The Scope for Competitive Markets under the Existing National, Regional and International Doctrines of Exhaustion of Intellectual Property Rights

Abstract

This essay argues that, although the International Exhaustion regime provides the greatest scope for market competition among all the regimes of exhaustion of intellectual property rights, unrestricted parallel trade may prove to be harmful in the long run. The Exhaustion principle may promote competition in markets by limiting the control of an IP owner over the resale and distribution of such IP, but the extent of such promotional effect depends on the extent to which the principle applies. The National, Regional, and the International Exhaustion regimes all contain pro-competitive benefits, however, an international regime will obviously provide for maximum market competition due to its larger area of operation. Unrestricted application of such a regime may however give rise to market harm eventually, particularly in the case of pharmaceutical patents, such as restricted market access, price inflation in developing markets, as well as a lack of incentive to innovate.