Intellectual Property & Market Impact

This assignment delves into the complex relationship between intellectual property (IP) rights and their influence on markets. It examines how IP protection affects market structures, competition, innovation, and ultimately, economic growth. Students are expected to analyze relevant case studies, explore theoretical frameworks surrounding IP and its market implications, and critically evaluate the arguments presented.

INTERNATIONAL
INTELLECTUAL PROPERTY
LAW

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
(i) Intellectual Property Rights and its intention..........................................................................4
(ii) Intention of IPR has conflict with EU single market principles...........................................7
(iii) Solutions according to case law ....................................................................................10
(i) Free movements of good principles on IPR ................................................................10
(ii) Rights conferred on owners of IP..................................................................................11
(iii) Condition for exhaustion of IPR....................................................................................12
(iv) Consequences of exhaustion ...........................................................................................13
Conclusion ....................................................................................................................................14
.................................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Intellectual property rights protect a firm's untouchable assets which allowing
enterprises to profit from their creative and innovative activities. Untouchable assets account
for more than half value of the companies and their importance is growing. Companies
compete more on quality, creativity, price, innovation. Intellectual property is a powerful tool of
any company to become more competitive 1. Intellectual property rights given to a person and
a company over the creativity. It is the protection granted to the creator of intellectual property.
Intellectual property law is creation of exclusive rights from the exploiting and benefiting from
creation by other. This will encourage creative activities and allow investor in research and
helps to develop a fair return on investment.
This report is mainly focus on Intellectual Property Law especially trade and copyright.
In this report there are the meaning and definition of Intellectual Property Rights with the
intention of intellectual property rights legislation along with case law. There is the explanation
of how the intention of intellectual property rights has potential to conflict with EU single market
principles. This report is mainly considered on the case of Deutsche Grammophon
Gesellschaft mbH v. Metro-SB-Grossmarket GmbHand Co. K.G., With the free movement of
goods, rights conferred on owner and condition of exhaustion along with consequence of
exhaustion.
1 Torremans, P.. Copyright Law: A Handbook of Contemporary Research. 2009. Edward
Elgar Publishing

(i) Intellectual Property Rights and its intention
Intellectual property rights basically refers to the protection of creations of the mind,
which have moral and commercial value. Intellectual property rights allow the owner of patent,
trademarks and copyright work to benefit from their own work in creation 2. It is the creation of
protection of exclusive rights from benefits taken by other. Intellectual property rights may have
a direct and substantial impact on industry and trade as the owner of it may through the
enforcement of such right, prevent the manufacture, sale of product. Intellectual property law
deals with the rules for securing and enforcing legal rights to inventions and creative work. Law
protects the ownership of personal property and protect the exclusive control of untouchable
assets.
Intellectual property rights are legal rights. This rights are safeguard of creator of
intellectual goods and services 3. Intellectual property includes the rights relating to:
 Protection provided from unfair competition
 Inventions concerning with attempts made by humans in all fields
 Industrial design
 Designation, trademarks, commercial names and service mark
 Performance given by artists
 Discoveries made in scientific fields
Protection of intellectual property comprises of three mechanisms:
2 Bosworth, D.L. Intellectual property rights. , 2014. Elsevier.
3 Checque, J. A. and Jensen, S. M. INTELLECTUAL PROPERTY RIGHTS. 2010..
Encyclopedia of Contemporary American Social Issues, p.178.

 Copyright: Exclusive rights are given by copyright to the owner which includes the right
of reproducing their work, performing their work and for displaying the work in public. The
owners are also provided economic rights with which they are able to obtain financial benefits
from their work. These rights also restrain other people from doing a particular work without
taking permission 4. Copyright is a legal term describing rights given to creator for their literary
and artistic work. It gives exclusive rights to the creator for a limited time period.
 PATENT: Patent safeguards the experiment and invention which previously have been
made, utilize and purchased by anybody for a particular time. There are three types of patent
Utility, Design and Plant. Utility patents safeguards those invention which are related to
chemical, machines, and technology.5. Design patent protects the unique way appears
manufactured objects. Plant patents protects plant varieties. Patent is specific right which is
provided by the Government to the inventors.
 Trademarks: Trademarks safeguards specific names and specific marks of particular
companies and its products. The main aim of providing trademark is to distinguish a
company and product from another 6. Trademark are signs which automatically
recognized after a business established. It is the recognizable sign and expression
which distinct product and services of particular trade.
4 Frank, A. G.World accumulation. 2011. NYU Press.
5 Burkart, P. Intellectual Property Rights. 2015. The International Encyclopedia of Digital
Communication and Society.
6 Craig, P. and De Búrca, G. EU law: text, cases, and materials. 2011.Oxford University
Press.

To protect the intellectual property of any owner including trademarks, patents and
copyrights the intellectual property obligations is provided. Intellectual property rights
comprises complex and rigid rules. There is mandatory requirement to hire or consult with the
intellectual property lawyer if rules have been broken or contravened. Whatever damages
incurred, can be get back through the help of an experienced or qualified attorney. 7. If any
person violates the intellectual property rights than it is liable to pay compensation. Intention of
intellectual property law is to promote and protect the progress by exchanging limited exclusive
rights for the creator and the owner. There is an absolute protection and a full view to
intellectual property. It also protects the right of cultural heritage and untouchable things.
Creator are legally entitle to protect their rights of intellectual property.
In the case of Deutsche Gramophone Gesellschaft mbH v Metro-SB-Grossmarket
GmbH and Co. K. G., Deutsche Gramophone sold the records in Germany and France but
France subsidiary Polydor could charged lower price due to market conditions. Metro bought
the records in France for resale in Germany at more below price. Deutsche Gramophone claim
its copyright in records to stop this practice. The court ruled that Deutsche Gramophone had
already complete its copyright in records by putting them on the market in France with its
consent. Deutsche Gramophone again appeal for review this and the court held that there is
not any kind or exhaustion is not exist in this case. Deustsche Gramophone has entitle to
protect their rights under copyright act.
7 Haufler, A. Commodity tax harmonization in the European Community: a general
equilibrium analysis of tax policy options in the internal market. 2012. Springer Science &
Business Media.

(ii) Intention of IPR has conflict with EU single market principles
Intellectual property consists or work, products and processes that company or an
individual have created and which gives a competitive advantage. The owner of the right can
claim for its right of intellectual property 8. Patents, trademark and copyrights are the three
broad categories of intellectual property rights. Patents safeguards the invention to sale and
invent in a particular time by any person or authority. Trademarks safeguards the rights of the
owner that it is name will not be used by others to sale in or trade in any commodity . Copyright
control the production, performance, distribution of the work. Copyright is granted automatically
there is no need for formal registration. The basic intention of intellectual property rights are
properly exercised at the time of used against goods of independent competitors in trade. It is
not used against the movement of one member state to another of goods initially connected
with the right of the owner. Objectives of intellectual property is to establish single market and
respect cultural diversity.
EU is one of the mechanism that is without any internal or external barriers in single
market provide free movements of goods and services. There are no common rules within the
EU, barriers to the movement of goods which result from national difference in rights must be
accepted. A function of single market are improve quality, decreases the price, improve
efficiency, competition and trade. European single market was the great achievement. Single
market rules are not made as they should, it conferred lot's of barriers. Single market operation
do not provide materialistic benefits which are required. To improve the single market
8 Dinopoulos, E. and Segerstrom, P. Intellectual property rights, multinational firms and
economic growth. 2010. Journal of Development Economics, 92(1), pp.13-27.

operation the decision has been taken by the commission which is encourage the movement
of service provider, making it suitable to the retailers to perform business activities beyond the
boundaries, easy access to the goods and services by assuring new and modern business
skills through out the European Union. There are some strategies to improve the single
market:
Single market for Services:. 9. All European companies are free to start it in a EU countries and
not bounded to facilitate goods and services in other countries where its already established.
Single market for Goods: Protection of environment, high safety standards as well as easy
mobility of good into the market is main concern or assurance of the the commission.
Standardization: It helps to reduce price, improve quality, enhance competition and facilitates
the acceptance of innovation. Standards are not mandatory and provided for technical grading
or specification for different types of product and service.
Digital Single Market: It is the modernization of intellectual property rights. It brings many
benefits to European business and costumers.
Barriers to Trade: The European commission work to remove barriers of trade and prevent the
new obstacles. It applies treaty rules prohibited quantitative restrictions on imports and export
and manage the technical regulation 10.
9 Dubuisson-Quellier, S. A market mediation strategy: How social movements seek to
change firms’ practices by promoting new principles of product valuation. 2013. Organization
Studies, 34(5-6), pp.683-703.
10 Mailand, M. The common European flexicurity principles: How a fragile consensus was
reached. 2010. European Journal of Industrial Relations,16(3), pp.241-257.

Governance of Single market: Application of EU law are regulated by the commission and it
has introduced an infringement procedure if EU countries contravenes the law. It governs the
function of super market producing evaluation.
Public procurement: It is referred as purchase of goods and services by public authorities just
like regional, national etc. The European Union responsibility is to confirm that public
procurement is performing their duties in fair and transparent manner r according to the single
market operation.
Single market or internal market are common market. For economic integration
common market is necessary element as well as it is important for the European union too. 11.
Internal market is outcome of increased specialization and competition it provide goods and
services to big economies of scale to reach that area where chances of improving the
efficiency and optimum utilization of resources. It is made with the intention to perform the
economic integration where different economic states and its members become integrates
within the European union economy. 12 EU govern the most of the business of goods and
services through the legislation. Single market operation is continuous process without
stoppage and perform integration of service industry. It maximizing international trade with the
market as representative international trade negotiation.
11 Saggi, K. Regional exhaustion of intellectual property. , 2014. International Journal of
Economic Theory, 10(1), pp.125-137.
12 Burkart, P. Intellectual Property Rights. 2015. The International Encyclopedia of Digital
Communication and Society.

(iii) Solutions according to case law
There are different scenario in a given assignment for which the solution is
provided in accordance with given case law.
(i) Free movements of good principles on IPR
According to given case scenario of Deutsche Grammophon Gesellschaft mbH. v
Metro-SB-Grossmärkte GmbH & Co. K.G.. There is restriction in trade practice regarding
copyright material which shows easy mobility of goods and services in the common market leads
by the manufacturers of recordings which is the important right granted him by the legislation.
This right is provided by the member of state to protect the market from the illegal
trade practices. The member of state cannot grant a permission to trade with a
intellectual property rights because it create a monopoly in the market. The free
movement of goods are directly effective which may relied upon the owners rights.
According to article 36 of European Economy community it restricts on the free
movements of goods for the protection of the industries, commercial property. This
restriction is justified to protect the rights which is provided over some specific
property. In accordance with article 30 it recognize the existence of conflict between
intellectual property right and free movements of goods. It resoluteness the conflict
by giving priority to intellectual property rights. In given case law the plaintiff company
is mainly deals in gramophone records and this establishment cannot makes free
movements of goods on the basis of its property right because it creates a conflict
among the others manufactures 13.
There has been always a complex relation between the creation of exclusive
and noncompetitive rights. The European internal market generally ensuring the
provision of free movement of goods. Article 26 deals with the treaty on the
functioning of European union (TFEU) which facilitate internally the market and settle an
area without the internal boundary in which free movements of goods, person,
services, movement of capital is according to the regulation of treaties. The internal
13 Bosworth, D.L. Intellectual property rights. , 2014. Elsevier.

market is one of the fundamental ideal for the EU. Internal market helps the owners
to interact in trade their product and services across national borders by third party
importers.
(ii) Rights conferred on owners of IP
In accordance with given case law the plaintiff (Deutsche Grammophon
Gesellschaft mbH.) has no right to make free transfer of goods on the basis of
property rights. It create a barriers to other manufacturer's to sell their product in the
market. The rights which are provided to the owners are very exclusively and different
from the other person who merely owns a copy of that work. Deutsche grants its right
of copyright within the France and German which are in EU border. Owner cannot
allotment his rights as free movement of goods but he can grant his right to other
enterprises for some specific period only . The proprietor has to made an agreement
before granting copyright to any other manufacture or enterprises. Deutsche can grant
its copyright to other enterprises by entering into a agreement.
(iii) Condition for exhaustion of IPR
According to case law the plaintiff is the manufacture of gramophone records
has made an agreement with the manufacturer to sold the records on the basis of
price maintenance agreements. Under which Polydor as listed as application for
injunction. The company is selling its records directly to Germany through agents at
DM 12.33 plus 11% value added tax. It selling its records through retailers or two
book-wholesalers. Defendant company (Metro-SB-Grossmärkte GmbH & Co. K.G.) has
made an contended that the agreements which are made by the subsidiaries company
are void according to article 85 of European Economy community. The whole
agreements is to be made between the European border only. According to case the
delivery of Polydor records which are manufacture in Germany to the foreign
subsidiaries of the plaintiff company which having exclusive distribution rights is not
exhausted under section 17(2) of the URG with effect that the appellant company has
no longer influence over the distribution of records which had reached France.

In accordance with court it has found that the right which is exclusively
dimension to Deutsche Grammophon to distribute the records in Germany had not
been exhausted by the delivery to Polydor Paris. According to section 17 of copyright
statue there is no exhaustion of the rights. The principles of exhaustion which provides
a ground for the European courts for the decision in different areas.
As per the case law the Deutsche Grammophon Gesellschaft mbH has deliver its
records to the Germany and France which create a single market by the company 14.
If the company is creating a single market then the company has to prepare a
strategies in relation with goods, services. It may provide a positive attribute towards
company because it increases the competition in the market , trade, improving the
efficiency, raises quality and helps in cut down the prices. The internal market helps
the company to create a single line market through strategies. The company can
make a free movement of goods through internal market which makes an condition on
import, export, custom, duty etc within the European union. The member of the state
remove all the internal trade which create a barrier to promote the efficiency in the
production.
(iv) Consequences of exhaustion
The principles of exhaustion is constituted to determine the legal doctrine which
provides a right to the copyright owners to control over the copies of their work which
exhausts on the first sale by the owner of copyright with his consent. The owner have
to made a control over the use of copyright beyond the limit. European union (EU)
has developed the principles of exhaustion but it is primarily meant to preserve the free
movement of goods throughout EU and across the EU member state. These doctrine is
only applies to control distribution such as resale, export, import 15. It does not apply
14 Reinecke, J., Manning, S. and Hagen, V. O., 2012. The emergence of a standards
market: Multiplicity of sustainability standards in the global coffee industry. 2012.
Organization Studies, 33(5-6), pp.791-814.

to the right of rent, perform or show a copyright work which is specified to subject
matter of the owners right to control over each and every use of right.
According to case law Deutsche Grammophon Gesellschaft mbH. v Metro-SB-
Grossmärkte GmbH & Co. K.G the exclusive right of distribution of plaintiff company is
not exhaust as per section 17(2). The tiredness of the intellectual property right
represent a limit of IP rights. There are lots of effect if the owner of the copyright
insert a restrictive clause for using copyright during agreement. In given case law the
appellant company does not insert such type of restriction when they are selling their
records to Germany and France. If the owner of the copyright is dealing outside the
EU borders then rights of the IP holder is protected. The holder can insert a clause
while doing a agreements outside the EU border to protects its rights against
registered copyright. Rights of holder must be protected so that outsider person
cannot use in illegal way which may effect to the holder 16.
Those agreements which are entered by the Deutsche Grammophon Gesellschaft
mbH to sale their records through agent, retailer and two book whole seller which is
an exclusion distribution rights is not exhausted as per section 17(2) of URG. Under
this case law the company is directly dealing in selling their records to France and
Germany with its Polydor marks. These intellectual property rights held to be exhausted
by the company which is released into the market in any member state by the owner
of copyright with their consent. If it is not worn-out without the consent of holder then
it may create a problem to owner as well as manufacturer's. In a copyright agreements
15 Burkart, P. Intellectual Property Rights. 2015. The International Encyclopedia of Digital
Communication and Society.
16 Rutz, O.J. and Sonnier, G.P.,. The evolution of internal market structure. Marketing
Science. 2011. 30(2), pp.274-289.

the manufacturers cannot use the right of the owner without its consent whether in EU
or outside the EU borders 17.
CONCLUSION
By studying the whole report which is base on the case law of Deutsche Grammophon
Gesellschaft mbH. v Metro-SB-Grossmärkte GmbH & Co. K.G which stated about the
intellectual property rights with the intention of IPR legislation. Furthermore it indicate the
principles of single market in European Union and their conflicts. It also stated the intention
to solve the conflict with EU single market principles. In accordance with the different cases
has been assign which is to be solve through given case law. It includes the free
movement of goods principle in relation with internal market which shows the right of the
intellectual property holder within the EU borders. It also shows that the European court tries
to balance this differentiation to ensure the effectiveness of internal market and free
movement provisions. The additional report is related to the status of accomplishment of intellectual
property rights. It consider and deals with the obligation and rules of European Union. In addition
to these the principle of single market which indicate the positive impact for the company.
Under this written document their are consequence of exhaustion is also analysis in relation
with protection of rights of the holders within the European union or outside the EU borders.
17 The european single market. 2016. [online]. Available through:
<http://ec.europa.eu/growth/single-market/index_en.htm>. [accessed on 14th june
2016].

REFERENCES
Books and Journals
Bosworth, D.L. Intellectual property rights. , 2014. Elsevier.
Burkart, P. Intellectual Property Rights. 2015. The International Encyclopedia of Digital
Communication and Society.
Checque, J. A. and Jensen, S. M. INTELLECTUAL PROPERTY RIGHTS. 2010..
Encyclopedia of Contemporary American Social Issues, p.178.
Ciocoiu, N. C. Considerations about Intellectual Property Rights, Innovation and Economic
Growth in the Digital Economy. 2011. Economia. Seria Management, 14(2), pp.310-
323.
Craig, P. and De Búrca, G. EU law: text, cases, and materials. 2011. Oxford University Press.
Dinopoulos, E. and Segerstrom, P. Intellectual property rights, multinational firms and
economic growth. 2010. Journal of Development Economics, 92(1), pp.13-27.

Dubuisson-Quellier, S. A market mediation strategy: How social movements seek to change
firms’ practices by promoting new principles of product valuation. 2013. Organization
Studies, 34(5-6), pp.683-703.
Frank, A. G.World accumulation. 2011. NYU Press.
Haufler, A. Commodity tax harmonization in the European Community: a general equilibrium
analysis of tax policy options in the internal market. 2012. Springer Science &
Business Media.
Horspool, M. and Humphreys, M. European Union Law. 2012. Oxford University Press.
Mailand, M. The common European flexicurity principles: How a fragile consensus was
reached. 2010. European Journal of Industrial Relations,16(3), pp.241-257.
Oliver, P. and Navarro, M. M.,. Free movement of goods. European Union Law, p.325.
Online
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Structural Equation Modeling Approach Supporting Hobfoll's Loss Spirals. 2010.
Journal of Applied Social Psychology, 40(6), pp.1357-1384.
Reinecke, J., Manning, S. and Hagen, V. O., 2012. The emergence of a standards market:
Multiplicity of sustainability standards in the global coffee industry. 2012. Organization
Studies, 33(5-6), pp.791-814.
Rutz, O.J. and Sonnier, G.P.,. The evolution of internal market structure. Marketing Science.
2011. 30(2), pp.274-289.

Saggi, K. Market Power in the Global Economy: The Exhaustion and Protection of Intellectual
Property*. 2013. The Economic Journal, 123(567), pp.131-161.
Saggi, K. Regional exhaustion of intellectual property. , 2014. International Journal of
Economic Theory, 10(1), pp.125-137.
Tomaskova, E. Internal barriers of market orientation application. 2015. Economics and
Management, (14), pp.535-540.
Torremans, P.. Copyright Law: A Handbook of Contemporary Research. 2009. Edward Elgar
Publishing
Von Bogdandy, A., Founding principles of EU law: a theoretical and doctrinal sketch. 2010.
European Law Journal, 16(2), pp.95-111.
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Quarterly, 61(02), pp.541-550.
What are intellectual property rights?. 2016. [online]. Available through:
<https://www.wto.org/english/tratop_e/trips_e/intel1_e.htm>. [Accessed on 14th June
2016].
The european single market. 2016. [online]. Available through:
<http://ec.europa.eu/growth/single-market/index_en.htm>. [accessed on 14th june
2016].