Definition and fundamentals of the exhaustion defense
Die Exhaustion defense is a term from German civil law, especially relevant in the law of obligations as well as in intellectual property law (such as patent law, trademark law, copyright law). It refers to the legal argument brought forward by a debtor to assert that a claim has already been fully satisfied through exhaustion and is thus already fully satisfied, or that the relevant right has been consumed by a particular process. The exhaustion defense differs in its specifics depending on the area of law but always signifies the end of the enforceability of a right by an entitled person.
Exhaustion defense in the law of obligations
Legal nature and function
In the law of obligations, the exhaustion defense is a plea within the meaning of § 242 BGB (good faith). It allows the debtor to defend against a claim asserted again by demonstrating that the claim has already been completely fulfilled.
Requirements
The assertion of the exhaustion defense typically requires:
- Existence of a claim: A claim was originally lawfully asserted.
- Exhaustion by satisfaction: The debt was fully discharged, typically by performing the owed action, payment, or omission.
- No further claim: The enforceable right of the creditor expires upon satisfaction of the claim.
Procedural significance
If a claim is asserted in court, the debtor may raise the exhaustion defense in the proceedings. This leads to dismissal of the claim if the court is satisfied by the debtor’s pleadings. The burden of proof that the claim has been fulfilled and is thus exhausted generally lies with the debtor.
The exhaustion defense in intellectual property law
Basic principle of exhaustion
In the context of intellectual property law, exhaustion (also ‘principle of exhaustion’) means that the exclusive right in a protective right (such as a patent, trademark, or copyright) regarding a particular product lapses after its first placing on the market. Here, the exhaustion defense is asserted as a means of defense against claims based on intellectual property rights (e.g., cease-and-desist, destruction, or compensation claims).
Relevant areas of law
Patent law (§ 9 PatG)
According to § 9 PatG, the exhaustion defense is permissible if a patented product was placed on the market with the consent of the patent holder. After this first sale, the patent holder can generally no longer enforce distribution restrictions against purchasers.
Trademark law (§ 24 MarkenG)
In trademark law, § 24 MarkenG regulates exhaustion. The trademark right in a product is generally considered exhausted after it has been placed on the market for the first time by the trademark owner or with their consent. Exhaustion applies within the European single market; exceptions exist for legitimate reasons to further enforce trademark rights (e.g., in case of alterations to the product).
Copyright law (§ 17 UrhG)
In copyright law, distribution of a copy of a work is exhausted under § 17 (2) UrhG after it has been placed on the market for the first time. This concerns, for example, the resale of books or CDs, provided the initial placing on the market was with the author’s consent.
Practical significance
The exhaustion defense protects legal transactions and secures the free movement of goods by limiting exclusive rights after their economic realization. Without the exhaustion defense, right holders could exercis excessive control over the trade of acquired products, which would conflict with the fundamental concepts of ownership and the market economy.
Exhaustion defense in enforcement proceedings
The exhaustion defense also applies in enforcement law. The debtor can prove that the adjudicated claim has already been fulfilled and enforcement is therefore inadmissible. In this context, special reference is made to the objection to enforcement pursuant to § 767 ZPO.
Distinction from other defenses
The exhaustion defense differs from other defenses in the law of obligations, such as the statute of limitations or the defense of non-performance (§ 320 BGB). While the latter are based on temporal or contractual grounds, the exhaustion defense is based on the complete extinction of the claim through satisfaction or consumption of the right.
International aspects and European harmonization
The principle of exhaustion is also of great significance under Union law. The so-called ‘Community exhaustion’ ensures that, after the first marketing within the European Union, secondary sale is generally not subject to the consent of the rights holder. The design of the exhaustion defense in the international context may, however, vary from country to country.
Significance for practice
The exhaustion defense is a central means of defense in practice to counter unjustified claims. Especially in the field of intellectual property rights, it prevents excessive control by right holders after the initial sale. In daily business and legal disputes, it provides effective protection against being held liable several times on the same legal basis.
Literature references
- Palandt, Civil Code (BGB), current edition: Commentary on §§ 241 ff. BGB
- Schricker/Loewenheim, Copyright Law, Commentary, § 17 UrhG
- Ingerl/Rohnke, Trademark Act, Commentary, § 24 MarkenG
- Benkard, Patent Act, Commentary, § 9 PatG
- Musielak/Voit, Code of Civil Procedure, Commentary, § 767 ZPO
This article provides a comprehensive overview of the exhaustion defense, its requirements, and legal significance in various statutory areas. The exhaustion defense ensures legal certainty and makes a significant contribution to the stability and flexibility of private law relationships.
Frequently Asked Questions
What effect does the exhaustion defense have in civil proceedings?
In German civil proceedings, the exhaustion defense allows the defendant to argue that a claim is exhausted due to prior use or sale of a legally protected product (for example, a copyright- or patent-protected product) by the right holder themself or with their consent within Germany or the European Union. This means that, after the initial placing on the market of the protected object, no further cease-and-desist or compensation claims can be enforced against third parties for further sale or use of that specific item. Therefore, the exhaustion defense is a substantive legal defense that can result in the dismissal of a claim to the extent that the asserted claim is based on circumstances where exhaustion has already occurred.
Who is responsible for pleading and proving the requirements of the exhaustion defense?
In civil proceedings, the burden of allegation and proof for the factual requirements of the exhaustion defense generally lies with the defendant. They must present specific facts and, if contested, prove that the object in dispute was placed on the market with the rights holder’s consent. The plaintiff only needs to provide substantiated denial, and if the defendant meets their burden of demonstration, the plaintiff may in turn present circumstances that oppose exhaustion, such as use outside the European Economic Area or a subsequent ban.
In which areas of law is the exhaustion defense applied?
The exhaustion defense is particularly relevant in intellectual property law, which includes trademark law, patent law, utility model law, design law, and copyright law. It can also play a role in connection with supplementary competition law protection of achievements. In all these areas, the exhaustion provision safeguards the free movement of goods by preventing rights holders from exerting further control over the distribution or use of the product once it has been placed on the market.
Can the exhaustion defense be raised against contractual claims?
The exhaustion defense primarily refers to statutory claims, especially claims for injunctive relief and damages arising from the respective protective right. Contractual claims, for example from license agreements, are generally not directly covered by exhaustion, as the contractual agreements apply in this respect. Nevertheless, exhaustion may have indirect significance, for instance, if the contract refers to the statutory exhaustion rule or if protective rights are incorporated as contractual objects.
How does the exhaustion defense relate to the issue of parallel imports?
Parallel import of goods is a classic application for the exhaustion defense. If a product is placed on the market in the European Economic Area (EEA) with the consent of the rights holder, the rights holder can generally no longer assert infringement due to onward sale in the EEA, as their rights are exhausted in this respect. Thus, the exhaustion defense is a central instrument for enabling the free movement of goods within the EEA, but it also limits the rights holder, as they can no longer claim cease-and-desist or damages for parallel imports.
Does the exhaustion defense also apply to imports from countries outside the European Economic Area?
Exhaustion generally only applies to goods placed on the market within the European Economic Area (EEA). If a protected product is placed on the market with the rights holder’s consent outside the EEA and then imported into the EEA, the importer cannot normally invoke the exhaustion defense. The rights holder may continue to take action against such import and distribution within the EEA unless explicit consent to the import has been given (key terms: international vs. regional exhaustion).
Can the exhaustion defense be contractually excluded?
In principle, parties may agree on contractual provisions regarding the scope of exhaustion. However, such agreements are only valid internally between the contracting parties and cannot be asserted against third parties, in particular bona fide purchasers. In external relations, the legal exhaustion rule is mandatory in favor of the free movement of goods. A contractual exclusion of exhaustion therefore generally has effect only between the immediate parties and does not affect third parties.
