Can the marketing of trademarked products by third parties be controlled?


In a freely competitive market, the trademark serves the entrepreneur to make his product known and differentiate it from other similar products in the market. On the other hand, the trademark helps and facilitates the choice of the product by consumers.

The registered trademark confers to its owner an exclusive right over it, entitling him to prohibit any third party from using it, without his consent, in the course of trade. However, such right is limited, so that the right conferred by the registration of a trademark will no allow its owner to prohibit third parties from using it if the so-called “exhaustion of the trademark right” has occurred.

Exhaustion of trademark rights

The exhaustion of trademark rights is regulated in Article 36 of the Trademark Law 17/2001 of December 7, 2001, according to which “The right conferred by trademark registration shall not allow its owner to prohibit third parties from using it for goods marketed in the European Economic Area under such trademark by the owner or with his consent.”, as well as in Article 15 of the European Union Regulation (EU) 2017/1001 of June 14, 2017, on the European Union trademark.

This implies that the exclusive right that the trademark confers on the trademark holder, in Article 34 of the Trademark Law, as well as in Article 9 of the European Union Regulation (EU) 2017/1001 of June 14, 2017, of the European Union trademark, is not a right of an absolute nature, but that this generic “ius prohibendi” that empowers the trademark right holder to prohibit a third party from using the trademark without its consent in the economic traffic, is limited by the so-called “exhaustion of the trademark right”.

What is the so called “exhaustion of trademark right”?

The exhaustion of trademark rights means that after a branded product is sold or transferred by the trademark owner or by others with the consent of the owner, the trademark right is exhausted. The exhaustion of trademark rights in effect is an owner’s loss of control over products bearing its trademark.

Focusing on the doctrine on the exhaustion of trademark rights, what it essentially says is that the owner of a trademark cannot oppose the subsequent marketing in the European Economic Area by a third party of products that have previously been marketed by the owner of the trademark or with its consent in that area, so that the exclusive rights is limited to the first circulation of the product (bearing the trademark) in the market, by the owner or with its consent.

In other words, the first transfer of a product in the European Union marks the limit to the exclusive rights of the trademark owner. By way of explanation, the exhaustion of the trademark right protects the marketing of goods bearing the trademark in the European Economic Area, so that the resale by a third party of that product within that area does not imply infringement of the trademark right. Ca

This means the end of the exclusive right of the trademark owner and the beginning of the freedom of trade and movement of goods, in accordance with the foundations of the European Union Treaty of free movement and competition in a single European market,

Exception to the exhaustion of trademark rights

Exhaustion of the trademark right finds its exception in paragraph 2 of Article 36 of the Trademark Law and article 15 of the European Union Regulation. Thus, both articles state that “it shall not apply when there are legitimate reasons that justify the owner’s opposition to the further commercialization of the goods, especially when the condition of the goods has been modified or altered after their commercialization”.

Exhaustion of the trademark right finds its exception in paragraph 2 of article 36 of the Trademark Law and article 15 of the European Union Regulation. Thus, both articles state that “it shall not apply when there are legitimate reasons that justify the owner’s opposition to the further commercialization of the goods, especially when the condition of the goods has been modified or altered after their commercialization“.

Thus, in general terms, the trademark right is exhausted after the first placing of the product on the market, that is to say, after the first transfer or sale of the product. From that moment on, the second or subsequent transmissions of the product by third parties will be legitimate, with the exception referred to paragraph 2 Article 36 of the Trademark Law, for example, because the product or packaging in which it is contained has been altered, which could undoubtedly damage the image of the trademark.

Territorial limitation to the exhaustion of trademark rights

While there seems to be no discussion on the Community exhaustion of the trademark right, i.e., when there has been a first transfer of the product within the European Economic Area by the owner or with his consent, international exhaustion is the subject of greater controversy and debate both in case law and doctrine.

The non-acceptance of international exhaustion means that, if the first marketing of the product has taken place outside the European Economic Area, the trademark right would not be exhausted, so that a third party could not introduce the product within the European Economic Area without the consent of the trademark owner.

On the contrary, the acceptance of international exhaustion implies that the first placing of the product bearing the trademark on the market, by the owner or with his consent, regardless of the place where it was made, i.e., whether it took place in the European Economic Area or in a third country, will exhaust the trademark right of the registered owner.

In view of the fact there is no clear acceptance of international exhaustion, so that the existence of tacit consent of the trademark owner for the introduction of the product from a third country into the European Economic Area for the first time cannot be interpreted, it is advisable that the trademark owners takes all possible precautions at the time of transferring the product outside the European Economic Area, making clear his will not to introduce the product from a third country into the European Economic Area.