Summary Report on Exhaustion of trade mark rights (SQ 294)

The national and regional Reports submitted by 43 AIPPI Groups and Independent Members (all Reports can be found in AIPPI’s library at www.aippi.org. The Summary Report can be found in AIPPI’s library at Exhaustion of trade mark rights) reveal a broad consensus on the importance of ensuring a balance between the legitimate interests of trade mark holders and the principles of market integration and consumer protection in the context of the exhaustion of trade mark rights. The following points summarize the most significant findings of the Study Question:

Current legal frameworks are generally considered adequate, but with room for improvement. Some Groups call for clarification or reform, particularly regarding legal uncertainty on role and required extent of expression of trade mark holder consent, inconsistencies in national jurisprudence, and the absence of specific exhaustion provisions.

Clear trends were observed in relation to the types of contracts and acts that trigger exhaustion. There was near-unanimous support for exhaustion triggered by acts involving the transfer of ownership (sale, donation, exchange). Moderate support was expressed for acts not involving ownership transfer (rental, lease), and slightly less than a quarter accepted mere possession (e.g., consignment). Transit and transfer to a forwarder or carrier were overwhelmingly rejected as causes of exhaustion.

Consent of the trade mark holder is central to exhaustion. The vast majority of Groups emphasized that exhaustion should only occur when the trade mark holder authorizes the market placement, to protect brand integrity and legal certainty. Majority of the groups declined the scenarios of trade mark exhaustion without trade mark holder’s consent. More than a half Groups require clear and unequivocal expression of consent to place goods on the market. Majority of Groups accept implied consent but only under clear and specific circumstances. There as acceptance that consent may be inferred from circumstances occurring before, during, or after the goods are placed on the market, provided that these circumstances clearly indicate that the trade mark proprietor has waived their rights. Almost half Groups support the notion that consent may be expressed a posteriori, generally under restrictive conditions. It was underlined that consent should not be inferred from silence.

Most Groups rejected the idea that contractual arrangements should override exhaustion. Majority stated that exhaustion should prevail over any contractual agreements. Only a minority supported exceptions via explicit contractual clauses, indirect mechanisms, or product labelling e.g., “not for resale”.

Legitimate reasons for intervention after exhaustion are widely aligned. Vast majority supported the following as legitimate grounds for enforcement after exhaustion:
alteration or impairment of goods, harm to brand reputation, risk of consumer confusion, deceptive marketing practices and repackaging without notice. Justifications based on economic motives or subjective preferences were overwhelmingly rejected.

Refurbishment, resale, and rebranding raise similar enforcement concerns. Groups strongly supported the right to oppose such activities when they damage brand reputation, mislead consumers, or involve unauthorized alteration.
However, resale of second-hand goods and customization at the request of the consumer were largely accepted, provided they do not mislead or impair product identity.

Sustainability-related alterations received qualified support. Over half of Groups supported customization of goods at the request of customers. Some Groups also supported resale after modification as part of a sustainability-driven business model, though under strict safeguards. In general it is emphasized that sustainability considerations must not override brand protection without clear criteria.

Burden of proof rests initially with the party invoking exhaustion, but may shift. The vast majority agreed that the burden lies with the party invoking exhaustion.
However, the same part stated that the burden of proof may shift to the trade mark holder in specific circumstances, such as where verifying information is under the owner’s control or there is a risk of market partitioning.

In conclusion, while the principle of exhaustion remains a cornerstone of trade mark law, the Reports reveal a pressing need for clarification and measured harmonisation, particularly in relation to consent, burden of proof, and the integration of sustainability goals. The Study Question highlights a strong commitment to ensuring that exhaustion frameworks remain robust, balanced, and capable of addressing new commercial, technological, and environmental realities.