Trademark as a legitimate barrier in trade

Abstract: The relationship between Intellectual Property (IP), free movement of goods and competition law has always been complex. While IP safeguards an exclusive right that is territorial, the free movement of goods and competition principles aim to have free competition on the market and at first sight, they seem to be in conflict. Trademark rights works as a legitimate barrier for market entry and has the possibility to shut out competitors however has the exhaustion principle limit these rights and the European Court of Justice has made a distinction between the existence and exercise of IPRs. Exhaustion makes sure that once a product is put on the Union market by the proprietor or with their consent, they cannot limit competition because their rights are consumed. It has been established that trademarks have different functions that it is worthy of protection, however the question has been raised whether parallel importers or grey marketers distorts fair trade and infringes the proprietors rights by affecting these types of functions. Parallel trade can cause tension between IPR’s and competition law and especially in connection with exclusive licensing. The free movement of goods provisions are also relevant in this context due to that they work as the fundamental framework to trade. They cover both imports and exports and apply to situation where trade barriers emerge, although there are some legitimate justifications for restricting trade. Under competition law a trademark can create market power that could be caught under the Article 101 of the Treaty Of the Function of the European Union that prohibits agreements that distorts competition. IPRs will not distort competition by just existing but the licensing of them may give rise to anti-competitive behaviour. The vertical relationships are usually exempted from the competition laws but there may be types of restrains that will fall under the provisions and especially when having a certain degree of market power. Modern technology has changed the market and created new obstacles that may be approached from both a free movement and competition law perspective. Because of Internets impact on trade it has raised a lot of question about how to apply the classic trademark provisions in a new forum.