Legal Definitions - exhaustion-of-rights doctrine

The exhaustion-of-rights doctrine is a legal principle, particularly relevant in intellectual property law, which states that once the owner of an intellectual property right (such as a patent, copyright, or trademark) sells a product embodying that right, their ability to control the resale of that specific item is "exhausted" or used up. This means that the original purchaser, or any subsequent buyer, is generally free to resell that particular item without needing further permission from the intellectual property owner. The doctrine ensures that intellectual property rights do not create perpetual control over individual physical goods once they have been legitimately introduced into the market.

Here are some examples to illustrate this doctrine:

• Designer Handbag Resale: Imagine a luxury fashion company that sells a handbag featuring its distinctive trademark. Once a customer purchases that handbag from an authorized retailer, the company's intellectual property rights regarding that specific physical bag are considered exhausted. This means the customer is free to resell their used handbag on a second-hand market, donate it, or give it away without needing permission from the luxury fashion company. The company cannot claim trademark infringement simply because the original buyer is reselling their legitimate, purchased item.

• Imported Books within a Common Market: Consider a publishing house based in Spain that releases a new novel. A bookstore in Portugal, both countries being part of the European Union's common market, purchases copies of this novel directly from the Spanish publisher. Once these books are legitimately sold in Portugal, the publisher's right to control their further distribution within the EU is exhausted. This allows the Portuguese bookstore to sell these books to customers, or even to another retailer in a different EU country, without the Spanish publisher being able to prevent these subsequent sales based on their intellectual property rights.

• Used Software/Video Games: When a consumer buys a physical copy of a video game disc, the game software itself is protected by copyright. However, under the exhaustion-of-rights doctrine, once that specific game disc is sold by the game developer or an authorized retailer, the developer's copyright control over that particular disc is exhausted. This allows the consumer to sell their used game disc to a friend, trade it in at a second-hand game store, or list it on an online marketplace. The game developer cannot prevent the resale of that specific used disc, even though they retain the copyright to the game's content and can prevent unauthorized copying or distribution of new copies.