Exhaustion Of Trademark Rights In The Eurasian Economic Union And Distributor Agreements

The exhaustion of trademark rights together with the related question of parallel import is now a hot topic within the Eurasian Economic Union (the EAEU). On 23 June 2014, the Eurasian Economic Commission (the executive body of the EAEU) created the Working Group to study the question of the exhaustion and parallel import. The Working Group is currently considering solutions to balance the interests of industry (i.e. IP rightholders) and consumers. On 21 August 2015, the Working Group was instructed to draft, by 31 December of this year, amendments allowing the parallel import for selected categories of goods. In this article, we first look at what the principle of exhaustion means, and then we discuss what implications the regional exhaustion rule could have for certain provisions of distributor agreements.23 Finally, we consider certain competition issues of the distributor agreements in the EAEU context.

What Is Exhaustion?

The principle of 'exhaustion' of trademark rights provides that it is not an infringement of a trademark to use it on goods which have been put on the market within a particular territory by the trademark owner or with its consent.

The EAEU Agreement, which took force on 1 January 2015, sets forth the regional exhaustion of trademark rights as follows: "There shall be found no infringement of trademark rights in the use of the trademark with respect to goods which have been lawfully released into civil circulation on the territory of any of the Member States directly by the trademark rightholder or other persons upon its consent." In other words, once trademarked goods are lawfully released into free circulation in Kazakhstan by the rightholder or upon its consent, these goods may be further resold without the rightholder's consent in Kazakhstan, as well as in Russia, Belarus, Kyrgyz Republic and Armenia.

The principal of regional exhaustion is intended to struggle against parallel import, i.e. import of original trademarked goods from outside the EAEU but without the rightholder's consent. The exhaustion principle is not completely new to Kazakhstan law. In 2010 (with the effect in Kazakhstan only in 2012), the principal of regional exhaustion was introduced within the framework of the Customs Union (i.e. between Kazakhstan, Russia and Belarus). This principal can be contrasted with that of 'international exhaustion', that is, once the rightholder sells its goods, they may be further sold and imported to any country...