The ASCDI’s Joe Marion is set to testify at the EU-US trade talks on breaking “Fortress Europe”. Here is the transcript of Marion’s prepared remarks.
THE EU TRADEMARK REGIME: SCALING THE WALLS OF FORTRESS EUROPE THROUGH TTIP
On behalf of the Owners’ Rights Initiative (ORI), I appreciate the opportunity to participate in this event and urge you to address a substantial barrier to U.S. access to a segment of the EU market that represents 10s of billions of dollars a year in trade. I am Joe Marion, president of the Association of Service and Computer Dealers International and the North American Association of Telecommunications Dealers (“ASCDI”), which are ORI members. ORI is an organization of over 20 companies and trade associations, including independent resellers, such as Ascdi members, as well as library associations and the eCommerce platform eBay – all of which are dedicated to the simple, fundamental principle that if “you bought it, you own it”, and should have the right to sell, lend, or give away your personal property. That fundamental principle is the bedrock of the stream of commerce and therefore critical to any meaningful trade liberalization between the U.S. and the EU, particularly for small and medium size enterprises (SMEs).
At the stakeholders’ event in May of this year, ORI explained that the EU regional trademark exhaustion rule is at odds with that principle and creates a substantial barrier to U.S. exports to the EU. Regional trademark exhaustion gives EU trademark owners the right, in perpetuity, to block importation into the EU of genuine new and used trademarked goods exported from the U.S. – and to do so for no reason other than to stifle competition. Within the EU, however, no such barrier exists – trademarked goods first marketed anywhere within the EU are freely traded within the EU. This is commonly referred to in the EU as “Fortress Europe”. In contrast, the U.S. applies an international exhaustion rule under which EU companies can freely trade genuine goods with the United States.
ORI’s proposition is simple. The primary reason for TTIP is to eliminate barriers to enhanced trade between the EU and the U.S. What good are tariff reductions to the tens of thousands of consumers and independent resellers (most of whom are SMEs) seeking to participate in global commerce if they cannot scale the walls of Fortress Europe? Other non-EU member states have been allowed within those walls and an important trading partner such as the U.S. should be as well.
Iceland, Liechtenstein, Norway and Switzerland are non-EU member countries and comprise what is known as the European Free Trade Association (EFTA).[1] In 1992, EFTA and the EU (then known as the European Community) entered into an agreement establishing the European Economic Area (EEA). The EEA extends the EU internal market to the EFTA states, creating what is essentially a free trade area.[2] To support the free movement of goods, Protocol 28 of the EEA applies the EU principle of regional exhaustion of IPR to the entire EEA free trade area. As a result, once a branded product is placed on the market anywhere within the EEA by the trademark owner (or with her consent), the rights holder can no longer block importation of that product from another EEA member state, including one outside the EU.[3]
The EEA stands as a model for expanding the EU’s regional exhaustion rule within the context of a free trade agreement. ORI’s proposal for addressing this issue under TTIP, however, is more modest than the preferred market access the EU granted EFTA countries. ORI seeks only to extend the EU’s regional trademark exhaustion principle to exports from the United States. We are not proposing to alter any of the existing rules with respect other types of intellectual property, i.e., patents and copyright, within the context of these negotiations.
There are several reasons ORI has focused its proposal on the EU’s trademark regime.
- Trade in genuine new and used goods by consumers and independent resellers is a growing segment of the global economy, estimated to be several hundred billion dollars annually;
- SMEs predominate in this market segment; therefore eliminating barriers to trade in this segment will provide meaningful trade benefits for SMEs who are disproportionately disadvantaged under the current trademark regime in the EU;
- It will give consumers, independent resellers, and other SMEs on both sides of the Atlantic a reason to celebrate and support TTIP.
In short, if your goal is to enhance EU-US trade and expand the circle of those who benefit from it – this is the right thing to do.
[1] See EFTA summary at http://www.efta.int/about-efta/european-free-trade-association.
[2] See “Free Movement of Goods”, August 2014, at http://www.efta.int/media/documents/eea/GoodsFactSheet.pdf.
[3] See “Free Movement of Goods” at PDF page 7.