Exhaustion of IP Rights

Exhaustion of the IP related rights is an important legal term that determines freedom of "parallel import" (gray market) to a particular territory or jurisdiction. In this case the goods imported to such territory originate from the right holder and are not counterfeit, but the right holder wouldn't have a consent to move products where they are sold to another country by third parties. The goods protected by IP (i.e. patent, trademark, design etc.) might be subject to different pricing or different distribution channels of the right holder, in each country, and other ways of distributing products to a particular region without consent of the right holder would deteriorate business strategies. On the other hand, a very large gap in prices of goods in different regions would cause instability in market condiditions. Therefore, international, regional or national exhaustion are applied depending on the local law of each jurisdiction. 

Article 6 - TRIPS prescribes that "For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights." Therefore, each country or jurisdiction is free to select one of the options of international, regional or national exhaustion. 

For example, EU applies the principle of "Regional Exhaustion" and is supporting free movement goods across the member states. For instance, once the product is sold out in Germany, rights are exhausted and therefore goods can be freely imported, for instance, to Spain without consent of the right holder. 

Situation in Turkey

Turkey applies the principle of "International Exhaustion" by virtue of Art. 152(1) - IP Law 6769 which prescribes that an industrial property right is exhausted once the product is put into market by the right holder or third parties with the consent of such right holder. The law doesn't specify any region or country which means that if the product is put into market in any part of the world, rights are deemed exhausted and parallel import to Turkey is then possible without any prohibition. 

Irrespective of whether the product is protected under the patent, trademark or design law, above provisions apply within Turkey. However, the law doesn't provide a provision for other types of IP protection such as copyrights.   

Nevertheless, Art. 152(2) - IP Law 6769 recites that the trademark owners are entitled to prevent commercial use by third parties who alter or deteriorate the product. Therefore, parallel import is allowable as long as the product itself or packaging thereof is not changed. This right is exclusive to the trademark owners and this specific capacity is not given to the patent or design proprietors.

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