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Free Trade in Patented Goods: International Exhaustion for Patents

60 Pages Posted: 24 Apr 2014 Last revised: 30 Dec 2014

Sarah Rajec

William & Mary Law School

Date Written: April 21, 2014

Abstract

Modern international trade law seeks to increase global welfare by lowering barriers to trade and encouraging international competition. This “free trade” approach, while originally applied to reduce tariffs on trade, has been extended to challenge non-tariff barriers, with modern trade agreements targeting telecommunication regulations, industrial and product safety standards, and intellectual property rules. Patent law, however, remains inconsistent with free-trade principles by allowing patent holders to subdivide the world market along national borders and to forbid trade in patented goods from one nation to another. This Article demonstrates that the doctrines thwarting free trade in patented goods are protectionist remnants of long-abandoned pre-Industrial Age economic theories, and the modern arguments for restricting international trade in patented goods — most notably, the possible desirability of permitting price discrimination — provide an insufficient justification for restricting trade across national frontiers. The Article concludes that modern patent law doctrine should be modified to permit free international trade in patented goods and that, if price discrimination or other goals are thought desirable, better alternatives are available to achieve those goals.

Keywords: patents, free trade, exhaustion, first sale

Suggested Citation

Rajec, Sarah, Free Trade in Patented Goods: International Exhaustion for Patents (April 21, 2014). 29 Berkeley Technology Law Journal, 317 (2014). Available at SSRN: https://ssrn.com/abstract=2428383

Sarah R.W. Rajec (Contact Author)

William & Mary Law School ( email )

South Henry Street
P.O. Box 8795
Williamsburg, VA 23187-8795
United States

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