Exhaustion means if the marked goods are once placed on the market by the owner of the trademark or by any other person with his consent, the owner cannot prevent subsequent sales of the goods in the same market, as the ‘exclusive right’ is exhausted after the first sale of the goods and cannot be exercised twice in respect of the same goods. Doctrine of exhaustion is a defense in the hands of the parallel importer.
The way in which a country coexists with other countries can have a profound effect on the way it operates the doctrine of exhaustion. Under the international regime three forms of exhaustion have been recognized. These are:-
· National Exhaustion - where the Trademark proprietor exhausts his right only if the marked goods are sold for the first time domestically.
· Regional Exhaustion - where the Trademark proprietors rights are exhausted only if the first sale occurs within his own country or any country within a region.
· International Exhaustion – where the Trademark proprietor rights are exhausted irrespective of the place where the marked goods are first put for sale.
This means that, “if the good are sold for the first time in the domestic market or within the territory of the country in which the trademark is registered, the owner of the trademark loses his right over the goods and cannot prevent subsequent sales of the same in the domestic market within the country. However, if the goods are sold for the first time in a different country beyond the jurisdiction of the nation in which the trademark is registered, then the owner can invoke his trademark right to prevent the importation of such goods into the domestic market”. India has adopted this form of exhaustion under the section 30 of the Trademarks Act, 1999.
Regional Exhaustion means: “If the goods bearing a trademark are put on sale in any country within the specific region by the owner or with is consent, the owner cannot stop subsequent sale of that product in his own country or in any country within the region. But if the goods are put on sale in a country outside the region, the owner can prevent anyone who imports the goods into that region and subsequent all them”. The EU has adopted regional exhaustion where by ‘sale in one country is equal to it being an act of sale in any other country within the region.
Global exhaustion operates on the premise that if goods bearing a trademark are once sold in a specific country by the owner or with his consent, he cannot stop subsequent sale of those goods either in his own country or in any other country. This doctrine works on the assumption that the whole world is one market or one country and thus goods once sold in any part of such market or country operates as exhaustion of rights of the trademark owner over such goods.