In a recent decision on appeal from the Trademark Office, the Administrative Court extended the doctrine of exhaustion of trademark rights, by holding that a Peruvian registrant may not prevent the importation into Peru of products that bear the registered mark, where the registered mark is applied lawfully to the goods outside of Peru by a party with an economic link to the Peruvian registrant.

Gestetner SA, a Peruvian company related to Gestetner International, owned a registration for the GESTETNER trademark in Peru. Based upon their registration, Gestetner SA brought infringement proceedings against Distribuidora Jaam SA, which had imported into Peru goods that were manufactured in the United States by Gestetner International and bore the trademark GESTETNER.

The Trademark Office upheld the claim for infringement, based on the relevant provisions of Andean Pact Decision 344, which provide that a trademark owner may proceed against any third party who, without the owner's consent, imports or sells goods bearing the registered mark. However, the right to prevent such activity does not extend to goods which are introduced into the market by the owner, his licensee or any other person authorized for the purpose. Since Gestetner International was not licensed or authorized by Gestetner SA, the Trademark Office did not apply this exception.

However, the Administrative Court reversed the decision of the Trademark Office and held that there was no infringement because there was an economic link between Gestetner SA, the owner of the mark in Peru, and Gestetner International, the manufacturer of the parallel goods. Although the language of Decision 344 does not provide for such an "economic link" exception, this exception was read into the law by the Court, thereby expanding the doctrine of exhaustion to cases where the Peruvian owner not only consents, but also is economically linked to the source of the parallel imports.

Since this decision should have persuasive effect on similar cases in Peru, it will be interesting to see whether it is followed and to what extent the doctrine of exhaustion may be affected in other Andean Pact member countries.