StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Free Movements of Goods and Parallel Imports - Literature review Example

Cite this document
Summary
This literature review "Free Movements of Goods and Parallel Imports" focuses on the objectives of the Euro that can be achieved through a common market, which facilitates free movement of goods by eradicating the trade barriers. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.3% of users find it useful
Free Movements of Goods and Parallel Imports
Read Text Preview

Extract of sample "Free Movements of Goods and Parallel Imports"

Substantive EU law- Free Movements of Goods and Parallel Imports European Union (EU) came into existence on March 25, 1957 because of the treaty of EEC with the name European Economic Community (EEC) and the then European Common Market. The objective of the EU through this treaty is to bring harmonious development of the economic activities. Along with this, it is formed to increase stability, balanced and continuous expansion, uplifting standard of living and creating closer and stronger relations between the states of the EU. These objectives can be achieved through a common market, which facilitates free movement of goods by eradicating the trade barriers. As a result, EU states will not impose any trade restriction on member States in relation to imports and exports of goods (Dedman 2010). The main treaty provisions that govern the free movement of goods are articles 34, 35 and 36. Article 34 delineates the intra-nation imports and prohibits within the Member States. In addition, it prohibits quantitative restrictions as well as all measures having equivalent effects between the Member States (Bigo and Guild 2005). Article 35 is concerned with exports between the Member States. It also prohibits quantitative restrictions and measures that have equivalent effects. Article 36 on the other hand outlines the derogations to the internal market freedoms mentioned in Article 34 and 35, which are justified on various specific grounds (Bigo and Guild 2005). Articles 34 and 35 incorporate all types of goods and products, which can be valued in monetary terms form the subject of commercial transactions. Notably, basing on its wording, article 34 is applicable to hurdles faced in trade between Member States. Thus, in evaluating a case under this provision, it has to involve cross-borders. In this regard, matters which affect domestic goods only are not categorized within the scope of articles 34-36 (Bigo and Guild 2005). There are clearly stipulated conditions to be met for cross border requirement. This is clearly illustrated in Case 8/74 Dassonville [1974] ECR 837. In this case, the Court of Justice elaborated the meaning and scope of measure of equivalence. In this regard, the terms imply ‘all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially intra-community trade are to be considered as measures having an effect equivalent to quantitative restrictions.’ In the Dassonville case, the court emphasised that the most significant element that determines whether a national measure fall within article 34 is its effect. That is if it is capable of hindering, directly or indirectly, actually or potentially. Consequently, the discriminatory aspect ceased to be the determinant factor for article 34. This was strengthened further by the court’s ruling Case 120/78 Rewe-Zentral (Cassis de Dijon) [1979] ECR 649. It reiterated the previous statements in the Directive70/50/EEC as well as the Dassonville case. The court acknowledged that there might be some differences between the national rules of the EU Member States. This could end up inhibiting trade in goods. In so doing, the court confirmed that article 34 could incorporate national measures that are applied equally to both domestic and imported goods (Dedman 2010). This argument seems to suggest that apart form Article 34 applying to national restrictions discriminating against imported goods, it also is applicable to measures, which in law may seem to apply equally to domestic and imported goods. These rules are also known as indistinctly applicable. Scores of years after the Dassonville case, there was the necessity to establish some limitations to the scope covered by the term ‘measures having equivalent effect’ as stipulated in article 34 (Dedman 2010). In the joined cases C-267/91 and C-268/91 Keck and Mithouard [1993] ECR I-6097, the court held that ‘in the view of increasing tendency of traders to invoke Article 34 of the treaty as means of challenging any rules whose effect is to limit their commercial freedom even where such rules are aimed at products from other Member State, the court considers it necessary to re-examine and clarify its case-law on this matter’ (Dedman 2010). Eventually, in Keck and Mithauard, the court, with reference to Cassis de Dijon held that contrary to what had been decides upon earlier, the application to products from other Member States of national provisions restricting certain selling arrangement is not such a hinder directly or indirectly, actually or potentially, trade between member states (Dedman 2010). Parallel import can be defined as goods, which are produced and sold legally and then exported. There is nothing illegal about the parallel imported goods but as native entrepreneurs sell same goods at higher price, they do not like this competition. In order to remove this competition, intellectual property act has been developed. Intellectual property refers to trade secrets which are usually protected in various forms including trademarks, designs, patents and copyrights.. A product sold or imported by the third party is considered to be infringed if such sale or import falls in the range of copyrights, patent, or trademark of that particular country There is no pervasive European patent system that enables the patentee with one single patent right to work in all the European Union countries and also Jurisdiction of European Court of Justice is limited in relation to patent matters. However, interference of the intellectual property rights in the free movement of goods under section 30 of Treaty of Rome provides the power to ECJ to take the cases of prevention of parallel imports within the European Union. The ECJ held the view that “It cannot be reconciled with the principles of free movement of goods under the provisions of the Treaty of Rome if a patentee exercises his rights under the legal provisions of one Member State to prevent marketing of a patented product in said state when the patented product has been brought into circulation in another Member State by the patentee or with his consent.” (Centrafarm B.V. and Adriaan de Peijper v. Sterling Drug Inc., 6 IIC 102 (1975) – Negram III). With regards to the exhaustion doctrine, ECJ is of the view that “the substance of a patent right should basically confer the exclusive right on the inventor to the first marketing of the patented product in order to permit a remuneration for the inventive activity” (Merck & Co. Inc. V. Stephar, 13 IIC 70 (1982) – Merck.) The ECJ cannot assume exhaustion if the patentee himself or with his consent the product is marketed in the member states of the European Union where no patent was obtained. Here, a question arises in relation to marketing of invented product. It says that if the patentee gets sufficient remuneration by doing first marketing of invention under an exclusive and monopolistic right then, it is insufficient in country where everyone is free to produce and market the invention. Hence, ECJ derived a consensus that either the patentee should obtain a patent in all the member states of EU to get remuneration under an exclusive right or should not circulate the goods in these countries by himself or with his consent (Edwards and Wiessala 1991). This point of the ECJ is not accepted by many producers in EU because obtaining patent is not only expensive, but also time-consuming. In addition to this, the principles of trade-mark exhaustion also apply to the patent. In the case of trade-mark, consent of trade-mark owner needs to be obtained for function as an indication of origin, otherwise these goods can be ascribed to the another source whereas in the case of patent rationale is quite different. Under the monopolistic conditions of a patent right, a patentee gets an opportunity to cash in upon the first marketing of the products. These monopolistic conditions do not have any meaning in a country where patent has not been obtained in relation to the circulation of the product. The patentee does not have a right to object to the parallel importation if he already has sold out the patent right to someone who can market the products and thus the patentee makes money. Along with this, he has get his reward under the previously owned paten right hence he is not entitled to get any remuneration on the marketing of the goods (European Parliament Fact Sheet 2008). If the patentee wants to enjoy reward upon the first sale under a monopolistic right then he/ she needs to apply for the patent in every country of the EU for production and marketing of the product. However, the fact that patent needs a long time for approval of application, fades the attractiveness of this solution for the patentees. In this context, decision of the Merck v. Primecrown case is also unfortunate because it does not apply at world scale in relation to model of exhaustion. In some circles of the Commission, the decision is consistent with the “Fortress Europe” idea entertained, but it is certainly inconsistent with the Community’s true function to minimize barriers world-wide, not only within Europe (Art. 110 Treaty of Rome). Patentees can advocate ban on the parallel importation but it can be a disastrous economic decision, as it hinders the free trade spirit. It has been argued that in order to respond to the price differences in different markets, patentees would want to parallel imports. Here, attention needs to be paid towards the condition of shutting off markets, which runs against the grain of a global economy, by the patentees to perpetuate the price difference. Consumers in the low price countries are subsidized by the consumers in the high price country while responding to the price difference in different countries. Again, question in relation to subsidies arise because it is controversial in most of the countries, as it does not enjoy democratic legitimacy. In addition, entrepreneurial dictatorship will be replaced by the market democracy in the future because entrepreneurs are only accountable to the shareholders and not to the entire public. Therefore, consumers in the industrialized countries are against of imposing surcharges on them as additional profits are only enjoyed by entrepreneurs and shareholders. There is one more question that whether the benefits are reaching to the consumers in the developing countries as consumers in the industrialized countries are paying higher prices (Heath 2008). It creates a classical theory of exhaustion, which states that under the monopolistic conditions of the patent right, the patentee should be allowed to release the goods. As per this theory, parallel import would be eliminated from countries, where the patentee is operating without obtaining the patent right. In addition to this, parallel importation under the scheme of price control and compulsory license. If this theory is practiced properly then it can improve the condition of free market in two ways. Firstly, price control schemes can be ended by the government and secondly, free market forces will be prevailing in the future market (Lungescu 2006). The term Fortress Europe means the impermeable border created by Europe to protect itself from outside cultural influences, economic rivalry, and mass migration. It was aimed at safeguarding its economic interests rather than adaptation of global market. In addition to this, this approach is confined to common agricultural policy and France. Fortress Europe is a convincing concept as it controls immigrants to come into Europe for economic purpose. However, there is some scope left for the importers who wish to import outside Europe (Bigo and Guild 2005). Thus, based on the above discussion it can be concluded that free movement is still a far off dream for the European Union due to different regulations of different country. However, EU has facilitated the concept of four freedom i.e. free movement of goods, services, people and capital by the creation of various treaties and agreements. The European Commission has been established to monitor the free movement of goods smoothly. Along with this, interpretation of ECJ and different theories are also very important in this regard. References Andenas, M. and Roth, W. 2002. Services and free movement in EU law. Oxford University Press, London. Bigo, D. and Guild, E. 2005. Controlling frontiers: free movement into and within Europe. Ashgate Publishing Ltd, London. Dedman, M. 2010. The origins and development of the European Union 1945-2008: a history of European integration. Taylor & Francis, New York. Edwards, G. and Wiessala, G. 1991. The European Union: The Annual Review 1999/2000. John Wiley & Sons, New York. European Parliament Fact Sheet. 2008. Free movement of goods. Available at: http://www.europarl.europa.eu/factsheets/3_2_1_en.htm [Accessed on: 13 Dec 2012]. Free movement of goods in the EU. 2010. Europedia. Available at: http://europedia.moussis.eu/books/Book_2/3/6/02/?all=1 [Accessed on: 13 Dec 2012]. Heath, C. 2008. Parallel imports and international trade. Available at: http://www.wipo.int/edocs/mdocs/sme/en/atrip_gva_99/atrip_gva_99_6.pdf [Accessed on: 13 Dec 2012]. Lelieveldt, H. And Princen, S. 2011. The Politics of the European Union. Cambridge University Press, Cambridge. Lungescu, O. 2006. The new Europe: Fortress Europe. Available at: http://www.bbc.co.uk/worldservice/theneweurope/wk22.htm [Accessed on: 13 Dec 2012]. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Free Movements of Goods and Parallel Imports Literature review, n.d.)
Free Movements of Goods and Parallel Imports Literature review. https://studentshare.org/law/1766428-love-substantive-eu-law-free-movements-of-goods-and-parallel-imports
(Free Movements of Goods and Parallel Imports Literature Review)
Free Movements of Goods and Parallel Imports Literature Review. https://studentshare.org/law/1766428-love-substantive-eu-law-free-movements-of-goods-and-parallel-imports.
“Free Movements of Goods and Parallel Imports Literature Review”. https://studentshare.org/law/1766428-love-substantive-eu-law-free-movements-of-goods-and-parallel-imports.
  • Cited: 0 times

CHECK THESE SAMPLES OF Free Movements of Goods and Parallel Imports

Judicial politics of the EU Court of Justice

The objectives of the union can be achieved through establishment of a common market that allows free movement of goods within the states of the EU.... Although more than half a century has passed since the formation of the treaty, its notion of the free movement of goods is still in its building stage.... The free movement of goods would endorse production efficiency because the entire process would make various countries' producers compete directly in the open market....
18 Pages (4500 words) Coursework

Free Movement of Goods

These objectives can be achieved through a common market, which facilitates free movement of goods by eradicating the trade barriers.... As a result, EU states will not impose any trade restriction on member states in relation to imports and exports of goods (Dedman 2010).... The free movement of goods within the EU is still a complicated perspective.... There are various hurdles which impede the free movement of goods in the European Union....
8 Pages (2000 words) Essay

National Economic Policy (macroeconomic)

Australia turned away from relative price impulsive properties towards more predictable exports of goods over the last fifteen years.... A rise in terms of trade will enable the country to buy more imports with fewer amounts of exports.... Question a The terms of trade consists of two prime components namely the world prices of the exports and imports and the goods variety that are offered to the consumers.... In short period of time the imports prices fall more rapidly than export prices....
5 Pages (1250 words) Essay

Rights of the IP Holders and Buyers Trading in the EU

free movement of goods and exceptions to free movement respectively.... They cannot be opposed by the right holder” Critically discuss this statement in relation to parallel imports and the exhaustion of rights.... Internal market Article 14 of the EC treaty seeks to create an Internal Market without internal borders so as to facilitate free movement of goods, persons, service and capital known as “four freedoms:.... The European Court of Justice (ECJ) has been consistently nullifying all national laws and practices of member states that militate against the said four freedoms ever since the Dassonvile decision in which the ECJ has stated that laws of the member states that hinder free movement of goods are to be treated as imposing restrictions (quantitative)....
7 Pages (1750 words) Assignment

Trademark Act in the UK

In the early case of Colgate Palmolive Ltd v Markwell Finance Ltd [1989] RPC 497 it was successfully proven that parallel imports are in fact a breach of trademark law, because it devalues the product, which breaches trademark law.... Therefore can Trademark law as Cornish argues can be used to protect trademarks in parallel exportation issues; however with much difficulty in an open market:Any intellectual property right may be used at the frontier of the higher-priced country to close off the entry of goods bought by a parallel importer in the lower-priced country, if those rights extend to the distributor's importation and are not regarded as ""exhausted" by the initial marketing abroad, i....
6 Pages (1500 words) Essay

Economic Effects of NAFTA on Mexico

It is expected that lifting of tariffs allows the exchange of goods and services that will give a chance for lower-cost products to compete with higher costing product.... Source: Congressional Budget Office It is then clearly illustrated that there is a smoother flow of exchange in goods and services, as well as balance in economic exchange.... Of the total imports in 1991, Mexico supplied 52% or roughly 11% of the total consumption.... Below summarises that effect of NAFTA on the broom-corn broom: imports come from Mexico, Honduras, Panama, Colombia, and Hungary....
5 Pages (1250 words) Assignment

European Union Law - Gustave Dassonville

For example, it gives firms the right to import goods for commercial purposes as well as entities individuals to import goods for personal… Additionally, it touches on issues on parallel imports of medicinal products.... Despite the efforts by courts to remove non fiscal measures that hinder the free movement of goods, for example in the case of Dassonville and Cassis de Dijon, more legal problems have emerged and This paper aims at critically discussing the implication of this statement through the use of decided cases and other resources....
7 Pages (1750 words) Essay

Equivalent Effect to Customs Duties

Articles 25 and 90EC are complementary in that they both apply in terms of charges levied on the import of goods.... Secondly, she is the only woman employee, therefore it would also be difficult for her to prove that a significant number of females or a group of women are being discriminated against for the sole reason that they are women, since there are limited parallel cases of women in jobs such as the one Rachel is in.... However, both these provisions cannot apply at the same time because Article 25 applies to any kind of levy on goods, no matter how small, which is imposed when the goods cross the border....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us