In application of the amended section of the Act in today’s scenario, if we take the same hypothetical case where ‘A’ holds the patent for a particular product in India and Nepal and sells the same, patented product at Rs. 500 in India and through its authorised licensee in Nepal at Rs. 100. Max Bazar in India, can buy the product in Nepal at the local price (Rs. 100) either from the authorized retail outlet of the patent holder or from any other third-party seller in Nepal who had bought it from the authorized retail outlet in Nepal. However, if the Indian patent holder does not hold a patent in Nepal for the product because either because it has not filed for patent or if the Nepalese Patent law does not mandate patents (under the trips exemption for least developed nations), generic versions of the patented product cannot be imported to India since the patent in India would be valid while the generic version would be legitimate only in Nepal. In any case, the patent right would not exhaust given that the product would not be protected under a patent. For the patent to exhaust, the patent needs to exist in the first case, hence there cannot be a case of parallel importation of generics into India. The patent holder would have the legal right to restrict entry of such imports through infringement action.

It might be interesting to note that in the amended language of the Section, the word ‘produce’ have been added. Often it is noticed that manufacturers of patented products prefer to manufacture the products in countries where the establishment costs are low and hence allow considerable comparative advantage. While in many others which do not have the manufacturing capacity, the patent holder might prefer to export at a lower price mainly to capture the market through price differentiation. Although it is not clear if there is any specific reason for inclusion of the word ‘produce(‘… authorised under the law to produce and sell …’) emphasis added, in the amended section of the patent law, it can be construed to include both that are locally manufactured under license as well as imports (for further re-importation).

The main intention of the amendment was to allow international exhaustion in a manner that patented products could be sourced via parallel importation to reduce costs. It must be noted that the entire process was initiated following the Doha Declaration of wto pertaining to trips and the debate over patented medicines and access to them in developing and least developing countries. In this regard, it is noteworthy to reflect on the political intent of the government as recorded in the parliamentary debates. Mr. E.V.K.S. Elangovan, Minister of State for Commerce and Industry, while answering a question on the probable impact of the new patent legislation on drug prices, specifically refers to the intent being, to allow parallel importation of patented medicine,

As a result thereof, the existing law effectively balances and calibrates intellectual property protection with public health, national security and public interest concerns.

The existing law has effective provisions: … d. The provision relating to parallel import of patented product for ensuring availability of patented products at cheaper price to the consumers. [Section 107A(b)].223

Further, there was no specific limitation or qualification as to when parallel imports might be allowed. This means that parallel imports would be allowed by the practice of international exhaustion hence it would not be possible to restrict parallel imports contractually, i.e. statutory provisions would supersede contractual obligations. It might also follow the doctrine of implied licence wherein parallel imports would be allowed only if it was not restricted contractually through specific notice. In such a case where the sale of the patented product was restricted through contract i.e. conditional sales, the intention of giving effect to international exhaustion and as such allowing parallel imports would fail. Another interpretation is that the Section 107A(b) enables not only international exhaustion but parallel importation from a country per se, i.e. if the product has been legitimately produced in that country. This means that parallel importation would prevail irrespective of the fact that such imports have been subjected to price control or compulsory licensing (cl) or where the patent does not even exist as might legitimately be the case in a least developed country because of the language used in the section, i.e. “ … legitimately placed in the market”.224

Until date there has been a single patent case heard by the Delhi High Court in Strix Ltd. v. Maharaja Appliances Ltd. that has been linked to exhaustion of patent but unfortunately without much clarity on the mode of exhaustion. The plaintiffs in this case, Strix held a patent for kettle heaters with sensors and were selling them in India, including to the defendants, Maharaja.225 Later the defendants on finding cheaper kettles allegedly of improved quality, started importing and selling them until restrained by the plaintiffs through a suit for infringement, before the Delhi High Court.

The defendants argued that the Chinese imports were patented hence exhausted under Section 107A (b). Here it is important to note that the patents allegedly held by the Chinese supplier was not licensed by Strix or held by any of its international subsidiaries hence there was no parallel existence of rights that could have exhausted. Surprisingly the defendants claimed parallel existence of patents on same invention in China by a different owner and initiated revocation of the patent held by the plaintiff in India. However, since the defendant could not substantiate its case even by presenting the valid patent number, the Single Bench at the Delhi High Court granted injunction in favour of the plaintiff. The case attracted public interest with the intention to ascertain the mode of patent exhaustion in India and a ‘Public Interest Litigation’ (pil) was filed before the division bench of the Delhi High Court but it was not entertained for lack of locus standi. The court considered it to be a private dispute and refused to admit it in public interest as a pil.226

In fact the above case has proved wrong the interpretation that irrespective of the existence of patent in the importing country, if a parallel product is legally put in the exporting country, it can be imported to India under Section 107A(b).227 At the same time this case does not establish that if Strix held a patent in China subsequent to the Indian patent or vice versa in India and the defendant or any other third party imported it from China leveraging lower costs, the exhaustion defence would not be allowed.

4.5.4 South Africa

Like many other commonwealth countries, South Africa does not explicitly define its exhaustion regime. Under the Medicine Act 1965, provision for parallel importation was made but interestingly Section 45(2) of the Patent Act did not specifically allow international exhaustion. However, a reading of Section 45 of the South African Patent law can be interpreted in favour of implied licence.228 But the issue of parallel imports of patented pharmaceuticals became a highly debated one and attracted a lot of international media exposure not because of its patent law but because of another law. Given the fact that South Africa is plagued with number of diseases, there is a specific law to control medicines and related substances and their availability at affordable prices. This law was first promulgated in 1965 and amended from time to time. The Medicines and Related Substance Amendment Act 1997 was successfully brought in by the Health Minister Ms. Nkosazana Dlamini-Zuma and President Nelson Mandela gave his assent to it.229 The Act included provisions under which the Health Minister could ascertain whether parallel importation of medicines and related substances would be allowed and if so, the parameters binding such imports.230 Different provisions of the law allowed different measures to make medicines and related substances available to the South African people at an affordable price.

The judicial interpretation in Stauffer v Agricura confirmed national exhaustion. This raised economic concerns and subsequently in May 2003 pharmaceutical companies in consultation with the Federal government of South Africa, introduced Section 15C along with supporting Regulation 7. This enabled parallel importation of medicine on basis of a permit under certain criteria and in June 2003 the guidelines for allowing parallel importation of medicines, was confirmed. This is a specific case of evolution of the patent exhaustion regime in a common law country from non-exhaustion to national exhaustion and then to international exhaustion (restricted to certain sectors and subject to certain conditions).231

This included not only parallel imports but also taking other measures like cl. Section 15C of the Medicines and Related Substance Amendment Act 1997 specifically provided for parallel imports and became a matter of contention between the South African government and the government of US. Section 15C states,

The Minister may prescribe conditions for the supply of more affordable medicines in certain circumstances so as to protect the health of the public, and in particular may

  1. (a)notwithstanding anything to the contrary contained in the Patents Act, 1978 (Act No. 57 of 1978), determine that the rights with regard to any medicine under a patent granted in the Republic shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine, or with his or her consent;
  2. (b)prescribe the conditions on which any medicine which is identical in composition, meets the same quality standard and is intended to have the same proprietary name as that of another medicine already registered in the Republic, but which is imported by a person other than the person who is the holder of the registration certificate of the medicine already registered and which originates from any site of manufacture of the original manufacturer as approved by the council in the prescribed manner, may be imported;
  3. (c)prescribe the registration procedure for, as well as the use of, the medicine referred to in paragraph (b)232

40 pharmaceutical companies got together under the banner of the Pharmaceutical Manufacturers’ Association of South Africa (pma) and moved against the Act before the South African High Court in Pretoria.233 Among many allegations, one was that Section 15 C of the Medicines and Related Substance Amendment Act 1997 overrides the South African Patent Act of 1978 and thus is in violation of the trips Agreement and the language used in drafting this section of the Act was objectionable. They challenged the constitutional validity under Article 231(2) and (3) of the amendment alleging that it was based on an impermissible delegation of powers from the legislative to the executive branch of government.234

The matter was not just brought in before the national court but the pharmaceutical industry lobby managed to put diplomatic pressure on South Africa through the government of US. The ustr designated South Africa as a ‘Special 301 Watch List’ country on its annual review of iprs both in 1998 and 1999 stating that it lacked adequate iprs protection. To exert additional pressure, the US White House declared that the four items that South Africa had requested preferential treatment under the Generalised System of Preferences (gsp) would be suspended because of South Africa’s laws on iprs.235

The pharmaceutical companies strongly opposed the South African government and took this stand against the particular law, not only to influence their interpretation of Article 6 of the trips Agreement but also to create a precedent that will discourage other countries to opt for parallel imports.236 But ironically the language of the particular section of the law was in fact not a creation of South African drafters in the government but was provided to the South African government by the wipo Committee of Experts.237 Further, the interpretation of Article 6 of the trips Agreement in relation to exhaustion of iprs was also unbalanced since this Article did not compel any member country to follow national exhaustion. The case was widely publicised and there was a strong public opinion against the pharmaceutical industry. Finally, the pharmaceutical companies withdrew the case unconditionally in 2001. Till date South Africa follows international exhaustion in case of pharmaceutical substances as provided under this law and the common law practice shows that in general the country follows implied licence (although there is no specific mention of this anywhere).

This study shows that the exhaustion principle did not develop in a uniform manner in different jurisdictions of the world. Some followed the exhaustion principle whereas some others followed the exhaustion principle with variations, while some tried to control movement of the patented product after sale, through contracts and some did not have any system at all. With increased participation in international trade, linkages between most of the legal jurisdictions, the need to establish a common exhaustion principle is important. International exhaustion can play a central role of balancing iprs on one hand and free trade on the other where customer benefits is paramount.

4.5.5 Indonesia

The first Indonesian post-independence Patent law is quite recent, replacing the 1910 law of patents and Regulation of Industrial Property of 1912, introduced in 1989 and became effective in 1991.238 The Law excluded inventions related to the production of food and beverages, new types of animals or plants and methods of treating animals and humans. It restricted the validity for 14 years’ tenure renewable for another 2 years and mandated working of the patent locally.239 The Act allows not only parallel imports of patented medicines but also generics.240 Further the explanatory memorandum allows what is mentioned as ‘copy products’, referring to generics rather than infringed copies.241 The provision of ‘copy products’, instead of providing clarity sometimes resulted in confusion with counterfeits although the drafters never intended so.242

Indonesia enacted a new patent law that came into force in August 2001.243 In the amended law it removed reference to ‘copy products’ but generally remained silent on exhaustion or treatment of parallel imports. However, given that patent violations are actionable both by civil suit and criminal prosecution, the law provided specific reprieve from criminal action in cases of parallel import of pharmaceutical products. Article 135 states,
  1. (a)Import of a pharmaceutical product which is protected by patent in Indonesia and sold in a country by the rightful patent holder under the condition that the said product is imported in accordance with existing laws and regulations.

Hence remains without any changes in the new amendment of 2016.244

Unfortunately, instead of providing clarity, this has still not removed confusion as to the meaning of the exemption, whether it means that no criminal action can be taken but civil action would be allowed or parallel imports would not be considered as infringement. So far Indonesia had been more a source of parallel exports rather than parallel imports so the issue has not been litigated. However, if the trend reverses and cheaper parallel imports are available, there might be disputes and it is to be seen how the courts would interpret Article 135(a) in terms of allowing or restricting parallel imports into Indonesia.

4.5.6 Malaysia

The British controlled the administration of iprs in what was known as ‘The Straits Settlements’ (Penang, Malacca and Singapore) by re-registration of patents for the region after they were granted in the UK. As a result, even the applications from the three States needed to be filed and subsequently granted in the UK.245 With passage of time an independent ip regime was introduced based on the UK model and The Patent Act of 1983 (Act 291) was enacted. This law governs patent issues in Malaysia effective since 1986 and was amended in 2000. The amended law came into effect in 2001 and replaced the old one with the main aim to address the issue of access to patented pharmaceuticals including hiv/aids drugs at reasonable price.

The Act indirectly touches upon exhaustion but does not define market as to whether it is national or international, hence it is difficult to conclude whether the mode of exhaustion would be national exhaustion or international exhaustion. However, under Section 43(1) of the Patent Act it is possible for the patent holder to restrict the licensee from further exporting the product or binding the market of the product via licence contract. Section 43(1) states,
  1. (1)In the absence of any provision to the contrary in the licence contract, the licensee shall be entitled to do any or all of the acts referred to in paragraph 19a), and subsection 36(3), within the whole geographical area of Malaysia without limitation as to time and through any application of the invention.246

Here it must be noted that Section 36(3) provides all the rights of the patent holder. The provision in this Section only elaborates the rights that would flow to the licensee unless contractually restricted. So, a patent holder can authorise anyone to sell under this provision. It however does not restrict third parties to buy the patented product in a different country from the authorised seller of the patent holder and then import it back into Malaysia.247

Growing concerns about rising prices of pharmaceuticals in Malaysia and worries about access to drugs for hiv/aids prompted a revision of the patent law to specifically allow parallel imports of patented pharmaceuticals. The Patents (Amendment) Act 2000 came into effect from 1st August 2001 introduced Section 58A, and states

  1. (1)It shall not be an act of infringement to import, offer for sale, sell or use –
    1. (a)any patented product; or
    2. (b)any product obtained directly by means of the patented process or to which the patented process has been applied, which is produced by, or with the consent, conditional or otherwise, of the owner of the patent or his licensee.
  2. (2)For the purposes of this section, ‘patent’ includes a patent granted in any country outside Malaysia in respect of the same or essentially the same invention as that for which a patent is granted under this Act.248 (Emphasis added).

The above provision in the present law thus clearly confirms a move towards international exhaustion of patent rights wherein parallel imports of patented products are allowed.

4.5.7 Singapore

One might question as to why the Singapore has been included in the study on developing countries with high gross national per capita and other parameters that are different from other developing countries.249 However Singapore does not declare itself as a developed country and there is no globally mandated threshold to determine which country is developing and which is developed. Singapore has been included since it is an ideal case of a growing economy that has come out of its third-world shackles. As mentioned earlier, historically iprs in Singapore was directly governed by UK as one of the Straits. Historically, the British introduced patent law in Singapore through the United Kingdom Patents Ordinance 1937 and the patents for protection in Singapore were registered in UK followed by re-registration in Singapore.250

Even after Singapore became independent in 1965, the practice of registration of patents in UK under the UK patent Act 1977 and then its re-registration in Singapore continued. Later it is only in 1994 things changed and the new patent law became effective from 23rd February 1995.251 It is interesting to note that although the new law is modelled after the UK Patent Act 1977, it did not opt for a practice of ‘implied licence’. It may be argued that in UK implied license is more a practice that was introduced by common law jurisprudence while interpreting contractual obligations rather than being indoctrinated in any manner of codification. However, it is interesting to note that with time Singapore chose to follow the contrary and opt for international exhaustion as expressed in the consideration of what would entail infringement.

Section 66(2)(g) of the Singapore Patents Act 1995 elaborates what would not be considered as infringement and states,

the import, use, disposal or offer to dispose of, of any patented product, or of any product obtained by means of a patented process or to which a patented process has been applied, which is produced by or with the consent (conditional or otherwise) of the proprietor of the patent or any person licensed by him, and for this purpose, ‘patent’ includes a patent granted in any country outside of Singapore in respect of the same or substantially the same invention as that for which a patent is granted under this Act and ‘patented product’, ‘patented process’ and ‘licensed’ shall be construed accordingly. (Emphasis added).252

This text makes it clear that international exhaustion is preferred whether the patent holder manufactures and/or markets the product directly, or the patented product is manufactured and/or marketed by the licensee. Further, the market may be the home market of the patent holder or the international market. More important here is the fact that even if the product is manufactured by a party under a cl, it would still exhaust.253

Singapore is the most active patent applicant country among the asean nations and its filings at the United States Patent and Trademark Office (uspto) are also on the rise and from the perspective of trade, the US is the largest foreign investor in Singapore.254 Obviously, Singapore’s option to follow international exhaustion and allow parallel imports was not liked by the US industries with exports of patented products coming from US as also from their licensees in other countries. Parallel imports enabled through international patent exhaustion would restrain their possibility to gain additional market-specific profits hence they were opposed to it. The negotiations between Singapore and US for a fta started and in the detailed provision on iprs, exhaustion was subtly included in the signed text of 6th May 2003.255 Chapter 16 of the fta requires that, there should be means to prevent importation of patented pharmaceutical products that breach licence contracts between the patent holder and the licensee. However, there is no case law on parallel imports. This shows that the fta has been a successful deterrent to restrain parallel imports or managed to keep parallel imports off from litigation.

4.5.8 Thailand

Thailand was never a colony of any other country hence the focus of Thai law in general, addressed indigenous requirements although the common law approach was generally followed until 1924 when there was a shift to civil law system. As a result, while other asean countries adopted their colonial rulers’ patent laws, Thailand did not have any law to protect inventions until as late as 1979.256 This Patent Act of 1979 of Thailand was amended in 1999 mainly to make its law compliant to the trips Agreement. In the previous law there was no specific provision for exhaustion of rights but the new law addressed it.

Section 36(7) of the Thai Patent Act 1999 states,

the use, sale, possession with the intention for sale, offering for sale or importation of a patented product when it has been produced or sold with the authorisation or consent of the patented holder.257

Here consent is expected to include licences beyond borders, thus it can be considered to allow parallel imports.258 However there was lack of clarity as to whether international or national exhaustion mode would be applicable. It was also not clear if the exhaustion would be restricted to only patents and petty patents or would also cover other iprs.259

It is important to note that although it is presumed that parallel imports of patented products are allowed, there is no case law to support this interpretation. In case of trademarks the courts have not been consistent in allowing or restricting parallel imports, and in case where it was restricted, it was so by way of contracts.260 In 1996 Thailand established the Central Intellectual Property and International Trade Court that started functioning in 1997.261 In case of trademarks this court has opined in favour of international exhaustion.262 The Supreme Court also has later confirmed this decision.263 No such decision has come on patents hence one would have to wait and see how the court would interpret the law dealing with conflicts related to parallel imports of patented products.

4.5.9 The Philippines

The Spanish colonial rulers imposed their ip laws in the Philippines, through the Royal Decree of May 1887. Later this continued under the treaty of transfer of sovereignty between Spain and the USA until 1913 before being replaced by US patent law. The Patent law of 1947 (Republic Act No. 165) had provisions that were contemporary to many industrialised nations with validity of 17 years. An amendment was introduced in 1953 to include second-tier utility models with 5 years’ validity. Later in 1997 the ip laws were strengthened and ‘The 1997 Intellectual Property Code’ with 20 years validity for patents and 7 years’ validity for utility models were introduced.264

In the present day, the Intellectual Property Code of the Philippines is the relevant ip law, providing necessary protection and administration of iprs.265 There is nothing in this code that allows or disallows exhaustion or deals with parallel imports. Section 71 of the code restricts importation of patented products without the authorisation of the patent holder. This is interpreted to be a restraint on importation of counterfeits however it is not clear whether parallel imports would be considered as counterfeits.266

The courts in the Philippines have considered the issue of parallel imports from the point of contract law rather than ip law. Given the absence of specific exhaustion provision in the statute, it depends on any specific reference of importation from a licensee who has consent from the patent holder in determining the market for the patented product. A prominent case in this regard is the ‘Mayfair’ case before the Supreme Court of the Philippines where the petitioner was party to an exclusive distributorship contract with the House of Mayfair in England (dating back to 1987).267 The respondent bought the product from the House of Mayfair through fnf trading in West Germany and sold it in the Philippines.268 The Court restricted the parallel importation on the basis of the exclusive contract and not on the basis of ip law, thus not considering it as an infringement but as a breach of contract.

In yet another case in 1995, the Court of Appeals relied on the Mayfair case and restricted parallel imports.269 In this case, Ariancorp was the exclusive distributor of ‘Murata’ fax machines in the Philippines and U–Bix imported different models of the Murata fax machine and sold it in Philippines. Even in this case, the court relied on the exclusive distributorship contract rather than ip law. However as far as policy issue is concerned, there is a growing trend in the government to allow parallel imports, especially in the area of pharmaceutical products.

The Republic Act No. 8293 or the ip Code allows exhaustion of patents specifically as a limitation to patent rights. Section 72 states,

Limitations of Patent Rights – The Owner of a patent has no right to prevent third parties from performing, without his authorization, the acts referred to in Section 71 hereof in the following circumstances:

72.1 Using a patented product which has been put on the market in the Philippines by the owner of the product, or with his express consent, in so far as such use is performed after that product has been so put on the said market; (Emphasis added).

The provision tends to follow the international exhaustion mode where once the patented product is distributed in Philippines either directly by the patent holder or by the licensee then further distribution cannot be restrained through enforcement of the patents.270

4.5.10 Vietnam

In Vietnam, patent law is evolving and in the process of synchronising with international standards.271 Patents are not only governed by patent law but also by the Civil Code of 1995 under government decrees and circulars and are treated in conjunction. The present law does not mention about exhaustion of patent rights, neither is there a practice of referring to earlier precedents for guidance.272 According to Section 796 of the Civil Code a patent owner has exclusive rights over the patented product to use it, transfer the right to others and protect from infringers. Section 34(I) of the Decree 63/cp of 1996 further confirms that the patent rights not only allow manufacture of the patented products, but also allows other rights like that of advertising, offering for sale and distribution and importation. However, it is silent on the rights of third parties to import from a second source of authorised patented products.

On the other hand, regarding licenses and importation, territoriality of the licence is accepted but at the same time licences cannot contractually restrict the licensee from exporting the product.273 Hence even in case of technology transfers, the transferor cannot contractually restrict the transferee from exporting the products manufactured under licences nor the quantity unless the importing country restricts it through its municipal laws.274 This means that the law allows parallel exports although it is silent on parallel imports. If a product has already been marketed by the owner of the patent inside the country or internationally, then its use by a third party would not be considered as infringement.275 This can however be deduced as international exhaustion allowing parallel imports.

There is a growing trend to allow parallel imports more specifically for at least pharmaceuticals drugs to keep their price low. However, given that after opening of Vietnam’s economy, there has been considerable interest among pharmaceutical multinational companies to market their products in Vietnam, there is strong resistance from the global industry towards international exhaustion. It is interesting to note that the ‘Agreement between the United States of America and the Socialist Republic of Vietnam on Trade Relations’, popularly known as US-Vietnam fta, does not specify any exhaustion mode to be followed. Chapter 2 of the agreement elaborates ‘Intellectual Property Rights’ and Article 7 provides for Patents in details but completely omits any mention of exhaustion of patents or refers to parallel importation.276

The comparative study of independent patent laws in the asean countries in this chapter shows that in most cases, patent law or industrial property law in general is a recent introduction. It will thus take time to absorb different doctrines and concepts of the law into their legal system. The process started with trips as all these countries have become part of the international regime and are forced to have a quick transit from their past. On the other hand, reality also presents that the socio-economic growth pattern of the different asean members are considerably diverse.277 Hence the nature of innovation also varies from one member to another significantly.

Considering the need for industrial progress, asean has prepared an action plan to move ahead on issues related to iprs through an Action Plan.278 The asean Intellectual Property Action Plan is designed to co-ordinate the efforts of each asean member and enhance collaboration among all members as well as establish regional cooperation in this field.279 The ultimate goal is to involve dialogue partners of asean as well as civil society organisations in the quest for social, economic and technological development. The Action Plan has identified simplification and harmonisation of ip laws of the Members. In this regard, considering a harmonised exhaustion of iprs policy allowing international exhaustion might be valuable from the perspective of asean’s role in multilateral trade.

128

Warwick Rothnie, “Parallel Imports”, Sweet & Maxwell, pg. 112, 1993.

129

Khan Zarina and Sokoloff Kenneth, “Historical perspectives on Patent Systems in economic development”, in Netanel Neil Weinstock (ed.), “The Development Agenda Global Intellectual Property and Developing Countries”, Oxford University Press, pg. 216, 217 (215–243), 2009.

130

Ibid at 50, pg. 45.

131

In Crane v. Price, 1842, mentioned in 1 Webster’s Patent Cases 377, Webster’s comments (413) were, “For a particular Article … Hence it is obvious, that a person legally acquires, by licence or by purchase, title to that which is the subject of letters patent, he may use it or improve upon it in whatever manner he pleases; in the same manner as if dealing with property of any other kind”.

132

In Betts v. Willmott, 1871 l.r. 6 Ch. App. 239, Lord Hatherley L.C. stated, “Unless it can be shewn … that there is some clear communication to the party to whom the Article is sold, I apprehend that in as much as he has the right of vending the goods in France, or Belgium or England, or in any other quarter of the globe, he transfers with the goods necessarily the licence to use them wherever the purchaser pleases. When a man has purchased an Article he expects to have control over it and there must be some clear and explicit agreement to the contrary to justify the vendor in saying that he has not given the purchase his licence to sell the item, or to use wherever he pleases as against himself”.

133

Ibid at 4.

134

Brown Jeremy, “International Exhaustion in Europe”, Les Nouvelles, pg. 108, September 1997.

135

Société Anonyme des Manufactures de Glaces v Tilghman’s Patent Sand Blast Company (1883) 25Ch. D1 (ca).

136

Sothers Christopher, “Patent Exhaustion: the UK Perspective” in “Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law”, Hart, Oxford, pgs. 40, 41, 2007.

137

Dunlop v Longlife (1958) r.p.c. 473 and Goodyear v Lancashire Batteries (1958) l.r. 1 r.p. 22 at 35.

138

Beecham Group Ltd. v International Products Ltd., (1968) r.p.c. 129 and fsr 162.

139

Ibid at 102, pg. 117, 2016.

140

United Wire Ltd. v Screen Repair Services (Scotland) and others, House of Lords, 4 All E R 353 (2000).

141

Ibid at 52, pg. 16, (13–23).

142

Reichgericht in Zivilsachen (rgz) 50, 362 – “Duotal”, cited by Christopher Heath, ibid at 141, pg. 16.

143

See Chapter 4.2 of this book for detailed discussion.

144

Ibid at 60, pg. 805.

145

Ibid at 60, pg. 809.

146

Kodak v Jumbo-Markt ag, 4C.24/1999/rnd, 7 December 1999 on appeal from, Zurich Commercial Court, “Kodak Photographic Material” case, 23 November 1998.

147

Ibid at 5, pg. 260–262. Also see, Cottier Thomas and Oesch Matthias, “International Trade Regulation”, pg. 953–958, Cameron May & Staempfli, Bern & London 2005.

148

Correa Carlos, “International Exhaustion of Rights”, in “Trade Related Aspects of Intellectual Property Rights A commentary on the trips Agreement”, Oxford University Press, pg. 79, 80, (78–90), 2007.

149

Article 9a: Federal Acts of Patents for Invention (Patents Act PatA) as on 1st April 2019. Availableat,www.admin.ch/opc/en/classified-compilation/19540108/201904010000/232.14.pdf.

150

Ibid at 147.

151

Here it must be noted that the common exhaustion mode in patent law followed throughout Europe is more a result of case laws introduced by the ecj eg., Case 78/70, Deutsche Gramophone ecr 487 (1971), Case 15/74, Centrafarm v. Sterling Drug ecr 1147 (1974) and was not through codification. There were repeated efforts to harmonise the Patent Laws in within the ec through codification and as a result of which the two Community Patent Conventions were introduced. However, since Conventions are not based on the ec Treaty, they were not adopted pursuant to ec legislation procedures and they never became enforceable since all members of the ec did not ratify them.

152

Ibid at 106, pgs., 16 (3–22).

153

Kieff Scott, “Quanta v lg Electronics: Frustrating Patent Deals by taking Contracting Options off the Table?”, John M. Olin Program in Law and Economics, Stanford Law School, Working Paper No. 366, pg. 321, September 2008.

154

Adam v Burke, 84 U.S. 453 (1873).

155

Bloomer v. McQuewan, 14 How. 539.

156

Bloomer v. McQuewan, 14 How. 539.

157

Holiday v. Mattheson, 24 Fed. 185–1866 (c.c.s.d.n.y. 1885).

158

Rothchild John, “Exhaustion of intellectual property rights and the principle of territoriality in the United States”, in Calboli Irene and Lee Edward (eds.), “Research handbook on Intellectual Property Exhaustion and Parallel Imports”, Edward Elgar Publishing Ltd., pg. 241, (226–245), 2016.

159

Boesch v. Graff 133 US 697 (1890).

160

26 Staat. at L 209 dated July 2, 1890.

161

E. Bement & Sons v National Harrow Co., 186 U.S. 70, 91 (1902).

162

United States v Univis Lens Co., 316 U.S. 241 (1942). In this case the Supreme Court upheld the judgement of the district court and stated, “The patentee may surrender his monopoly in whole by the sale of his patent or in part by the sale of an article embodying the invention. His monopoly remains so long as he retains the ownership of the patented Article. But the sale of it exhausts the monopoly in that Article and the patentee may not thereafter, by virtue of his patent, control the use or disposition of the Article”. The apex court had confirmed in this case that there was no violation of the Sherman Act and the features of the contracts do not come under the exceptions of the Millers-Tyding Act in any way.

163

Sanofi S.A. v. Med-Tech Veterinarian Products Inc. 565 F. Supp. 931 (1983).

164

Turton Michael and Mills Aleta, “The first sale doctrine and parallel imports in the United States after Jazz photo”, Comments 3 e.i.p.r., pgs. 149, 150, (148–152) 2004.

165

35 usc Sec 271 states, “(g) Whoever without authority imports into the United States or offers to sell, or uses within the United States a product which is made by a process patented in the United States shall be liable as and infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the non-commercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after- (i) it is materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another product.”

166

Jehoram Herman, “Prohibition of Parallel Imports through Intellectual property Rights”, 30 (5) iic pg. 150, 1999.

167

See, https://ustr.gov/sites/default/files/uploads/agreements/fta/morocco/asset_upload_file797_3849.pdf.

168

Ibid at 5, pg. 177, (177–187).

169

Barrett Margreth, “A Fond Farewell to Parallel Imports of Patented Goods: The United States and the Rule of International Exhaustion”, pgs. 571–577, Issue 12 e.i.p.r. 2002. See discussion on Jazz Photo Corp. V. International Trade Commission, 264 F. 3d 1094 (Fed. Cir. 2001), U.S. Supreme Court No. 01–1158, filed February 6, 2002.

170

Ibid at 169.

171

Quanta Computer, Inc., et al. v. lg Electronics, Inc. (No. 06–937) 453 F. 3d 1364, reversed (Supreme Court, 9 June, 2008).

172

Ibid at 162. In this case the Supreme Court upheld the judgement of the district court and stated, “The patentee may surrender his monopoly in whole by the sale of his patent or in part by the sale of an Article embodying the invention. His monopoly remains so long as he retains the ownership of the patented Article. But the sale of it exhausts the monopoly in that Article and the patentee may not thereafter, by virtue of his patent, control the use or disposition of the Article”. The apex court had confirmed in this particular case that there was no violation of the Sherman Act and the features of the contracts do not come under the exceptions of the Millers-Tyding Act in any way.

173

Paul John, Freeman Kia, Gerstenblish Bart and Underwood Jessica, “The U.S. Supreme Court clarifies Patent Exhaustion”, Les Nouvelles, pgs. 154, 155, 156, (149–157), September 2008.

174

Painchod Francois and Cebron Claire, “Overview of the implications of the Quanta Computer Inc. v lg Electronics Inc. Decision on the drafting of License Agreements from a Canadian Perspective”, les Nouvelles pgs. 99, 100, (99–104), June 2009.

175

Ibid at 171.

176

Verbraeken Erik, “Recent U.S. and EU developments: The Exhaustion Theory is not yet exhausted”, les Nouvelles, pg. 157 (148–161), September 2009.

177

Ibid at 171.

178

Bowman v Monsanto Co., 133 S. Ct. 1761, 1766 (2013).

179

Monsanto Co. v. Bowman, 657 F.3d 1341 (Fed. circ. 2011).

180

Ibid at 59, pgs. 295, 296.

181

Ibid at 106, pgs. 20, 21 (3–22).

182

Ibid at 171.

183

The Uruguay Round Agreements Act, Pub. L. No. 103–465, § 532, § 533, 108 Sat. 4809, 4983–90, 1994.

184

Shanker Daya, “Brazil, the Pharmaceutical Industry and the wto” 5 (1) The Journal of World Intellectual Property Law pgs. 74, (53–104) 2002. “Other areas of U.S. intellectual Property law are unaffected by the Agreement on trips. For example, the Agreement does not require any change in current U.S. law or practice with respect to parallel importation of goods that are the subject of intellectual property rights”.

185

Frankel Suzy and Gervais Suzy, “International intellectual property rules and parallel imports”, in Calboli Irene and Lee Edward (eds.), “Research handbook on Intellectual Property Exhaustion and Parallel Imports”, Edward Elgar Publishing Ltd., pgs. 86, (85–105), 2016.

186

In the matter of “Certain Digital Models, Digital Data and Treatment Plans for Use in Making Incremental dental Positioning Adjustment Appliances, the Appliances Made Therefrom and Methods of Making the Same”, Inv. No. 337-ta-833, April 10, 2014.

187

Impression Products Inc. v. Lexmark International Inc., 137 S Ct. 1523 (2017). Available at, https://www.supremecourt.gov/opinions/16pdf/15-1189_ebfj.pdf.

188

Ibid at 5, pgs. 253–258.

189

Kaunpoth Jakrit, “Intellectual Property Protection after trips: An Asian experience” in Mallon Justin and Lawson Charles (eds.), “Interpreting and implementing the trips Agreement Is it Fair?” Edward Elgar Publishing Ltd., pgs. 85, 86, (71–96), 2008.

190

Heath Christopher, “From “Parker” to “bbs” – The Treatment of Parallel Imports in Japan”, 24 (2) iic, pgs. 182, 1993.

191

Kawaguchi Hiroya, “Exhaustion of Patent right” in “The Essentials of Japanese Patent Law”, Kluwer Law International, pgs. 64, 65, 2007.

192

Brunswick Corp. v Orian Kogyo Kabushiki Kaisha (1969), 1 Mutai / Saishu 160, Osaka District Court, 9th June, 1969.

193

Tokyo District Court’s decision of 29th May, 1965 in Parker I case.

194

Tokyo District Court’s decision of 7th December, 1984 on the Lacoste case is worth mention.

195

Tokyo District Court’s decision in bbs Wheels, Wa-No. 16565 of 1992.

196

Tokyo High Court’s decision in bbs Wheels, Ne-No. 3272 of 1994.

197

Naoko Nanao, Takahiro Koyama and Hiromi Sudo, “Decisions on Parallel Imports of Patented Goods”, The Journal of Law and Technology, 1996.

198

Supreme Court of Japan decision in bbs Wheels, Wo-No. 1988 of 1997.

199

Matsushita Mitsuo, “Issues Regarding Parallel Importation of Trademarked and Patented Products and Competition Policy in Japan”, in Cottier Thomas and Mavroidis Petros (eds.), “Intellectual Property: trade, Competition and Sustainable Development”, The Michigan University Press, pg. 193, 2003.

200

Ibid 198.

201

Xintian Yin, “Parallel Importation as viewed from the Chinese Patent Law”, 2 China Patents & Trademarks, pg. 28, (25–28) 2001.

202

The ‘fast growing developing countries’ in this text refers to the leading countries of the G 20 bloc, namely Brazil, China, India and South Africa (G 20 comprises of twentyone countries – Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Phillipinnes, South Africa, Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe).

203

Barbosa Denis, “The Brazilian Legal System” available at https://www.dbba.com.br/wp-content/uploads/empresarial09.pdf.

204

Article 184.

205

See Report by aippi on Brazil’s Exhaustion mode based on their questionnaire available at: https://www.aippi.fr/upload/Totonto2014/sumrep_q240_e_120814.pdf. Also see wipo Standing Committee on the Law of Patents, wipo scp/21/7 October 6, 2014. Also available at http://www.wipo.int/edocs/mdocs/scp/en/scp_21/scp_21_7.pdf. Please note that due to unavailability of any details on the Brazilian Patent Law in English, the aippi questionnaire and the wipo Secretariat document are the main source of information.

206

Ibid at 203.

207

See Report by aippi on Brazil’s Exhaustion mode based on their questionnaire available at: https://www.aippi.fr/upload/Totonto2014/sumrep_q240_e_120814.pdf. Also see wipo Standing Committee on the Law of Patents, wipo scp/21/7 October 6, 2014 (53–104). Also available at http://www.wipo.int/edocs/mdocs/scp/en/scp_21/scp_21_7.pdf. Please note that due to unavailability of any details on the Brazilian Patent Law in English, the aippi questionnaire and the wipo Secretariat document are the main source of information.

208

Ibid at 203.

209

Ibid at 203.

210

Bailey Christopher and Wang Lucy, “Exceptions and Limitation”, in Luginbuehl Stefan and Ganea Peter (eds.), “Patent Law in Greater China”, Edward Elgar Publishing Ltd., pg. 128, 129, 296, 297, 2014. Also see, Si Xiangjun (Jay) and Wang Stephanie, “Chinese Patent-Law and Implementation Amendments Bring Key Changes, Interpretive Challenges”, Davis Wright Tremaine llp. Available at, https://www.dwt.com/advisories/Chinese_PatentLaw_and_Implementation_Amendments_Bring_Key_Changes_Interpretive_Challenges_02_22_2011/.

211

Yu Xiang, “Exhaustion and Parallel Imports in China” (The Patent Act of 2000, adopted on 25th August 2000, entered into force on July 2001 reproduced in English); 26 European Intellectual Property Review, pg. 26, 2004.

212

Ibid at 211.

213

Ibid at 211.

214

Zhang Hui, Mengling and Yang James, Wolters Kluwer Patent Blog, May 29, 2018. Available at,http://patentblog.kluweriplaw.com/2018/05/29/beijing-high-court-upholds-chinas-first-ever-sep-injunction-iwncomm-v-sony/.

215

Ibid at 2.

216

Baldia Sonia, “Exhaustion and Parallel Imports in India”, Heath Christopher eds., “Parallel Imports in Asia”, Kluwer Law International, pgs. 64, 65, 2004.

217

Dhar Biswajit and Rao Niranjan, “Transfer of Technology for Successful Integration into the Global Economy – A case Study of the Pharmaceutical Industry in India” (1–10), Document No. unctad/ite/ipc/Misc.22, unctad New York and Geneva 2002.

218

Chaudhuri Shubham, Goldberg Pinelopi and Jia Panle, “The effects of extending Intellectual Property Rights Protection to Developing Countries: A case study of the Indian Pharmaceutical Market”, pg. 33, National Bureau of Economic Research Working Paper 10159 Cambridge MA 2003. Available at www.nber.org/papers/w10159. In this paper it is concluded that in certain pharmaceutical medicine segments, “… patent enforcement would result in a total annual welfare loss of U.S. $713 million for the Indian economy.”

219

The Committee on Patents (Second) Amendment Bill 1999.

220

Doha Declaration on the trips Agreement and public health, adopted on 14th November 2001. wto Doc. No. wt/min(01)/dec/2 available at, http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

221

Basheer Shamnad and Kochupillai Mrilani, “’Exhausting’ Patent Rights in India: Parallel Imports and trips Compliance”, Journal of Intellectual Property Rights, Vol. 13, pages 486–497, September 2008.

222

The official press release of the Government of India on … stated that Section 107 A (b) had been amended, “… to say that the foreign exporter need only be ‘duly authorised under the law’, thus making parallel imports easier. A parallel import is a mechanism that helps in price control.” referred to by Basheer and Kochupillai.

223

Parliamentary debate held in the Rajya Sabha (At the upper house of the Indian Parliament on March 3, 2005, answering a question posed by Mr. Karnendu Bhattacharya).

224

Ibid at 221. September 2008. “107B. … amendments are proposed: … Parallel Importation and Exhaustion of Rights. (a) For the purposes of this Act, the rights of a patentee or anyone claiming through such patentee shall stand exhausted after an Article covered by a patent has been sold once anywhere in the world (including within India), by or with the authorization of such patentee. (b) The provisions of section 107B (a) shall apply in case of sale of any patented Article, notwithstanding: (i) any contractual stipulation to the contrary by the patentee or her authorized representatives. (ii) The specific form of the transaction between the patentee or her authorized representative and the buyer. Any attempt to classify what is in essence a ‘sale’ of an Article as a license shall be ignored for the purpose of this section. (iii) any notice in relation to the Article placed by the patentee or her authorised representatives or any other party selling the patented Article; unless such notice is absolutely essential to ensure public health or safety.” (Footnotes omitted). Basheer and Kochupillai.

225

Strix Ltd. v. Maharaja Appliances Ltd. (2008) i.a. No. 7441 of 2008 in c.s. (os) No. 1206 of 2008 (India).

226

Pai Yogesh, “The hermeneutics of the Patent exhaustion”, in Calboli Irene and Lee Edward (eds.), “Research handbook on Intellectual Property Exhaustion and Parallel Imports”, Edward Elgar Publishing Ltd., pg. 328 (324–340), 2016.

227

Basheer Shamnad, “India’s Tryst with trips: The Patents (Amendment) Act, 2005”, 1 The Indian Journal of Law and Technology, pgs. 30, 31, 2005.

228

Section 45 of South African Patent Law: Effect of Patent, “(1) The effect of a patent shall be to grant to the patentee in the Republic, subject to the provisions of this Act, for the duration of the patent, the right to exclude other persons from making, using, exercising, disposing or offering to dispose of or importing the invention, so that he or she shall have and enjoy the whole profit and advantage accruing by reason of the invention. [Subsection amended by Act 38/1997 to include “offering to dispose of” and “importing”] (2) The sale of a patented Article by or on behalf of a patentee or his licensee shall, subject to other patent rights, give the purchaser the right to use and dispose of that Article.”

229

Bond Patrick, “Globalization, Pharmaceutical Pricing and South African Health Policy: Managing Confrontation with U.S. Firms and Politicians”, 29 (4) International Journal of Health Services, pg. 2, 1999.

230

unctadictsd, “Resource Book on trips and Development”, Cambridge University Press pg. 111, 2005.

231

Stauffer Chemical Co. v Agricura Ltd. 1979 bp 168 (cp).

232

Section 15 C of the Medicines and Related Substance Amendment Act 1997.

233

Notice of Motion in the High Court of South Africa, (Transvaal Provisional Division) Case No. 4183/98. 27% of the South African pharmaceutical market was controlled by US pharmaceutical companies and their subsidiaries.

234

Abbot Frederick, “Toward a new era of objective assessment in the field of trips and variable geometry for the preservation of multilateralism”, 8 (1) Journal of International Economic Law, pg. 86, (77–100) 2005.

235

Barber Simon, “U.S. Witholds Benefits Over Zuma’s Bill”, Africa News, July 15, 1998.

236

Fisher William iii and Rigamonti Cyrill, “The South Africa aids Controversy A Case Study in Patent Law and Policy”, The Law of Business of Patents, Harvard Law School, pg. 5, Feb 2005.

237

Abbott Frederick, “wto trips Agreement and 1st Implications for Access to Medicines in Developing Countries”, Study Paper 2a, Commission on ipr, pg. 53, 54, 2002.

238

Law No. 6 of 1989. Available at, http://www.wipo.int/wipolex/en/text.jsp?file_id=256035.

239

Endshaw Assafa, “Intellectual Property in asean: A Survey” in “Intellectual Property in Asian Emerging Economies”, Ashgate Publishing Ltd., Pgs. 17, 18 (13–42), 2010.

240

Section 21 states, “… importation of patented products or of products made by a patented process or their equivalents by someone other than the patent holder.”

241

Antons Christoph and Priapantja Cita Citrawinda, “Exhaustion and Parallel Imports in Indonesia”, pg. 9, 102 (101–111). Illustration of Bambang Kesowo, “Perkembangan Pengaturan Paten dalam Rangka Pembangunan Sistem Hak I Nasional (Beberapa Catatan tentang Kemungkinan Pengaruhnya terhadap Industri Obat di Indonesia)” [The Development of Patent Regulation within the Framework of the Establishment of a National Intellectual Property System (Some Remarks about Possible Effects on the Pharmaceutical Industry in Indonesia)] Jakarta, 1999.

242

Lau, Laurence J., “The sources of East Asian economic growth” in F. Gerard Adams and Shinichi Ichimura (eds.) “East Asian Development: Will the East Asian Miracle Survive?” Praeger, London, pgs. 17, 18 (13–42), 1998.

243

Patent Law No. 14 of 2001 – Lembaran Negara Republik Indonesia 2001 No. 109 www.dgip.go.id (website of the Directorate General of Intellectual Property).

244

Indonesia: Massive Amendments to the Patent Law, https://adipven.com/en/2016/09/06/indonesia-massive-amendments-to-the-patent-law/.

245

Ibid at 242.

246

The legal provision in Section 43(1) is available at, http://www.myipo.gov.my/wp-content/uploads/2016/09/PATENT-ACT-1983-ACT-291.pdf.

247

Chong John, “Exhaustion and Parallel Imports in Malaysia”, in Heath Christopher (ed.) “Parallel imports in Asia”, Kluwer Law International pg. 126, (123–135), 2004.

248

Section 58A is introduced afresh in the Patent (Amendment) Act and was not there in the old Act. It is available at, http://www.wipo.int/wipolex/en/text.jsp?file_id=128830#P63_4459.

249

World Bank data on Singapore, https://www.worldbank.org/en/country/singapore/overview#1.

250

Ibid at 242. Pgs. 34, 35.

251

Loon Ng-Loy Wee, “The exhaustion doctrine in Singapore: different strokes for different ip folks”, in Calboli Irene and Lee Edward (eds.), “Research Handbook on Intellectual Property Exhaustion and Parallel Imports”, Edward Elgar Publishing Ltd., pgs. 193, 194 (185–1), 2004.

252

Section 66 (2) (g) available at, https://sso.agc.gov.sg/Act/PA1994?ValidDate=20171030&ProvIds=pr66-.

253

Ibid at 251, pg. 138, 139; Ibid at 242, pgs. 54, 55.

254

S. Said, “U.S. Free trade pact to boost S’pore gdp by 0.5 Pct”, Malaysia Economic News, May 7 2003.

255

Details of the Free Trade Agreement is available at, https://ustr.gov/sites/default/files/uploads/agreements/fta/singapore/asset_upload_file708_4036.pdf.

256

Ibid at 242, Pg. 40, 41.

257

The Patent Act 1999 is available at, http://www.asianlii.org/th/legis/consol_act/pa199991/.

258

Ariyanuntaka Vichai, “Exhaustion and Parallel Imports in Thailand”, in Heath Christopher (ed.) “Parallel imports in Asia”, Kluwer Law International, pg. 97 (95–100), 2004.

259

Supasiripongchai Noppanun, “Parallel Importation of Patented Products in Thailand: The need for the New Patent Exhaustion Regime in the light of asean Economic Community (aec)”, Volume 7 Queen Mary Journal of Intellectual Property, Issue 4, pg. 370, (366–415), 2017.

260

Kosolkitiwong Punjaporn, “The legend and practical measures to prevent parallel imports”, Special Topic Report to Anti-Counterfeiting Committee of Asian patent Attorneys’ Association (apaa), 60th & 61st Council Meetings, 27–31 October 2012.

261

The Act for the Establishment of and Procedure for Intellectual Property and International Trade Court 1996 was passed by the National Assembly and promulgated in the Government Gazette on 25th December 1996 and was passed to inaugurate it by Rozal Decree on 1st December 1997. For salient features and other details of the court see, Ariyanuntaka Vichai, “Intellectual Property and International Trade Court: A New Dimension for ip Rights Enforcement in Thailand”.

262

Thailand Court Decision No. 16/2542 (1999).

263

Supreme Court of Thailand’s Decision No. 2817/2543 (2000).

264

Ibid at 242, Pgs. 26, 27, 29.

265

Republic Act No. 8293.

266

Fider Alex Ferdinand, “Exhaustion and Parallel Imports in the Philippines”, in Heath Christopher (ed.) “Parallel imports in Asia”, Kluwer Law International, pg. 114 (13–121), 2004.

267

Yu v. Court of Appeals, 217 scra 328–333 (1993).

268

A commentary in English is available at, https://www.lawphil.net/judjuris/juri1993/jan1993/gr_86683_1993.html.

269

U–Bix Corporation v. Ariancorp International Inc. cag.r. No. 41260, 1995.

270

Republic Act No. 8293 (ip Code) available at, https://www.lawphil.net/statutes/repacts/ra1997/ra_8293_1997.html.

271

The Lien Hoang (eds.), “Commentary of the Civil Code”, The National Politics Publishing House, Hanoi pgs. 12–20, 1998.

272

Pham Duy Nghia, “Exhaustion and Parallel Imports in Vietnam”, in Heath Christopher (ed.) “Parallel imports in Asia”, Kluwer Law International, pg. 86 (85–93), 2004.

273

Para 17.3 and 17.4 of Circular 3055/tt/shcn (1996).

274

Section 13 (iii) Decree 45/1998/nd-cp.

275

Section 52 (1) (b) of Decree 63/cp (1996).

276

See the text of the US-Vietnam fta, the Agreement between the United States of America and the Socialist Republic of Vietnam on Trade Relations, http://vcci-ip.com/wp-content/uploads/2017/06/Agreement_between_the_United_States_of_America_and_the_Socialist_Republic_of_Vietnam_on_Trade_Relations.pdf.

277

Lam Ngo Van and Wattanapruttipaisan Thitapha, “Intellectual Property Rights and Enterprise Development in asean” 7 (1) The Journal of World Intellectual Property, pg. 92 (53–93) 2004.

278

asean Intellectual Property Rights Action Plan (Under the Hanoi Plan) 2004–2010 available at, http://asean.org/?static_post=asean-intellectual-property-right-action-plan-2004-2010.

279

asean Intellectual Property Rights Action Plan (Under the Hanoi Plan) 2004–2010 available at, http://asean.org/?static_post=asean-intellectual-property-right-action-plan-2004-2010.

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