1)

Italian law, like national and above all EU case law, does not provide for international exhaustion considered as exhaustion of rights related to goods put on any market. As a matter of fact, exhaustion is only national and/or intracommunitarian. This is valid for trade marks as well as for patents and industrial models. The choice taken by legislators and by case law is merely political, since international exhaustion was accepted only as a matter of interpretation (see, for example, Como Court, 8th October 1992, in Giur. it. 1994, I, 159) before the adoption of precise rules, such as the enforcement of EU directive 89/104 pertaining to trade marks. It follows that parallel imports of products put on the market by an IPR owner or with his consent can be blocked only if the products come from countries not included in the European Union and/or the European Economical Space (vide infra). The only exception is the law regarding semiconductor topographies, which allows international exhaustion according to Italian law 70/89, art. 4, par. 5.

2)

Whereas international exhaustion, as defined in point 1, is not allowed in Italy (see ex multis Italian Supreme Court, 18th November 1998 No. 11603 Jolka srl v. Colgate Palmolive Spa, in Giust. Civ., 1999, 1401), it is necessary to draw due distinctions. In the case of goods put on the EU market, contractual restrictions are hypothetically legitimate but forbidden in most cases, as they would represent a sharing of the market and a measure limiting the free circulation of goods and services (see EU Court of Justice, 11th November 1997, C-349/95 Loendersloot v. Ballantine, in Raccolta, 1997, I - 6227). Conversely, a breach regarding the quantity, and not the territorial destination of a product covered by a certain IP right is, at least in principle, considered as legitimate and in this case, though difficult to enforce, the right is thought to be valid for products in excess of said quantity. Should international exhaustion be allowed in the future, contractual provisions aimed at excluding consent would be suitable for avoiding exhaustion, but once again only for products imported into non-EU countries, as the principle of arts. 28-30 (former 30-36) of the Treaty of Rome (as modified), where relevant, would still apply.

A contractual provision aimed at avoiding right exhaustion cannot be enforced when the goods come from a EU or EES country; therefore, a breach will not have any effect and exhaustion will occur. Conversely, if the goods come from countries outside the European Union, a contractual provision will be redundant and right exhaustion will not occur. Imports can thus be prosecuted as well as a contractual breach. Should international exhaustion be introduced, the breach of a restriction could instead be prosecuted and right exhaustion would not occur.

3)

Contractual provisions must be express, so as to remove consent.

There are no particular ways to express contractual restrictions, provided they are suitable for attaining the above-mentioned aim.

If the removal of an indication of marketing restriction is such as to determine a substantial modification of the appearance of a product, it is always illegitimate, and exhaustion does not occur. In the other cases, if a territorial restriction is legitimate, failing to represent any limitation to the free circulation of goods, where this is protected (intra EU), the removal of an indication of restriction is illegitimate. In case a territorial restriction is instead illegitimate because it represents a marketing restriction, a removal of the indication has no influence and cannot be prosecuted.

4)

It is necessary to say that a compulsory licence is applicable only to patents. In the case of a national patent the problem of exhaustion does not arise at all and the right must be considered exhausted in any case. Instead, it is necessary to analyse the case in which a patented good is put on the market, under a compulsory licence, in a EU country, and subsequently imported into Italy. Since an automatic identification system for compulsory licences is not provided for, products imported into Italy must be considered as illegitimate because the principle of intracommunitarian exhaustion cannot be applied, except for the case of a licensee having a suitable licence, even a compulsory one, for Italy.

5)

The consent which gives rise to right exhaustion can be either express or implied. When implied, it can be inferred from a fact, when it is possible to find a clear economical or legal link between the IPR owner and the person who puts the products or services on the market. This link takes shape in the quality and, above all, quantity control of the products put on the market, and in particular it exists where the behaviour of the owner of the right is inequivocally directed towards distribution or the circulation of the products with consumers.

6)

An IPR owner:

can always object to the marketing of goods which have been modified from their original state;

can object to the marketing of goods when the modification of the packaging implies an alteration of the product. Alteration means a modification damaging the image and the name of the trade mark (the so called modification of the mental condition of the goods, see cited Ballantine decision, as well as EU Court of Justice 31st October 1974, suit 16/74 Centrafarm v. Winthorp, in Raccolta, 1974, 1183; EU Court of Justice 4th November 1997, suit C - 337/95 Parfums Christian Dior SA and Parfums Christian Dior Bv v. Evora Bv, in Riv. Dir. Ind., 1999, II, 129; Bologna Court, 4th March 1999 Levi Strauss & Co., Levi's Strauss Italia srl v. Scout srl, in Dir. Ind., 1999, 215). Anyway, an alteration modifying, for example, only the bar codes of identification or a disclaimer in relation to the country - in case they are not legitimate - do not imply an alteration of the mental condition of the goods and thus do not avoid right exhaustion. Finally, it is in any case necessary for the person who makes a modification to inform the owner of the right, so that the modification is legitimate.

7)

Though in Italy international exhaustion was initially accepted as a matter of interpretation, case law and, where possible, also legislators have adapted to the principles set forth in tne EU case law. As a consequence, international exhaustion is not provided for, except for some single cases. It seems that possible modifications to this trend could occur only as a result of express political decisions, since it is not possible to introduce the principle as a matter of interpretation, as also the Supreme Court reaffirmed in the cited Colgate case.

The AIPPI Italian group adapts to this trend, hoping for possible openings to international exhaustion only under reciprocity conditions and in particularly limited cases.