1.

Is there international exhaustion of (i) patents; (ii) trademarks; and (iii) other industrial property rights? That is, can an industrial property right owner use industrial property rights against parallel imports form another country, when the imported products have been put on the market in that country by the industrial property right owner or with his consent.

Patents: There is no provision for international exhaustion of IP rights for patents.

Trademarks: Yes. The Trademark Law provides for national and international exhaustion (arts. 17 and 18)

Other industrial property rights: Copyrights: Yes.

Remarks: There is a new patent law in study at the Paraguayan Congress. This new law states that a patent does not grant th eright to prevent commerical acts carried out by a third party with respectto a product protected by a patent after these where licitly introduced in the commerce.(Art. 34)

An industrial property right owner can not use rights against parallel imports from another country, when the imported products have been licitly put on the market in that country by the industrial property right owner or with his consent.

The National Constitution clearly prescribes the free flow of goods in Art. 108.

2.(a)

Can contractual restriction imposed by an industrial property right owner be used to limit the effect of international exhaustion) (b) What is the effect of breach of contractual restriction by a purchaser- does exhaustion occur?

Contractual restrictions (namely, exclusive license, distribution contract and/or others) may limit the effect of international exhaustion, but such contractual restrictions can not stop parallel import/export. In effect, contracts are valid only between the intellectual property right owner, and the local or interested contracting party. Any third party that legally acquires the products, legally marked in one country, can import the products to the other country, and any clause foreseen in a contract could not stop it.

Effect of breach of contractual restrictions will depend on clauses foreseen in the contract for this kind of situations. Exhaustion would not occur, as consequence of breach of contractual restrictions.

3.(a)

If contractual restrictions can be used to limit importation, does it matter whether they are expressed or implied?

As mentioned above, contractual limitations will be valid only between the contracting parties. Its clauses can not be used against any third party who legally acquires the products in a foreign country and introduce such products to other country. In any case, any kind of limitations negotiated between the parties should be expressly stated in the contract.

3.(b)

If contractual limitation are express, are there any particular marking requirements?

In case of license, the licensee should expressly mark on the product the condition of exclusiveness of the license. No provisions are mentioned for other contracts.

3.(c)

If protected products are marked to indicate some marketing restriction, what are the consequences of removal or loss of any marking?

If the marketing restrictions arise out of an agreement between the parties, the injured party may exert his contractual rights, by filing the proper action or requesting precautionary measures. If these restrictions are imposed by the law or regulations, the pertinent authority is responsible for its application and penalization. Local authorities normally act ex officio or upon a claim.

4.

Does international exhaustion of industrial property rights apply where a product has been put on the market under a compulsory license (if applicable)?

Not applicable under our present legislation. However the bill of Patent Law currently being debated in congress provides for compulsory license in certain circumstances (art. 43) however a compulsory licenses shall not be granted as exclusive. (art. 48)

5.

Is "consent" which gives rise to exhaustion limited to specific arrangement (for example a relationship with a subsidiary or affiliated company, or an agreement with a licensee) or a question of fact in each case?

Consent gives rise to exhaustion, and it is limited to specific arrangements between the parties, when such consent is ruled by a contract. In case of parallel importation, it would be a question of fact.

6.

Can an IPR owner object to parallel importation where (a) goods or (b) their packaging have been modified?

In case of modification of goods or their packaging, illegally performed and/or without consent of the trademark owner, then the intellectual property right owner would have full rights to object parallel importation. As a matter of fact, the trademark owner would have full rights to enter civil and criminal actions against such an act. (Trademark Law Art. 15, 17)

Regarding the modification of packaging or non compliance with the local provisions regarding labeling or product registration, etc. the injured party may simply inform the pertinent authorities (Health Ministry, Customs Authority, Municipality, etc) and they in turn must act ex officio.

7.

As well as stating the law in their respective countries, the groups are also invited to (a) make any proposals for changes; and (b) offer any observations of interest on the topics raised above.

Parallel importation is legal and the trademark owner can not take actions, whenever such importation was legally performed. Good faith may also be taken in consideration in each case that parallel importation may occur.