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The Legal System Research on Parallel Importation

Author: ZhuNingBo
Tutor: DingWei
School: East China University of Politics and Law
Course: International Law
Keywords: Parallel Importation the Principle of Exhaustion TRIPS Agreement
CLC: D997.1
Type: PhD thesis
Year: 2006
Downloads: 998
Quote: 10
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Parallel importation is the flowing of the intellectual products among the different countries. Parallel importation occurs in such condition that an unauthorized importer purchases the goods abroad and imports them for resale in the importing country without the permission of the owner of intellectual property right.Parallel importation is one of the frequent phenomena in the international trade. It is called by“Grey Market”for its legal nature is not confirmed. Actually, they are different not only in definition but also in use.“Grey Market”is usually used by American and“Parallel Importation”is used by European in generally. Moreover, the scope of“Grey Market”is larger than that of“Parallel Importation”, it includes the parallel importation, anti-importation and circuit importation. So we can say the parallel importation is just one of the types of grey market.As far as the goods’transnational flowing is concerned, the parallel importation is similar to smuggle. Sometimes the goods entered into an importing country through these manners are totally called“smuggled goods”. But both of them are different from occurrence reason, the object, the nature of the behavior and the consequence or legal liabilities. They may be transformed each other when the legal attitude of importing country changes. That is to say, the goods will enter into the importing country through the channels of smuggling when the parallel importation is forbidden. In the contrary, the smuggled goods will enter into the importing country through lawful customs procedure when the parallel importation is permitted.The parallel importation is similar to the reverse passing-off sometimes. For example, their goods are both lawful intellectual ones, both belong to the reselling behavior and they may impair the consumers’legal rights and interests. Whether the goods are“genuine goods”or not is the weighing standard of differing both of them. It is very important to distinguish them for the country where parallel importation is lawful.With the scope of intellectual property protection enlarged, the range of parallel importation is extended. The parallel importations of patent, copyright and trademark are the most frequent and fundamental types. Which kinds of legislation attitude depend on different countries’protection degree to the intellectual property right.The major reason of parallel importation is the difference of goods’price within different countries. There is much causation resulting in price difference, such as the producing cost of goods, the intellectual property owners’strategies of making price, countries’custom policies, etc. For earning these profits, the parallel importers purchase the goods from the intellectual property owners and resell them in the importing country. The behaviors of parallel importers are in favor of breaking the monopolization and accelerate the freedom of international trade. But these behaviors tamper the interests of the owner of intellectual property rights and are not always in favor of the consumers.The issue of parallel importation can not be avoided since the protection of intellectual property is strengthened within international society. In history, the disputes of parallel importation are not too much. With the up-rush of international sale of goods and technology on the ground of the economic globalization, the litigations of parallel importation come forth in the gross. People pay more attention to research the theory and legislation of parallel importation.Now, the territorial principle and the exhaustion principle are still considered the main theories which are the standard of whether parallel importation is lawful or not. The principle of territoriality holds that intellectual property right is acquired according to the laws of the country of origin on intellectual property, and has no force in other countries outside the country of origin. If an unauthorized importer bought the goods protected by intellectual property right and sold them to the importing country, the owner of intellectual property right shall prohibit the importation according to the right of importation. The principle of exhaustion is opposite with the principle of territoriality. It is generally accepted in domestic market by many countries all over the world in order to ensure the free circulation of goods protected by intellectual property rights, that is to say, the principle of national exhaustion is generally accepted. But in international market, it is a controversial issue on the adoption of the exhaustion principle. If the exhaustion principle is adopted in international market, parallel import shall be considered to be with the law. It is a controversial issue on the legality of the principle of international exhaustion in the countries throughout the world. So the choice of those principles decides the legitimation of parallel importation.The issue of parallel importation is involved in not only the protection of intellectual property but also the freedom of international trade. So the nature of parallel importation should also research the theory of international trade. Countries which forbid or limited parallel importation always use the theories of parallel importation to hold back the tenor of trade freedom. Some goods are blocked outside the importing countries for the parallel importation, or result in a great deal of intellectual property disputes and incur damages even if the goods came into the importing country.It is useful for the theory of interests’equity to understand the issue of parallel importation because the goal of the legal system of parallel importation also embodies justice and give attention to different interested parties. The theory of interests’equity means the equity of individual interest and public interests is the reason of permitting or forbidding parallel importation. The issue of parallel importation makes countries in a dilemma——the interests of the owner of intellectual property may be incurred damages if permitting parallel importation; The monopolization of the owner of intellectual property may be induced, and influence the freedom of international trade, the public interests and the whole social welfare if parallel importation is forbidden.The competition rules also influence the policy of parallel importation. The behavior of parallel importation itself may not infringe the intellectual property rights. The infringement of intellectual property rights always takes place the process of movement or reselling of goods. So the competition rules have effect in these processes to rule the unfair competition. The competition rules are flexible to regulate the behavior of parallel importation——Whether the legitimating of parallel importation or not depends on whether these behaviors fulfill the requirements of competition law.Up to the present, there is few content of parallel importation in the international conventions and practices. Except there is the special regulations about parallel importation of generic drug in TRIPs Agreement, most international conventions have no related previsions about parallel importation. As far as the regional conventions are concerned, the European Union has very good theories and practices on parallel importation. The principle of regional exhaustion accelerates the freedom circulation of goods, services and persons within European Union and ensures the freedom competition in European Union. The success practices of European Union not only offer the perfect reference for their member states but also are good examples for other regional groups.The legislation of parallel importation mostly roots in national law, especially the developed countries or the countries of high level of intellectual property protection. Till now, the U.S., Japan and the countries of European Union have the related legal systems about parallel importation. Even if some countries consider the parallel importation is lawful, the opinion of parallel importation is not coherent in international society. The attitude of parallel importation even in one country is often changeable during different period.The time of researching on parallel importation in our country is just more than 10 years. The time of legislations about parallel importation is not long and the effectiveness of legislations is not high. In the mean time, the number and the scope of legislation are limited. The status in quo results from the limited practices of parallel importation. Moreover, the lack of the evaluation system about parallel importation results in the difficulties of legislation. With the building of Chinese Market Economics, China entering into the WTO and the fast development of Chinese economy, a great deal of parallel importation will come forth. The making our parallel importation law is the requirements of the necessary and urgency of Chinese economic developments.Through the systemic analysis of the theories and practicing problem, the author thinks it is good for China to permit parallel importation in the present period. At the same time, it is necessary for regulating some restrictions to reduce the negative influence of parallel importation. As far as the Chinese legal system of parallel importation is concerned, the author thinks that we can make perfect the legal system on the ground of Chinese Intellectual Property Laws, Unfair Competition law, Customs Law, Foreign Trade Law and Consumers Interests Protection Law, etc. and make the Chinese Parallel Importation Law eventually. We must follow the international principle, the principle of in favor of Chinese economic development, the principle of separate legislation and the principle of harmony between the lasting goal and short interests.

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CLC: > Political, legal > Legal > International law > Private international law > International Civil
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