The exhaustion of trademark rights, also known as the principle of exhaustion or the first-sale doctrine, is a crucial element of intellectual property law. It defines the extent to which trademark owners can control goods once they are lawfully placed on the market. The doctrine seeks to balance trademark protection with free trade and consumer access, ensuring that intellectual property rights do not become tools of market monopolization.
What is Exhaustion of Trademark Rights?
The owner of a trademark has the exclusive right to use the mark on their goods and to some extent control its usage. However, this right is subject to the principle of exhaustion, which means that after the first sale of the goods, the trademark owner's rights are exhausted, and they cannot prevent subsequent sales or trade in those goods by prohibiting the use of their trademark. Essentially, the trademark owner can only control the initial marketing of the goods and not subsequent resales.
There are 3 types of exhaustion which are national, regional and international which will give repercussions for the IP rights holder and the consumer.
🔹 1. National Exhaustion
Under this regime, trademark rights are exhausted only within the country where the product was first sold.
🔹 2. Regional Exhaustion
Once goods are placed on the market within a region (e.g., the European Economic Area), the rights are exhausted across all member states. This regime promotes regional economic integration.
🔹 3. International Exhaustion
The broadest form, under which rights are exhausted worldwide after the first authorized sale, allowing parallel imports globally.
As Art. 6 of WTO TRIPS Agreement states, member countries are free to determine their own exhaustion regimes—there is no mandatory uniform approach.
Article 14 of the Law of the Republic of Armenia on Trademarks provides that the sale (use) of goods bearing the trademark, or marked with it, shall not be considered an infringement of the exclusive right to the trademark if such goods have been placed on the market by the trademark owner or with their consent, either in the Republic of Armenia or in another country with which an international agreement on a common market or a common customs border is in force.
From January 1, 2018, the provision of Clause 16, Section 5 of the Protocol on the Protection and Enforcement of Rights in Respect of Intellectual Property Objects under the Treaty on the Eurasian Economic Union has come into force for the Republic of Armenia, according to which the regional principle of exhaustion of the exclusive right to a trademark applies within the territories of the member states.
It follows from the above that the Republic of Armenia has adopted the regional principle of exhaustion of the exclusive right.
Exceptions to the Doctrine
It should be emphasized that the legislation of the Republic of Armenia does not establish any exceptions to the application of the exhaustion principle, nor does there exist any Armenian judicial practice interpreting or delineating the limits of this principle. However, at the international level, courts and intellectual property authorities recognize certain circumstances in which the trademark owner may legitimately object to the further commercialization of goods that have already been placed on the market.
In particular, if the condition of the goods deteriorates after the first placing on the market, the trademark owner does not have to tolerate this. For example, if textiles are offered dyed by the retailer, the trademark owner does not have to tolerate this (German Federal Court of Justice, judgment of 14 December 1995 - I ZR 210/93 - Gefärbte Jeans). However, it is not enough that the way in which the brand is resold can damage its reputation. Rather, the trademark owner must prove that this has actually happened. The resale of branded goods without packaging, for example, can therefore only be prohibited if it can be proven that such a resale actually damages the image of the goods and the reputation of the brand (see ECJ of 12 July 2011 - C-324/09 - L'Oreal SA et al. / eBay International AG et al.).
Furthermore, the CJEU in Peak Holding AB v. Axolin-Elinor AB (Handelskompaniet Factory Outlet) (Judgment of 30 November 2004 – C-16/03) confirmed that exhaustion applies irrespective of contractual restrictions imposed by the trademark owner on the buyer. Once goods are sold within the EU or EEA, the trademark owner cannot prevent their resale in the region, even if the initial agreement sought to restrict such resale.
Conclusion
The principle of exhaustion of trademark rights plays a fundamental role in balancing the interests of trademark owners, traders, and consumers. By limiting the control of trademark owners to the first lawful placement of goods on the market, the doctrine promotes fair competition, parallel trade, and consumer access to goods. In the Republic of Armenia, the exhaustion regime is established on a regional basis within the framework of the Eurasian Economic Union. However, Armenian legislation does not provide for any exceptions to the operation of this principle, nor does there currently exist any judicial practice that interprets or defines its potential limits. Consequently, in the absence of domestic case law, comparative international jurisprudence—particularly decisions of the CJEU and other foreign courts—may serve as persuasive authority in clarifying how the doctrine might be applied in specific circumstances, such as when the condition of the goods has changed or the trademark’s reputation may be at risk.
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Author:
Emma Petrosyan
Senior Associate, Legelata Legal and Tax
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LEGELATA LLC 20/10/2025
