First Report (Final) to the Committee on International Trade Law of the International Law Association on the Subject of Parallel Importation

Abstract

The First Report on Parallel Imports approaches the exhaustion/parallel imports question in broad economic terms, asking whether there may be an economic and social welfare benefit to permitting IPRs holders to block parallel imports that outweighs the potential harm to liberal trade. The Report addresses each major form of IPR (patent, trademark and copyright) separately. It concludes with respect to each form that the evidence of benefits that might flow from allowing parallel imports to be blocked is insufficient to justify the potential inhibition of trade. The Report observes that most objectives which IPRs holders seek to achieve by the allocation of geographic markets can be attained through less trade restrictive means, namely through the vertical allocation of distribution territories by contract. The interests of the developing countries are a focus of the Report. Some economists have suggested that allowing rules on parallel information to enforce price discrimination in favor of developing countries may increase global economic welfare. The Report concludes that developing and developed countries are better served by open markets and the operation of comparative advantage. The Report recommends that the WTO adopt a rule precluding governments from blocking parallel imports save in certain exceptional cases, and it also suggests that further study of this issue would be desirable.