Gfa Final Report Final

THE EUROPEAN UNION’S FRAMEWORK CONTRACT:
FWC SIEA 2018: LOT 2: Infrastructure, sustainable growth and jobs
Study to assess the socio-economic

impact of the international exhaustion
of Trademark rights in Mauritius
Specific contract 2018/398478/1
Final Report
Prepared by
Dr. Ana María Pacón, LL.M.
October 2019
This project is
funded by
the European A project implemented by Consortium Partner
Union GFA Consulting Group GmbH
Study to assess the socio-economic impact of the international exhaustion of
Trademark rights in Mauritius
Specific contract 2018/398478/1
Final Report
October 2019
Prepared by:
Dr. Ana María Pacón, LL.M.
Disclaimer
The contents of this publication are the sole responsibility of the contractor and can
in no way be taken to reflect the views of the European Union.
Address
GFA Consulting Group GmbH

Eulenkrugstraße 82
D-22359 Hamburg
Germany
Phone: +49 (40) 6 03 06 – 703

Fax: +49 (40) 6 03 06 – 799
E-mail: PD.SIEA@gfa-group.de
TABLE OF CONTENTS
1. General Considerations .................................................................................................. 1
2. Factual background......................................................................................................... 3
3. The exhaustion of trade mark rights ............................................................................. 5
4. Economic foundations of parallel trade ........................................................................ 8
4.1 Causes of parallel trade ............................................................................................... 8
4.1.1 Price differences between import and export countries ..................................... 8
4.1.2 Transaction costs, market entry barriers and framework conditions in the
import country ..................................................................................................... 9
4.2 Extent and importance of parallel trade ........................................................... 10
4.3 Interest of the TM titleholders and the exclusive distributors ........................... 11
4.4 Interest of the parallel importer ........................................................................ 11
4.5 Consumer interest ............................................................................................ 12
5. Arguments in pro of national exhaustion of trademark law ..................................... 13
6. Arguments in pro of international exhaustion of trademark law ............................. 15
7. The economic model ..................................................................................................... 16
8. Automotive Industry ...................................................................................................... 21
8.1 Companies operating with foreign trademarks ................................................ 21
8.2 Contribution of companies in terms of employment, added value, investment
and innovation .................................................................................................. 23
8.3 Social costs and benefits of the eventual transition to the international
exhaustion of trademark rights ......................................................................... 25
8.3.1 Representatives of foreign TMs in Mauritius.................................................... 25
8.3.2 National producers ........................................................................................... 26
8.3.3 Consumers ....................................................................................................... 27
9. Pharmaceutical Industry ............................................................................................... 29
and innovation .................................................................................................. 31
9.3 Social costs and benefits of the eventual transition to international exhaustion
of trademark rights ........................................................................................... 33
9.3.3 Consumers ....................................................................................................... 36
10. Textile and Clothing Industry ....................................................................................... 38
and innovation .................................................................................................. 41
STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

INTERNATIONAL EXHAUSTION OF TRADEMARK RIGHTS i
Interim Report (final), September 2019

10.3.3 Consumers ....................................................................................................... 45
11. Food and beverages ...................................................................................................... 47
and innovation .................................................................................................. 49
11.3.3 Consumers ....................................................................................................... 53
12. Perfumery, cosmetic or toilet preparations ................................................................ 54
and innovation .................................................................................................. 59
12.3.3 Consumers ....................................................................................................... 61
13. Global assessment of costs and benefits................................................................... 62
13.1 Quantitative estimation of costs and benefits by sectors ......................... 62
13.2 Qualitative assessment of costs and benefits by sectors ......................... 67
13.2.1 Automotive Industry ...................................................................................... 67
13.2.2 Pharmaceutical Industry ............................................................................... 69
13.2.3 Textile and clothing Industry ........................................................................ 70
13.2.4 Foods and beverages Industry ..................................................................... 71
13.2.5 Cosmetics Industry ........................................................................................ 72
13.3 Qualitative evaluation of the arguments in favor of national exhaustion 73
13.4 Qualitative evaluation of the arguments in favor of international
exhaustion ...................................................................................................................... 76
13.5 Comments on concerns collected in Mauritius .......................................... 80
14. Possible displacement of existing industries in Mauritius ....................................... 82
15. The Madrid Protocol ...................................................................................................... 83
15.1 Objective .......................................................................................................... 83
15.2 Advantages for the trademark owner ............................................................... 83
15.3 Advantages for the country and trademark offices .......................................... 85
15.4 Disadvantages.................................................................................................. 85

INTERNATIONAL EXHAUSTION OF TRADEMARK RIGHTS ii
15.5 Accession Procedures ..................................................................................... 86
15.6 Effects of Accession ......................................................................................... 87
16. Conclusions ................................................................................................................... 88
17. Recommendations......................................................................................................... 92
17.1 Exhaustion regime of trademark law ........................................................... 92
17.2 Capacity building programs.......................................................................... 92
17.3 Enforcement ................................................................................................... 92
ANNEX I: Persons interviewed .......................................................................................... 93
ANNEX II: Survey (template) .............................................................................................. 95
ANNEX IV: MODEL INSTRUMENT OF ACCESSION TO THE PROTOCOL RELATING
TO THE MADRID AGREEMENT CONCERNING THE INTERNATIONAL
REGISTRATION OF MARKS ......................................................................................... 96
ANNEX V: THE PROTOCOL RELATING TO THE MADRID AGREEMENT CONCERNING
THE INTERNATIONAL REGISTRATION OF MARKS .................................................. 97
PART I – MODEL PROVISIONS ..................................................................................... 98
PART II – NOTES ON THE MODEL PROVISIONS .....................................................106
MODEL PROVISION 2: LANGUAGE ...........................................................................106
PART III – ISSUES FOR FURTHER CONSIDERATION..............................................117
PART IV – PRINCIPAL DECLARATIONS THAT MAY BE MADE IN CONNECTION
WITH ACCESSION TO THE MADRID PROTOCOL .....................................120
PART V – LINKS TOTHE LEGAL FRAMEWORK OF THE MADRID PROTOCOL AND
TO OTHER REFERENCE MATERIAL ..........................................................122
TABLES
Table 1 : Mauritius merchandise exports and imports, and exports and imports of
commercial services 2007-2017 (Million dollars)............................. 4
Table 2 Registration of new motor vehicles 2014 – 2017 and Registered motor
vehicles 2017..................................................................................22
Table 3 Automobile sector: Entreprises ranking by turnover. Million Rs 2017 .....23
Table 4 Total imports by section / main commodities, 2013 – 2017 Value (c.i.f.)*:
(Rs. Million) .....................................................................................23
Table 5 Budgetary Central Government Revenue, 2014 - 2016/17 (Rs million) ..24
Table 6 Repair of motor vehicles and motorcycles ...............................................24
Table 7 Production account of the industry group: Manufacture of motor vehicles,
trailers and semi-trailers / Manufacture of other transport
equipment, large establishments, 2016 Rs Million ........................25
Table 8 Biggest companies in the health sector ...................................................30
Table 9 Employment in large establishments1 by industry group March 2013 -
March 2017 .....................................................................................33
Table 10 Price difference between medicaments .................................................33

INTERNATIONAL EXHAUSTION OF TRADEMARK RIGHTS iii
Table 11 Production account of Non-EOE Sector by industry group, 2016, Rs
million..............................................................................................35
Table 12 Biggest companies in the textile and clothing sector .............................39
Table 13 Trade 2015 by Chapter (Rs. Million) ......................................................41
Table 14 Employment in large establishments1 by Industry group March 2000,
and march 2013 - 2017 ..................................................................42
Table 15 Production account of the Industrial Sector by industry group, 2016 (R
Million) ............................................................................................42
Table 16 Gross Domestic Fixed Capital Formation at current prices by type and
use ..................................................................................................43
Table 17 Production account of Non-EOE Sector by industry group, 2016, Rs
million..............................................................................................45
Table 18 Biggest companies in the food and beverage sector .............................48
Table 19 Number of large establishments and employment,1 by industry group,
March 2013 – 2017 ........................................................................49
Table 20 Production account of the Industrial Sector by industry group, 2016
(Large establishments. Rs Million) .................................................50
Table 21 Production account of Non-EOE Sector (excluding Sugar) Large
establishments, 2016 Rs Million ....................................................52
Table 22 Biggest companies in the cosmetic sector .............................................55
Table 23 Imports of cosmetics, HS Code 33, 2017, in Rs ....................................57
Table 24 Total estimation of parallel import costs for representatives of foreign
trademarks and consumer surplus, Rs million, 2017 ....................64
Table 25 Total estimation of the costs of parallel imports for domestic producers
and the surplus of consumers, Rs million, 2016 ............................66
Table 26 Total benefit to consumers and net social benefit, Rs million ................66

INTERNATIONAL EXHAUSTION OF TRADEMARK RIGHTS iv
1.General Considerations
To attain the goal of the study five specific areas will be covered. These five studies
corresponds with the industrial sectors which would be the most affected by the
implementation of an international regime of parallel imports. These would be
automobiles and their spare parts, pharmaceuticals, textile, food and beverages, and
cosmetics, forward to previous international experience and the information achieved on
site in Mauritius, in coordination with the International Trade Division of the Ministry of
Foreign Affairs, Regional Integration and International Trade.
As for the relevant stakeholders operating with foreign trademark licenses, the
information required is that of each of the products identified with those trademarks and,
first, the value of the respective imports.
As the information by company and at the trademark level was not available, it was
agreed to use alternative information to indirectly estimate the costs and benefits
resulting from the transition from the national to the international exhaustion of trademark
rights regime. Depending on the types of activities selected, it was more or less
complicated to find suitable proxy variables. Consequently, quantitative impact estimates
are an approximation.
Similarly, estimating the impact on domestic producers is also an approximation, the

accuracy of which depends on the extent to which the statistical data corresponds to the
production of perfect substitutes for products imported with foreign trademarks.
The choice between the regime of national or international exhaustion of trademark law
is a State decision that requires taking into account all available sources of information;
of a political, historical, economic and even of sociological nature.
It is attributed to Sir Winston Churchill the assertion that war is too important to be left to
the military, a phrase that can be extended to all professions and State decisions. That
is, the government should not wait for a mathematical formula to take a decision, but
should gather opinions from different professional approaches and stakeholders, to
weigh them out and decide thinking about the long-term benefit of the country.
In the present case, the historical context places the decision in the aftermath of a break
in the orientation of world trade policy in 1994. It was a break because the previous
orientation was towards free trade.
This orientation begins as far back as the eighteenth century, with Adam Smith and the
beginning of the modern economy, followed by David Ricardo and the controversy over

INTERNATIONAL EXHAUSTION OF TRADEMARK RIGHTS 1
the free import of grains. The last episode began with the Breton Woods agreements of
1944, at the end of the Second World War.1
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS or

TRIPS Agreement) of 1994 between all the members of the World Trade Organization
(WTO)2 is the most important multilateral milestone of the 20th century, because it
definitively established a link between intellectual property (IP) and trade.
TRIPS is the first international agreement requiring its Members to implement a detailed
set of substantive norms - in all intellectual property (IP) categories - within their national
legal systems, as well as requiring them to establish enforcement measures and
procedures meeting minimum standards. In addition TRIPS allow each Member to use
the WTO Dispute Settlement system for IP matter.
The process did not end with the TRIPS Agreement which instead fostered the beginning
of a new era that has not yet ended, in which the developed countries have kept
struggling to promote a new wave their strengthening of intellectual property rights’
systems, beyond the provisions set forth by TRIPS and the treaties of the World
Intellectual Property Organization (WIPO) in the frame of the Free Trade Agreements
(FTA).3
Hence, in Braithwaite and Davos (2000) developed countries pressed to conceive new
rules and regulations, while developing countries tend to accept them but trying to reduce
their impact incorporating other principles, among them the exhaustion of intellectual
property rights at national and international level.4 In this line, Álvaro Díaz of the UN-
ECLAC indicates that, in the debate on Free Trade Agreements, the United States
underlines the principle of national exhaustion of rights while the countries of Latin
America and the Caribbean emphasize the principle of international exhaustion of the
rights. Indeed
“The countries of the region need to pursue intellectual property policies that facilitate
the creation of a new intellectual property system for the twenty-first century, one that
will help the region to achieve its goals in terms of growth, equity and democracy. The
challenge consists of striking a new type of balance between the protection of
1 See Samuelson, Paul A., Economics, an Introductory Analysis, McGraw-Hill

Company, New. York, 1948.
2 The TRIPS Agreement is Annex 1C of the Marrakesh Agreement establishing the
World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994, available at:
https://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm.
3 See Antons, Christoph/Hilty, Reto, Intellectual property and free trade agreements in
the Asia-Pacific region, Springer, Heidelberg/New York/Dordrecht/London, 2015;
Maskus, Keith/Ridley, William, Intellectual Property-Related Preferential Trade
Agreements and the Composition of Trade, 2017, available at:
https://www.oecd.org/site/stipatents/IPSDM17_1.1_Maskus_paper.pdf
4 See Comisión Económica para América Latina y el Caribe (CEPAL), La propiedad intelectual después de los
tratados de libre comercio, Santiago de Chile, 2008.

intellectual property rights and social interests, and between the need for private
control over and public access to knowledge and information”. 5
The purpose of intellectual property is to generate sufficient incentives to promote

innovations and creations, while ensuring the social dissemination of its contents and
benefits. This is not achieved by establishing eternal and absolute property rights, but
temporary and subject to a series of limitations and exceptions. Intellectual property
represents the balance between private control and social access, between incentives
for inventors and creators and the social right of access to new knowledge and
information.
2. Factual background
Mauritius is an island state of 1.3 million inhabitants in 1,979 square km, which implies
that the population density is high, about 650 per square kilometre.
The country’s economy has made great strides since its independence in 1968, and in
2017 real gross domestic product (GDP) growth reached 4%. The main drivers of growth
were to be located at the services sector, especially finance, the trade and
accommodation services. The latter benefited from a buoyant tourism sector; a key
sector supported by the recent acceleration in the global economy. Tourist arrivals
increased by 5.2% in 2017 to reach 1.34 million—a number equivalent to the island’s
entire resident population.6
In accordance to Mauritius Trade Easy, a website supported by the Ministry of Foreign

Affairs, Regional Integration and International Trade of Mauritius:
Mauritius has a liberal economic and trade policy, with a trade-to-GDP ratio of 98%
(World Bank, 2017). The country is a member of the WTO, as well as other regional
economic groups (COMESA, SADC, IOC). Mauritius aims to transform the island into
an open and globally competitive economy and to fully integrate it into the world trade
system through its trade policies. Comparatively, the island does not have many trade
barriers and customs duties are low (the average applied tariff is only 0.9%).7
Mauritius has been a Member of the WTO since 1995, and of the General Agreement on
Tariffs and Trade (GATT) since 1970.8
The country's main trade partners are the European Union (led by France and the United
Kingdom), China, India, South Africa and the United States.9
5 Comisión Económica para América Latina y el Caribe (CEPAL), op.cit.

6 The World Bank in Mauritius, Mauritius Overview. Last Updated: Jun 04, 2018, available at:
https://www.worldbank.org/en/country/mauritius/overview.
7 See http://www.mauritiustrade.mu/en/trading-with-mauritius/mauritius-trade-profile#classification_by_products.
8 See https://www.wto.org/english/thewto_e/countries_e/mauritius_e.htm.

Mauritius exports clothing, textiles, sugar, cut flowers, molasses and fish and radio
transmission equipment. Sugarcane occupies 90% of the country's cultivated land and
represents 15% of its exports. The export of services has been on the rise. As far as
services are concerned, the country has a positive trade balance.
The island imports petroleum products (petroleum/oil and derivates), fish, vehicles,
medicine and radio transmission equipments.10
Mauritius imports more than it exports, and the current account deficit continued to be
supported by financial and capital net inflows, including net inflows to the large offshore
corporate sector. Thus, the overall balance of payments remained moderately in surplus,
and gross international reserves rose to $ 6.1 billion in January 2018 (equivalent to over
10 months of imports).
As can be seen in Table 1, the trade deficit is permanent.
Table 1 shows that the export of services grew strongly between 2007 and 2011, and
the country maintains a positive balance of services.11
Table 1 : Mauritius merchandise exports and imports, and exports and imports of commercial services 2007-
2017 (Million dollars)
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
X 2238 2384 1939 2261 2565 2649 2869 3094 2662 2376 2363
M 3894 4651 3733 4386 5149 5354 5397 5610 4790 4655 5253
Trade deficit - - - - - - - - - - -
1656 2267 1794 2125 2584 2705 2528 2516 2128 2279 2890
Xs 2194 2530 2225 2656 3215 3364 2734 3119 2802 2835 2981
Ms 1562 1910 1586 1951 2428 2382 2143 2426 2188 2038 2231
Services balance 632 620 639 705 787 982 591 693 614 797 750
X Total 4432 4914 4164 4917 5780 6013 5603 6213 5464 5211 5344
M Total 5456 6561 5319 6337 7577 7736 7540 8036 6978 6693 7484
Balance in - - - - - - - - - - -
Current C 1024 1647 1155 1420 1797 1723 1937 1823 1514 1482 2140
Source: World Trade Organization, World Trade Statistical Review 2018, available at:
www.wto.org/statistics
X and M = merchandise exports and imports
Xs and Ms = exports and imports of commercial services
11 See http://www.mauritiustrade.mu/en/trading-with-mauritius/mauritius-trade-profile#classification_by_products

Figure 1 Title
6000
5000
4000
3000
2000
1000
0 X M Xs Ms
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: World Trade Organization, World Trade Statistical Review 2018, available at:
www.wto.org/statistics
X and M = merchandise exports and imports
Xs and Ms = exports and imports of commercial services
3. The exhaustion of trade mark rights

Trademark rights grant trademark owners the ability to exclude third parties from using
identical or similar marks on identical or similar products when such use could lead to a
likelihood of consumer confusion. For the titleholders of notorious trademarks, this also
extends to identical or similar signs used on non-similar products when this use is likely
to take unfair advantage of, or tarnish, the trademark’s distinctiveness or reputation.
These rights are limited, however, by the principle of trademark exhaustion, also
referrred to as trademark first sale, which provides that the right „to control distribution of
trademarked product does not extend beyond the first sale of the product“ and that „the
resale by the first purchaser of the original article under the producer’s trademark is
neither trademark infringement nor unfair competition“.12
The core function of trademarks is to serve as indicators of the commercial origin and
quality of the products and/or services it is used for, not to lead its holder to generate
market division by controlling the distribution of its offer. Being this so, the principle of
trademark exhaustion finds its rationale in assuring the whole legal system while
preserving a healthy degree of workable competition in the market at distribution level,
all in all in benefit of the end consumers. And so, whether third parties resell trademarked
products after their first authorized sale in the market with or without trademark owners’
12 Ghosh, Shubha/Calboli, Irene, Exhausting Intellectual Property Rights. A Comparative Law and Policy Analysis,
Cambridge University Press, 2018, p. 66.

authorization, these sales are considered to not create consumer confusion as the
products are genuine (original) products, and the trademarks continue to indicate their
true commercial origin and quality regardless of the indentity of the distributor of the
goods. The only exception of this principle applies when third parties have altered the
products’ quality after the first authorized sale of the products in the market. 13
The exhaustion of intellectual property rights constitutes a legal figure created initially by
jurisprudence and then incorporated by legislation as a remedy against the possible
abusive exercise of intellectual property rights that may prevent the free movement of
goods: a person who legitimately put on the market a product protected by an intellectual
property right cannot prohibit that product from being able to continue circulating in the
market (for example, it can be resold), since it is considered that its right has been
exhausted at the time when its owner (or someone with its authorization) legally put it in
the market.
It is possible to freely sell, purchase or hire a used book, car or laptop due the exhaustion
doctrine, which allows a market for reselling products. Should it not be for the exhaustion
doctrine, the market for reselling or renting products would either not exist or would look
very different.14
In accordance to the exhaustion doctrine, an intellectual property owner loses some of

his rights to exclude after the authorized distribution of his products in some geographic
region. The doctrine may have many variants depending on the type of intellectual
property, type of right, type of work (in case of copyrights) and place where the
intellectual property right could be enforced.
To find a balance in the application of the exhaustion doctrine it is mandatory to carefully

identify who is a legitimate purchaser and what transactions may constitute a sale.
Another source of balance is selecting among alternative options for the geographic
scope of the doctrine. These options are referred to as national exhaustion, regional
exhaustion (in the case of trading area) and international exhaustion. If national
exhaustion is regulated in a country it is considered that the right only has been
exhausted when its owner legally put it in the national market (i.e.: a French trademark
for France). In accordance to regional exhaustion the right will have been exhausted
when ist owner legally put it in the regional trade area (i.e.: a European Union trademark
for all 28 countries of the European Union (EU)). And if international exhaustion is
regulated the right will have been exhausted when its owner legally put in some part of
the world.
The question of geographic area is at the heart of how intellectual property affects the
movement of goods across national borders and national policies on international trade
and business practices of intellectual property owners. 15
13 Ghosh, Shubha/Calboli, Irene, op. cit., p. 66.

14 Ghosh, Shubha/Calboli, Irene, op. cit., p. 6.
15 See Ghosh, Shubha/Calboli, Irene, op.cit., p. 10.

Depending on the type of exhaustion that exists in a country, trademark owners will be
able to block parallel imports of genuine products originating outside the national
markets. Some countries follow the principle of national exhaustion (like Mauritius,
Cambodia, Laos), while others follow international exhaustion (Singapore, United States,
Canada, Mexico, Australia, New Zealand, Andean Countries).16 The impact of these
different policies derives in the fact that trademark owners can legitimately oppose the
importation of unauthorized (though genuine) products into the national market under the
former approach, while they cannot oppose these imports under the latter.
The term „parallel import“ describes situations where goods sold abroad at a lower price
are imported by an unauthorized dealer and compete domestically with the local
authorized distribution system.17
16 See Ghosh, Shubha/Calboli, Irene, op.cit., pp. 65-85; Heath, Christopher, Heath, Christopher (eds.), Parallel Imports
in Asia, Kluwer Law International, The Hague/London/New York, 2004, pp. 25-185.
17 Katz, Ariel, The economic rationale for exhaustion: distribution and post-sale restraints, in: Calboli, Irene/Lee,
Edward, Research Handbook on Intellectual Property Exhaustion and Parallel Imports, Edward Elgar Publishing
Limited, Cheltenham, UK, 2016, p. 30.

4. Economic foundations of parallel trade
Parallel trade in trademarked products can be a significant component of trade and affect
a variety of private and public interests. A study of the parallel import problem in Mauritius
therefore requires knowledge of the causes, extent and economic consequences of
parallel trade.
The ability to use intellectual property rights to avoid parallel imports has been discussed
for decades, and is still being discussed. A patent grants to its holder the right to
monopolize the commercialization of the product protected by the patent, which
constitutes an argument to obtain an exception to the economic principle of the free
circulation of goods in international trade. That is why discussions on parallel imports
have focused on patent law and less attention has been paid to trademark law.18 Thus,
the issue of international exhaustion of trademark law does not appear as a matter of
controversy in bilateral trade negotiations between developing countries and the United
States, where the prohibition of parallel imports in the patent field is often a prerequisite
for starting negotiations.19
Therefore, it is important to distinguish whether parallel imports correspond to products

with patent or trademark’s rights into force.
4.1 Causes of parallel trade

Parallel imports may be good business provided that the same products are sold at a
lower price in the country of origin than in the country of destination, and if the price
difference allows the parallel trader to cover the cost of the business (purchase price +
transaction costs) and obtain additional gains (arbitrage potential).
4.1.1 Price differences between import and export

countries
Different selling prices in different countries for the products distributed under an identical
trademark are based on the decisions of multinational companies, which set the selling
prices for a product (at the same purchasing prices) in accordance with the demand
conditions in the respective market.
Demand conditions can vary considerably in different countries, and are determined
above all by so-called demand elasticity (which is greater depending on the number of
alternative offers for the same economic necessity). So, for a monopolistic exporter, it
makes economic sense to set higher prices in industrialized countries with a relatively
inelastic demand than in countries with relatively elastic demand. In these countries,
18 For example, on an article of the WTO dealing with the TRIPS Agreement, there is no reference to trademark law
and there are 23 references to patents, available at:
https://www.wto.org/spanish/tratop_s/trips_s/art27_3b_background_s.htm.
19 Cimoli, Mario/Coriat, Benjamin/Primi, Annalisa, Intellectual Property and Industrial Development: A Critical
Assessment. Initiative for Policy Dialogue. Working Paper Series, 2008, available at:
http://policydialogue.org/files/publications/papers/ch_19_CimoliCoriatPrimi_jan_08ver6as_.pdf

raising the price can reduce sales so much that total billing would be lower than before
the price increase.
In addition, the intensity of competition, the cost of production, the level of VAT, and the
purchasing power and willingness to pay of consumers20 are also significant for the
differences in demand conditions.
Moreover, when national licensees, rather than holders of intellectual property rights,
provide marketing support, there can be significant differences in marketing costs. These
differences in market cost are transmitted to the price charged by the national licensees.
Where local marketing costs are lower, the selling price is lower, and result in a price
difference with countries where the costs are high enough to cover cross shipping and
various transaction costs.
It could even happen that licensees in export markets sell to parallel importers at prices
that exclude some or all of the local marketing expenses incurred in the export market,
making dumping possible.
Price differences in specific sectors (mainly the pharmaceutical) can also be caused by
government price regulations based on national health policy decisions.21
In addition, differences in selling prices for the same product may arise as a result of
proprietors not owning investments in marketing, advertising, repair and warranty
services,22 but rather to national licensees and independent distributors who reimburse
their costs according to the individual expenses incurred through the sale cover the
trademarked products.
4.1.2 Transaction costs, market entry barriers

and framework conditions in the import
country
Transaction costs may reduce the arbitrage potential of parallel imports in terms of
transport and other distribution costs as well as in terms of market entry costs in the
importing country.23
Transportation costs are mainly influenced by the ratio of the specific value of the product
to its physical weight. In addition, sensitivity and perishability of the goods can cause
increased transport costs.
Further costs that the parallel importer has to cover arise by overcoming market entry
barriers in the importing country. If parallel trade is not conducted within a free trade
20 However, the behavior of the consumer is not determined solely by his solvency. Especially with certain luxury and
trademarked articles, the so-called snob effect can be observed, according to which consumers pay attention to a
good only after a certain price, because they assume that the corresponding product is not acquired by a broad
layer.
21 See Vautier, Kerrin M., Economic Considerations on Parallel Imports, in: Heath, Christopher (eds.), op. cit., pp. 1, 5.
22 See OECD (eds.), Synthesis Report on Parallel Imports, 2002, p. 8.
23 According to SJ Berwin & Co/IFF Research, The economic consequences of the choice of regime of exhaustion in
the area of trademarks, London, 1999, p. 79 (cited as the NERA study), parallel transport of motor vehicles, non-
alcoholic drinks and electrical and domestic appliances is associated with relatively high transport costs.

area, the importer has to pay customs duties. In individual cases, imports may even be
excluded due to import quotas or other trade policy measures. In addition, market entry
costs are incurred if the parallel importer in the importing country has to modify his
products due to health and safety regulations, technical standards and packaging
requirements in the importing country. This is especially true in the pharmaceutical and
food/beverage sectors. In certain fields, in particular in the fertilizer and plant protection
sectors, and in the price-regulated pharmaceutical sector, the parallel importer must also
carry out licensing and licensing procedures and produce proof of conformity (testing,
inspection, certificate), which can entail administrative expenditures and significant
costs.
4.2 Extent and importance of parallel trade

The extent and importance of parallel trade varies in different countries and sectors, as
only part of the trade volume is effectively eligible for parallel imports. 24 Which volumes
are actually affected by a parallel import depends on the factors mentioned above (the
actual price difference and the specific amount of the transaction costs) and the
tradability of the goods concerned and the maximum volume of goods involved.
The tradability of protected products presupposes that they are transportable and that
there is a sufficiently broad customer base. Tradeable are medicines and most consumer
goods. On the other hand, capital goods that enter into production processes of other
companies as intermediate consumption are in principle not suitable for parallel imports.
To define the scope of the customer base, among other things, customer demand and
the existence of parallel high and low-price markets are relevant. Consumer demand is
important in that it determines the size of the sales market and thus the volume of trade
that is effectively affected. If the priority of consumers is to maintain a certain standard
of warranty and other services, and consumers are prepared to pay more for their
products, then this will be as negative for the parallel importer as consumers are for
goods to order the private use also over the Internet.25
Positive demand effects, on the other hand, result for the parallel importer in parallel
high- and low-price parallel markets and price elasticity of demand. The more price-
elastic the demand is, the greater the additional quantity demanded for the cheaper
products.
The real importance of global and national parallel trade is difficult to ascertain, as
parallel imports as legal components of trade are not specifically identified in the trade
balance. Empirical studies on the worldwide extent of parallel trade do not exist, to the
extent of our knowledge. Indeed, and according to the studies to date, parallel trade in
24 OECD (eds.), Synthesis Report on Parallel Imports, 2002, p. 232.

25 Konkurrensverket, Schwedisch Competition Authority, Parallel Imports, Summary, 1999, p. 3.

industrialized countries has not been significant.26 In individual sectors, however, parallel
imports may play a significant role.
The subject of the parallel trade is primarily high-quality technical goods with luxury and
prestige character as well as pharmaceuticals. According to the referential studies of
international scope, in particular, car components and auto spare parts, compact discs
and records, clothes, motorcycles, shoes, sporting goods, perfumes and cosmetics,
consumer electronics, photographic equipment, optics, watches, tires, food and
champagne will have varying market shares in the countries imported from 3% and 15%
in parallel.27 It has also been found that parallel imports can account for up to 20% of
trade in specific products. Unfortunately, there is currently a lack of meaningful empirical
research on the extent of parallel trade in developing and emerging countries. The study
by the OECD does not provide any reliable material on the importance of parallel imports
in these countries.28
4.3 Interest of the TM titleholders and the

exclusive distributors
The parallel import question affects a wide range of private and public interests.
Depending on the perspective, parallel imports are therefore considered to be
economically advantageous or disadvantageous. A parallel import ban is initially
fundamentally in the interest of trademark proprietors and exclusive distributors, while
parallel imports clearly benefit the parallel importers.
International titleholders generally benefit from parallel import bans because they are
enabled to pursue a differentiated price policy geared by demand elasticity. If parallel
import bans exist in the industrialized countries as countries with relatively inelastic
demand, the IPR holder in these countries may charge higher prices because he is not
under pressure to lower his prices for the protected products due to the lack of parallel
import competition.
4.4 Interest of the parallel importer

By contrast, open parallel import arrangements are in the interest of parallel importers
and those involved in parallel imports, e.g. the transport companies. Parallel importers
are international wholesalers, department stores or even retailers. In addition,
multinational companies sometimes operate as parallel importers themselves in order to
sell "excess production" in other countries or to discipline local traders. In developing
26 According to Frontier, Economics/Plaut, Erschöpfung von Eigentumsrechten: Auswirkungen eines Systemwechsels

auf die schweizerische Volkswirtschaft, Bern, 2003, p. xvi, the parallel import volume in Switzerland for
pharmaceutical products is estimated at CHF 0.9-1.3 billion and for consumer goods at CHF 0.6-1.1 billion. This
corresponds to about 0.19-0.28% of the gross national product.
27 According to the NERA study (op.cit., p. iv), parallel trade in the EU covered, in particular, beverages, leather goods
and footwear with a market share of up to 5% of clothing with a market share above 5%, and cosmetics and
alcoholic beverages with a market share of 5-10%. According to Konkurrensverket, parallel trade in car components
and car wheels each has a market share of 20% and parallel trade in clothing and motorcycles each has a market
share of 10%. Critical in relation to both studies OECD, which contains a summary of all relevant studies.
28 OECD (eds.), Synthesis Report on Parallel Imports, 2002.

countries, due to better knowledge of the domestic market, mainly national companies
are likely to participate in parallel trade.
In some cases, parallel importers benefit to a significant extent from parallel imports,
whose gross profits and revenues increase with increasing penetration rates. After
experience in the pharmaceutical industry, the price difference is almost completely
exploited by the parallel importers.
4.5 Consumer interest

Consumers in developing countries are affected both by parallel import regulations in
their own countries and by parallel import regulations in developed countries.
Allowing parallel imports to these countries through open parallel import schemes in
developing countries is seen by developing countries as being in the interest of their
consumers, as they can benefit from lower prices and wider product range. Parallel
imports are particularly important in the pharmaceutical sector as a means to ensure
access to affordable essential medicines against epidemics.
These effects occur when parallel imports to the developing country are in fact attractive
and profitable because the developing country has a higher price level and a large and
efficient market. In addition, the transaction costs incurred in parallel trade must be
relatively low.
However, in the discussion on the authorization of parallel imports into developing

countries, it is also claimed that consumers could also be disadvantaged because of
parallel imports. Since the system of unfair competition in developing countries often
presents deficiencies, parallel imports of poor-quality products and inadequate operating
instructions cannot be averted. There is a risk that consumers will be misled and harmed
by parallel imports.
In addition, consumers may to be indirectly disadvantaged as a developing country with

its own capacity to produce goods is weakened in the development of domestic industry
because it is exposed to parallel import competition.
There are different opinions about the positive or negative effects of the application of
international exhaustion of trademark law, and there are economic arguments in pro and
against it. These arguments may relate to parallel imports in the developed world or in
developing countries; or refer to any restriction on free trade or, in particular, to the
prohibition on parallel imports.

5. Arguments in pro of national
exhaustion of trademark law
The main arguments in favour of national exhaustion and against parallel imports are, in
summary, the following:29
• Parallel imports interfere with exclusive distribution contracts (those agreements

between a producer of goods usually differenciated with a renown trademark and
several distributors from different countries who are reciprocally conferred a
geographical area where they may only resell to end customers, it being
understood that passive sales are to be respected that is, those purchases made
by customers resident in a contractual area of influence who spontaneously have
requested the items from a distributor of the network located in other territory).
• Those who import in parallel take indirect and undue advantage of advertising,
marketing and other expenses incurred by authorized sellers. A parallel importer
does not incur these expenses, since it does not deal with problems such as
supply, services, quality control, storage facilities, etc.
• The entry of parallel imports generates the emergence of direct competition for
the official distribution network (controlled by the owner of the trademark), which
triggers intra-trademark competition (horizontal competition among resellers of
the same products) beyond the owner's control.
• By acquiring an imported product in parallel, the consumer could be purchasing

apparently original and genuine merchandise, but that would not be covered by
any guarantee, the consumer not being aware of this situation when buying the
parallel importer's product.
• Only the owner of the trademark, and not the parallel importers, can adequately
assume the handling of certain products in terms of packaging, deposit
conditions, and other aspects.
The principal opponents to international exhaustion are the titleholders of trademark

rights, which is logical because “Arguments for limiting exhaustion to the EEA derive
from the belief that this provides a higher economic reward to firms”.30
Actually, the International Trademark Association (INTA) “supports the principle that
international exhaustion should not apply to parallel imports in the absence of clear proof
that the trademark owner expressly consented to such imports, and that the burden of
proof should be on the party seeking to demonstrate such consent”.31
29 Ferrero, Gonzalo, Importaciones paralelas y agotamiento de derechos de propiedad intelectual. Themis: Revista de
Derecho, N° 41. Lima, 2000, available at: https://dialnet.unirioja.es/descarga/articulo/5109665.pdf
30 NERA, op.cit.
31 INTA, Harmonization of Trademark Law and Practice Committee, Model Free Trade Agreement, New York, 2011.

In similar orientation, according to the International Chamber of Commerce (ICC), the
socioeconomic impact would be negative in the following aspects: 32
• International exhaustion reduces the commercial incentive to invest in innovation,

trademark reputation, and customer service.
• In the long term, therefore, international exhaustion could discourage investment

in innovation and trademark reputation, with negative consequences for social
and consumer welfare.
• The intellectual property owner will be forced to withdraw the product from low
priced markets altogether, denying access to beneficial products, or may be
compelled to converge prices internationally to stop leakage from the lower priced
market to the higher priced market, and such a convergence will inevitably
exclude less developed regions, or may also reduce the investment in
manufacture, supply and customer service in certain countries, further reducing
consumer welfare.
• In the long run, a regime of international exhaustion could limit instead of

encourage trade and investment and deprive consumers in certain markets of
innovative products that they could have afforded under a differential pricing
system.
But international studies were written in developed countries, considering the hypothesis
of retaliation of other countries that have to protect their national enterprises who invest
in trademarks around the world. Also, studies carried out by international organizations
refer to the international community and not to a little economy in an island. Thus, the
cited studies that lead to the conclusion that "moving towards an international exhaustion
of rights would bring no real benefits to consumers" have been made to answer the
question about the impact on the welfare of consumers of the imposition of an
international exhaustion regime in the economy of a large group of developed countries,
not just in one little country.
For the reasons indicated, it is important to focus on the analysis on the position of the
private sector from Mauritius, expressed in a position paper.33
32 International Chamber of Commerce, ICC, Commission on Intellectual and Industrial Property. Policy statement.
Exhaustion of intellectual property rights. Washington, 2000.
33 MCCI, MCCI Position Paper, International Exhaustion of IP Rights in Mauritius, MCCI Position Papers/ 2016/ No. 1,
November 2016.

6. Arguments in pro of international
exhaustion of trademark law
The main arguments of those who promote parallel imports are the following:34
• The parallel importer generates an increase in the supply of the product, and
induces price competition with sellers that are integrated into the official network.
Price competition may also further occur between the sellers that are members
of the same network, which undoubtedly will directly benefit the consuming
public.
• Parallel imports prevent multinational corporations from exercising their

monopoly power by discriminating prices between countries. Indeed, parallel
importers will acquire the products in the country where the price is significantly
lower and will increase the supply in countries where the price is high.
• Parallel imports also help to avoid price agreements in oligopolistic markets,

because they generate a price war that is beneficial for society by generating a
more efficient allocation of resources.
• Increasing the supply, satisfies the demand of the public and decreases the
prices to the consumer.
• The obligation of the State to protect consumers is not only to protect them from
possible harm, but also to promote their freedom to choose between different
products and alternative suppliers, which can occur through parallel imports.
• If the exclusive distribution contracts do not allow parallel imports, monopolies

are generated because these contracts grant them an absolute territorial
protection.
An argument of a generic nature that encompasses the previous ones, is based on the
contradiction between the right of trademarks and the economic principle of free
movement of goods. It is derived from the fact that the prohibition of parallel imports is a
restriction to free trade and the assertion that free trade is an optimal situation, of
maximum global benefit, and that the benefit of free trade is evengreater in a small
country. This topic is analyzed under the heading of qualitative evaluation of the
arguments in favour of international exhaustion.
34 Ferrero Diez Canseco, G. Importaciones Paralelas y Agotamiento de Derechos de Propiedad Intelectual. THEMIS,
Revista de Derecho, N° 41, 2000, available at: https://dialnet.unirioja.es/descarga/articulo/5109665.pdf

7. The economic model
To distinguish the different impacts that parallel imports can have, a partial equilibrium
model with functions of supply and demand is applied, in which the price and volume of
a product traded are the result of the balance of the internal market forces, together with
the international price of the imported product.
The first graph represents a situation of autarky, without international trade. The balance
point between supply and demand is marked with the letter A, the quantity produced and
consumed will be Qa, and sales will be made at the price Pa. The benefit or surplus of
the consumer, is measured by the area of the upper triangle and that of the producer by
the lower triangle.
Figure 2
Price
Domestic offer
Consumer
surplus
A
Pa
Producer
surplus
Domestic demand
Quantity
Qa
Source:Own elaboration
If the market opens up to international competition, there will be imports if the world price
is lower than the domestic price, otherwise there would be no incentive to import.
To study the impact of imports (which include parallel imports) in Mauritius, the simplest
and most appropriate assumption is that, given the small size of the national economy in
relation to the rest of the world, any quantity of the product that it demands can be bought
without affecting the international price. For this reason, the following graph shows the

international offer of the product by a horizontal straight line at the Pm level of the world
market price.
Figure 3
Price
Domestic offer
1
A
Pa
2
4 5
Pm International price
3 Domestic demand
Quantity
Qp Qa Qc
Source: Own elaboration
Due to imports, the price of the product falls to the level of the international price Pm, the
quantity consumed rises from Qa to Qc and domestic production falls to Qp. The
difference between the quantity demanded and the quantity offered is covered by
imports.
The fall in the domestic price means that the surplus of the consumer rises and that of
the producer goes down.
In the graph it can be seen that the consumer surplus indicator, which was represented
by area number 1, increases in areas 2, 4 and 5; and the surplus or benefit of the
producer is reduced in area 2. This last area does not mean a net gain for the economy,
because the consumer's profit is made at the producer's expense; but there is a net gain
that is measured by the sum of areas 4 and 5, which corroborates that if a country is
opened to international trade there is a net benefit to society and, on the contrary, any
restriction on imports harms the consumers.
Under the current regime of national exhaustion of trademark law, there are imports, but
parallel imports are restricted. Therefore, the following graph is based on a global supply

that does not include parallel imports (price Ps) and the result of greater trade opening
is a reduction in the domestic price of the product from Ps to Pm.
Figure 4
Price
Domestic offer
Global offer without

Ps parallel imports
1 2 3 4
Pm Global offer
Domestic demand
Quantity
Q2 Q1 C1 C2
This price reduction in turn reduces the surplus of the domestic producer in area 1 and
that of the importers with trademark licenses in area 3.
In contrast, the surplus of consumers increases by an amount equal to the sum of the
areas 1 + 2 + 3 + 4.
Since two groups of economic agents have the indicated losses due to the price
reduction, the net benefit for the national economy as a whole is equal to the sum of the
2 + 4 areas.
It should be remembered that this is a partial static equilibrium model, very useful for
estimating the short-term impact on the market of a product that has no greater effect on

the economy as a whole, as in the case of tea, which is an example used by Professor
Marshall.35
Therefore, it is convenient to use the model with specific products, not with a group of
products, as in the five sectors to study. It would have been ideal to carry out the
consultancy with the products identified with foreign trademarks registered in the
Customs of Mauritius.
However, the representative of a foreign trade mark registered in Mauritius, even if it is
not registered at Customs, can prevent the entry of parallel imports into the country, so
that the study should be based on interested parties operating with trademark licenses
foreign and not only in trademarks registered at customs.
On the other hand, about 1,000 trademarks are registered each year in favor of non-
residents in Mauritius (Annex III) while only 400 foreign trademarks are registered in
Customs (Annex IV), so it was not possible to extrapolate and calculate the economic
impact based on these 400 foreign trademarks.
In particular, it should not be forgotten that the partial equilibrium model is short-term,
and that it does not take into account the possible long-term impacts or the possible
indirect effects of the release of parallel imports, such as:
• The estimation of the economic and social benefit will be an underestimation of

the real impact.
• The increase of the real income of the consumers in Mauritius, due to the
reduction of the prices of the goods in which the parallel imports happen. This
would increase their purchasing power, since the savings in their initial
consumption basket would allow them to consume more and better goods.
• Depending on the value of elasticities, imports could increase or decrease, with
an effect on the exchange rate.
Furthermore, to try a quantitative estimate of the different impacts that parallel imports
can have, it is necessary to know the following variables:
• Quantity and price of a basket representative of imports of products with a foreign

trademark.
• Quantity and price of the imports of perfect substitute products of the previous
ones.
• Quantity and price of the national production of perfect substitutes of the previous
ones.
• The percentage difference between the price of foreign trademark products and
that of parallel imports.
• Elasticity price of demand and national supply.
Unfortunately, this information was not available. In particular, that of elasticities, whose
estimation requires econometric research. In the study of the pharmaceutical sector,
35 Marshall, Alfred, Principles of Economics. Eighth Edition. Palgrave Classics in Economics, 1920, available at:
http://www.library.fa.ru/files/Marshall-Principles.pdf

indicators of the other variables were found, at least approximate, which allowed for
some numerical calculations adopting estimates of the elasticities of other countries.
Considering all the parameters involved and economic data available at stage, the model
demonstrates that there is a positive net impact on the well-being of the population, but
the quantitative estimate of the impact would be less than the actual impact. A more
accurate estimate would require the application of a dynamic general equilibrium model,
much more complicated than the one used.
The situation of five sectors is presented in some detail below, to estimate the possible
consequences of the international exhaustion of trademark law in Mauritius. As already
stated, the five sectors correspond with the main areas where trademarks play a vital
role on the market and consequently could be the most affected by the introduction of an
international regime of parallel imports.

8.Automotive Industry
The automotive industry covers the manufacture of motor vehicles, trailers and semi-
trailers as well as the production of spare parts and components.
In Mauritius there are several car dealers that cover the most popular trademarks in the
world, which benefits the consumer by the multiple options to choose according to their
acquisition capacity. Dealerships have thrived selling a variety of cars, from luxury cars
to compact cars, in differentiated markets.
8.1 Companies operating with foreign

t r a d e m a r k s 36
531,797 vehicles were registered on the island in 2017, of which 8,799 owned by the
government. The private ones were 522,998, of which 51.4% cars and dual-purpose
vehicles, and 39.0% two-wheeled motorized vehicles. The remaining 9.6% consists of
vans, lorries and trucks, buses and other vehicles (Table 2).
The total number of registered vehicles increased to 19,109 in 2017, 5.2% higher than
18,170 in 2014 (Table 2), which would show a moderate increasing trend. However,
there are very optimistic opinions, such as The Top 100 Companies (2017 set a new
record regarding car sales on the island with 11,151 units sold) and the one transcribed
below:
The more impressive numbers come from a comparison of registered vehicles at

the NTA37 over the last decade. In 2006, there was a total of 319,440 vehicles
registered in the country, including 91,911 cars and 33,936 motorcycles. The
numbers have systematically gone up since, averaging a percentage increase of
over 4% every year. As of February 2017, there are 511,139 vehicles registered
at the NTA, with 204,931 cars and 83,666 motorcycles. With these numbers,
there should have been little reason for concern for the industry in Mauritius but
there are inevitable challenges.38
36 DCDM Research. Business Magazine. Mauritius The TOP 100 Companies, 2018 Edition. La Sentinelle Editions,
2018.
37 The National Transport Authority, Ministry of Public Infrastructure and Land Transport, Mauritius.
38 Moorghen, Shanda, Automotive Industry: facing the challenges, 2017, available at:.
https://www.lexpress.mu/node/307525.

Table 2 Registration of new motor vehicles 2014 – 2017 and Registered motor vehicles 2017
Registration of new motor vehicles, including Registered

government vehicles 2017
Type 2014 2015 2016 2017 Government

owned
8,799
Private/
commercial
Car 7,181 6,678 6,928 8,882 216,416
Dual purpose vehicle1 - 1 - 1 46,843

Double cab pickup2 1,161 970 1,092 1,279 4,282
Heavy motor car3 45 29 37 26 1,134
Motor cycle 6,608 5,923 5,619 5,986 87,199
Autocycle 2,194 1,658 1,929 1,832 116,956
Lorry and truck 264 236 315 350 14,312

Van 454 470 593 534 27,190
Bus 163 56 220 79 3,101

Other 100 87 98 140 5,565
Total 18,170 16,108 16,831 19,109 531,797
Source: Own elaboration based on data from the Ministry of Finance and Economic
Development, Annual Digest of Statistics – 2017, Port Luis, Mauritius, 2018, Tables 13.1
and 13.2, pp. 164-165.
1 Essentially a car but so designed as to be capable of carrying a certain load of goods.

2 New category of vehicle defined in Road Traffic Act as amended by Act No. 27 of 2012.
Prior to the year 2013 'double cab pickup' was included in 'dual purpose vehicle'
3 Vehicle of the 'bus' type designed to carry passengers but not for hire or reward
There are several entities involved in car dealership covering most of the popular
trademarks in the world, and it seems that the automotive market in Mauritius is
becoming more and more competitive for suppliers.
However, in Mauritius at the very least, car dealers manage to thrive by selling a
variety of different cars, ranging from luxury cars to compact cars suited to the
streets of Port Louis. They each have their own markets even though the major
companies in the Mauritian automotive industry control the lion’s share of the

market. For the time being, the industry has been better off with the increased
competition.39
Table 3 Automobile sector: Entreprises ranking by turnover. Million Rs 2017
Ranking Company Name Turnover Profit Before Tax % Profit
1 Leal & Co. Ltd 3,012.07 176.13 5.8
2 ABC Motors Company 2,938.46 129.87 4.4
3 CFAO Motors (Mauritius) Ltd 2,298 105.2 4.6
4 Axess Limited 2,104.03 62.48 3.0
5 Toyota Mauritius Ltd 1,889.93 257.18 13.6
6 United Motors Limited 1,033.5 59.6 5.8
7 Allied Motors Co. Ltd. 546.62 37.62 6.9
8 EAL Man Hin and Sons Limited 495.03 17.99 3.6
Total 14,317.64 846.07 5.9
Source: Own elaboration based on data from DCDM Research. Business Magazine.
Mauritius The Top 100 Companies, 2018 Edition.
8.2 Contribution of companies in terms of

employment, added value, investment
and innovation
The vehicles imported by the main companies led to reach the 531,797 units registered
in 2017. As can be seen in Table 4, the value of road vehicle imports has grown strongly
between 2014 (Rs 7,866 million) and 2017 (Rs 12,129 million). In fact, the value in
Rupees of imports increased 54.2%, a much higher percentage than the indicated 5.2%
of the number of vehicles in the same period.
Table 4 Total imports by section / main commodities, 2013 – 2017 Value (c.i.f.)*: (Rs. Million)
Section 2013 2014 2015 20161 20172
Road vehicles 8,658 7,866 8,804 10,750 12,129
Source: Own elaboration based on data from Ministry of Finance and Economic
Development, Statistics Mauritius, 2018. Digest of Industrial Statistics, p. 121
40 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience: a
dilemma that still needs an answer. European Intellectual Property Review (EIPR), September, 2016, p. 3, available
at: https://www.researchgate.net/publication/308618825.

* CIF: Cost, insurance and freight. 1 Revised 2 Provisional
In a similar period, from 2014 to 2016-2017, the collection of Motor vehicles taxes
increased 8.8%, from Rs 1,345.0 million to Rs 1,463.4 million (Table 5). This value
represents 1.74% of total taxes, and 58.0% of what is collected by Taxes on use of goods
and permission to use goods.
Table 5 Budgetary Central Government Revenue, 2014 - 2016/17 (Rs million)
GFS Revenue 2014 Jan-June 2015 2015-16 2016-17

Code
11 Taxes 71,727.4 36,569.4 78,223.7 84,148.3
1145 Taxes on use of goods and 2,075.4 1,248.9 2,530.3 2,524.1

permission to use goods
11451 Motor vehicles taxes 1,345.0 682.7 1,429.6 1,463.4
Source: Ministry of Finance and Economic Development, Statistics Mauritius, 2018.

Digest of Industrial Statistics, p. 68
The data of Wholesale & retail trade, Repair of motor vehicles and motorcycles of the
Annual Digest of Statistics, include the total of the commerce sector in Mauritius and do
not correspond only to the automotive sector. However, they allow to obtain some data
of the “Repair of motor vehicles and motorcycles” activity.
Table 6 Repair of motor vehicles and motorcycles
2015 2016 20171 20182
Gross Value Wholesale & retail trade; repair of motor 43,738 45,914 48,990 52,287
Added at vehicles and motorcycles
current
basic prices. Of which: Wholesale and retail trade 40,968 43,006 45,844 48,884
Rs million
Repair of motor vehicles and motorcycles 2,770 2,908 3,146 3,403
Gross Fixed Wholesale & retail trade; repair of motor

4,624 4,812 5,493 4,781
Capital vehicles and motorcycles
Formation at
current Of which Wholesale and retail trade 4,153 4,390 5,045 4,241
prices. Rs
million Repair of motor vehicles and motorcycles 471 422 448 540
Employment Employment in large establishments 28,157 27,807 27,783

Of which: Wholesale and retail trade 27,871 27,530 27,490
Repair of motor vehicles and motorcycles 286 277 293
Development, Statistics Mauritius, 2018, Digest of Industrial Statistics, pp. 90, 96 and
128
1/ Revised 2/ Forecast
This activity, which is not export-oriented, is not included in the Production account of
Non-EOE Sector by industry group, presented in Table 7.
Table 7 Production account of the industry group: Manufacture of motor vehicles, trailers and semi-trailers /
Manufacture of other transport equipment, large establishments, 2016 Rs Million
Gross Value
Gross
output at Intermediate added at Compensation Taxes on
operating
basic Consumption basic of employees production
surplus
prices prices
Non-
1,845.9 805.4 1,040.6 265.4 5.0 770.2
EOE*
Industrial
171,748.6 107,017.4 64,731.2 25,193.7 327.8 39,149.8
Sector
Development, Statistics Mauritius, 2018, Digest of Industrial Statistics, p. 87
* Non-Export Oriented Enterprises
8.3 Social costs and benefits of the

eventual transition to the international
exhaustion of trademark rights
8.3.1 Representatives of foreign TMs in

Mauritius
To calculate the impact that parallel imports could have on the income of companies
operating with foreign trademarks, it is necessary to know the price difference between
these possible imports and the average prices at which vehicles are sold in Mauritius,
but there is no information on this price difference between parallel imports and
representatives of foreign trademarks in Mauritius.
So it should be necessary to accumulate evidence to estimate this difference.

One indication is the divergence of 20% that Zappalaglio 40 points out between the prices
of luxury vehicles in the US and China, although it must be taken into account that the
difference may be lower in the case of non-luxury vehicles. In addition, the quality of the
products imported in parallel may be lower, so that the prices would not be comparable;
and the prestige associated with trademarked products can reduce the potential impact
of parallel imports.
Therefore, in the absence of reliable information, it is necessary to use an alternative

approach.
A characteristic of the perfect competition model is the trend towards the disappearance
of the profits of companies, so it is valid to consider that the elimination of profit is a limit
to the impact of parallel imports on the income of companies operating with foreign
trademarks.41
If it is assumed that the prohibition of parallel imports makes it possible to obtain profit
margins in the market for imported trademarked products, the increase in competition
(caused by parallel imports) will reduce those profit margins. The maximum impact would
be the zeroing of those margins, because, if there are no positive profit margins, no
entrepreneur will be interested in importing in parallel.
Therefore, it is possible to estimate that the maximum cost that foreign trademark
representatives could face would be the loss of the Profit Before Tax of the biggest
companies in the sector, Rs 846.07 million (Table 3).
8.3.2 National producers

Not only the representatives of foreign trademarks would be affected by parallel imports,
but also the national producers of the automotive industry sector: the manufacture of
motor vehicles, trailers and semi-trailers, and other transport equipment (NSIC42 29 –
30).
The proposed economic model was designed for a single product, which is imported and
competes in the domestic market with a national product that is a perfect substitute for
imported goods. But, the domestic automotive industry is oriented to the national market,
and includes goods and services that are substitutes or complement the imports of
foreign trademark representatives.
As for considering different goods, it is normal to use the model for a set of different
products, as in the case of determining the exchange rate for the balance between the
supply and demand of currency, which includes all imported and exported products.
40 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience: a
dilemma that still needs an answer. European Intellectual Property Review (EIPR), September, 2016, p. 3, available
at: https://www.researchgate.net/publication/308618825.
41 See Samuelson, Paul A., Economics, an Introductory Analysis, McGraw-Hill Company, New. York, 1948.
42 National Standard Industrial Classification of all Economic Activities.

As for the goods and services that complement the imported goods, it is logical that the
reduction in the price of these can affect domestic production. For example, when
deciding to repair a vehicle or buy a new one, the consumer compares the cost of the
repair with the price of the new vehicle and, if the imported vehicles fall in price, will not
be willing to pay the same as before the reduction of the price of imported vehicles.
Consequently, to calculate the impact of parallel imports on domestic production, a

reduction of the sales price to consumers of 5.9% will be considered (Table 3).
The proposed method to estimate the impact that parallel imports could have on national
production, in the five sectors considered,43 begins by multiplying that price difference
by the gross output at basic prices of the Non-EOE of 2016.
But, in the case of the Mauritian automotive sector, the value of the gross output does
not include the vehicle repair service, which is an important activity of the sector and
must be taken into account.
The data calculated in Table 6 do not include Intermediate Consumption, but must be
added to the gross output, for the sake of better information.
Therefore, the price difference of 5.9% must be multiplied by Rs 5,175.9 million, which
is the sum of gross production at basic prices (Rs 1,845.9 million, Table 7), the Gross
Value Added at current basic prices (Rs 2,908 million, Table 6) and the Gross Fixed
Capital Formation at current prices (Rs 422 million, Table 6).
The result is Rs 305.86 million, which corresponds to the sum of areas 1 and 2 of The
economic model of supply and demand.
Area 2 represents the reduction in the cost of production caused by the decrease in the
sale price, which can be calculated by multiplying the gross output by the supply elasticity
and the price differential squared. Considering the price reduction of 5.91% and a supply
elasticity equal to 0.2 (13.1 Quantitative estimation of costs and benefits by sectors), a
value of Rs 1.80 million is obtained for area 2 of the model, so that the cost of national
producers is estimated at Rs 304.05 million.
8.3.3 Consumers
As indicated, the loss of representatives of foreign trademarks would be equal to or less
than the profit before tax of Rs 846.07 million. This cost of exclusive distributors is
equivalent to a transfer to consumers, who would receive a benefit of the same amount
for this concept. This benefit is represented by the area 3 of The economic model of
supply and demand.
43 See 13.1 Quantitative estimation of costs and benefits by sectors

The resulting consumer benefit would be higher, depending on the price elasticity value
of vehicle demand in Mauritius. Considering a short-term elasticity of 2.0,44 the additional
gain for consumers would be Rs 50.00 million, value represented by the area 4 of The
As indicated, the value of Rs 305.86 million corresponds to the sum of areas 1 and 2 of
the economic model of supply and demand, and the benefit obtained by the consumer
(both for the implicit transfer of the loss of domestic producers as for the replacement of
part of the national production by imports) is equal to the same amount for this concept,
Rs 305.86 million.
The total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 305.86 +
846.07 + 50.00 = Rs 1,201.9 million.
The annual net benefit for Mauritius is represented in the graphic model by the sum of
the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
producers to consumers.
That benefit is estimated by the sum of 50.00 + 1.8 = Rs 51.8 million.
44 Anderson, Patrick L./McLellan, Richard D./Overton, Joseph P./Wolfram, Dr. Gary L, Price Elasticity of Demand,
1997, available at: https://scholar.harvard.edu/files/alada/files/price_elasticity_of_demand_handout.pdf.

9.Pharmaceutical Industry
Health is one of the most important aspects worldwide.
Mauritius, yet being a small island with a per capita gross domestic product of US $ 5,406
in 2003, managed to create a health care system that has brought important
achievements to put Mauritius at the highest level of health among the countries. The
general state of health in the population of Mauritius has been improving and is on good
terms for the current years. In Mauritius, public health services are financed by taxes and
are free, since health is considered to be a human rights problem.
In the opinion of foreign trade officials of the United States, the pharmaceutical sector of
Mauritius has relevant characteristics for the interest of the service providers or North
American investors.
Mauritius has a well-developed health system. About 73% of the health needs of the
population are catered to by public health institutions and 27% by the private sector.
Non-communicable diseases, such as cardiovascular diseases, diabetes, cancer,
and chronic respiratory diseases account for 80% of total mortality in Mauritius every
year.
Public hospitals are free in Mauritius, but there are also several private clinics.
Mauritius’ healthcare infrastructure includes five major public hospitals, six
specialized public hospitals, 18 private multi-specialty clinics, 11 private specialized
clinics, and 28 medical laboratories. There are more than 4,500 beds in both public
and private hospitals. The Government has announced plans to upgrade the
healthcare infrastructure, and tenders are issued on a regular basis for medical
equipment as well as for the procurement of pharmaceuticals and disposables.45
And in the opinion of the officials of The Economic Development Board (EDB) the
pharmaceutical sector of Mauritius has bright development prospects.
The healthcare sector in Mauritius has metamorphosed itself into an integrated

cluster underpinned by a core group of high-value activities such as hi-tech medicine,
medical tourism, medical education and wellness.
With state-of-the-art medical facilities and highly qualified personnel, Mauritius is

positioning itself to cater for the growing needs of both domestic and international
patients.
Over the years the number of private institutions has doubled and future projections
indicate that the sector is expected to substantially contribute to GDP and become a
pillar of the economy.
45 Export.gov Helping US Companies Export. Healthcare Resource Guide: Mauritius, available at:
https://2016.export.gov/industry/health/healthcareresourceguide/eg_main_116239.asp#P179_12554.

The presence of global healthcare players is increasingly positioning Mauritius as a
competitive high-tech medical hub.46
Private institutions have multiplied and are expected to continue growing until they
become an important sector of the national economy.

trademarks
The health sector’s operators showed notable growth in 2017, in both turnover and
profitability. Their cumulated turnover reached Rs 5.30 billion in 2017, compared to Rs
4.32 billion in 2016. The total profit stood at Rs 602 million. Seven newcomers make their
entry in the list of Top 100 Companies 2018-Mauritius, and two companies no longer
form part of the ranking.47 Table 8 includes a list of the main private companies in the
sector, as well as two indicators of their economic activity in 2017.
In accordance to Mauritius the Top 100 Companies; Ajanta Pharma (Mauritius), a

specialty pharmaceutical company engaged in the development, manufacturing and
marketing of quality finished dosages, was the company in the health sector with the
biggest turnover (Rs 1.4 billion) and profit (Rs 309 million). The Medical and Surgical
Centre Limited was in the second place with a turnover of Rs 1.2 billion). The company
however showed a loss of Rs 14.25 million. Scott Health was in the third place with Rs
4.18 million in turnover.
Here the list of the biggest companies in the health sector:
Table 8 Biggest companies in the health sector

Turnover Rs Profit Before Tax Profit
Company Name
Million Rs Million %
1 Ajanta Pharma (Mauritius) Limited 1400 309 22.07
The Medical and Surgical Centre
2 1216 -14
Limited -1.15
3 Scott Health Ltd. 420 21 5.00
4 Proximed Ltd 317 86 27.13
5 Medical Trading Company Ltd. 300 4 1.33
6 City Clinic Ltd 279 65 23.30
7 Ducray Lenoir Limited 269 13 4.83
8 Nutec Medical Ltd 246 4 1.63
9 The Mauritius Pharmacy (Seegobin) Ltd. 232 8 3.45
10 Jyotic’s Clinic Ltd 161 50 31.06
11 Nouvele Clinic du Bon Pasteur Ltee 130 11 8.46
12 Pay Medical Ltd 109 7 6.42
13 Azur Medical Ltd 56 15 26.79
46 The Economic Development Board (EDB), available at: http://www.edbmauritius.org/opportunities/healthcare/.

47 DCDM Research. Business Magazine, Mauritius The TOP 100 Companies, 2018 Edition, op. cit.

14 Bo Head Ltd 55 12 21.82
15 Pharmacure Co Ltd 45 2 4.44
Orbit Healthcare Services (Mauritius)
16 43 5
Ltd 11.63
17 Gynecology and Fertility Centre Ltd 30 8 26.67
Total 5,308 606 11.42
Source: Own elaboration based on data from DCDM Research. Business Magazine.
According to the Ministry of Health there are 33 pharmaceutical companies that are
registered for the Ministry48 and are authorised to import pharmaceutical products to
Mauritius.
9.2 Contribution of companies in terms of

employment, added value, investment
and innovation
In 2011, the Ministry of Health and Quality of Life, in collaboration with the World Health
Organization, produced the Pharmaceutical Country Profile 2011. The document is
several years old, but it contains valuable information on aspects related to the
pharmaceutical sector in Mauritius which is partially reproduced below:49
▪ The state health services employed over 650 doctors and 17 pharmacists.
▪ The private sector employed over 400 doctors and 275 pharmacists.
▪ Also, it provides primary and secondary services with 14 private clinics, 20 private
medical laboratories and absorbs 32% of the total expenditure on health.
▪ In terms of manufacturing capabilities, there is no Research and Development for
discovering new active substances, no Production of pharmaceutical starting
materials (APIs).
▪ There is production of formulations from pharmaceutical starting material and
repackaging of finished dosage forms.
▪ The percentage of market share by volume produced by domestic manufacturers is
0.9% and 2% by value produced.
▪ Private health expenditure as % of total health expenditure (% of total expenditure
on health): 53.8%.
▪ Market share of generic pharmaceuticals [branded and INN] by value (%): 65%.
▪ Private out-of-pocket expenditure as % of private health expenditure (% of private
expenditure on health): 81.88%.
▪ Premiums for private prepaid health plans as % of total private health expenditure
(% of private expenditure on health): 10.13%.
Information from more recent years is very aggregate and not very useful for measuring
the specific contribution of the pharmaceutical sector to the economy. For example, in
48 Interview held with representatives of the Ministry of Health.

49 Ministry of Health and Quality of Life-World Health Organization, Pharmaceutical Country Profile. Mauritius, 2011.

the two sources of Table 9 the employment of the sector appears together with different
productive sectors, without further reference.

Table 9 Employment in large establishments1 by industry group March 2013 - March 2017
NSIC 2013 2014 2015 20162 20173
Coke and refined petroleum products / Chemicals and chemical 2,456 2,378 2,433 2,429 2,328
products / Basic pharmaceutical products and pharmaceutical
preparations. *
Pharmaceuticals, medicinal and other chemical products. ** 1,294 1,643
Source: Own elaboration based on data from *Survey of Employment and Earnings.
Digest of Industrial Statistics-2017
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/in
dustry/Digest_%20Industrial_Prod_Yr17.pdf and from **Ministry of Finance and
Economic Development. 2019. Digest of Labour Statistics. (2017-2018). Port Louis,
Mauritius, available at:
http://statsmauritius.govmu.org/English/StatsbySubj/Documents/labour%20-
%20digest/Digest_Labour_Yr17.pdf
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/la
bour/Digest_Labour_Yr18.pdf
1 Excluding government ministries and departments. 2 Revised. 3 Provisional.

eventual transition to international

Mauritius
The economic impact of the eventual transition to the international exhaustion regime
depends on the difference between the current prices of pharmaceutical products in
Mauritius and the prices at which they could be imported in parallel. The price differences
vary greatly between medications, as shown in the examples in Table 10.
Table 10 Price difference between medicaments

Name License holder Parallel import Price increase
(Rs) (Rs) (Rs) (%)
Lipanor 260 170 90 53
Lasilix 40mg 124 101 23 23
Gaviscon 125 85 40 47
Bactrim Forte 220 88 132 150

Source: Own elaboration based on data from information provided by an importing
company of pharmaceutical products
Prices = CIF + Customs clearance fees, at date Nov 2018.
Given the dispersion of prices, an attempt was made to use the information included in
the Pharmaceutical Country Profile for calculations of the final benefit to consumers, from
which the following quote is extracted:50
Pricing
The Median Price Ratio is used to indicate how prices of medicines in Mauritius
relate to those on the international market. That is, prices of medicines have been
compared to international reference prices51 and expressed as a ratio of the
national price to the international price. For example, a price ratio of 2 would mean
that the price is twice that of the international reference price. Since prices have
been collected for a predefined basket of medicines, the Median Price Ratio has
been selected to reflect the situation in the country.
As for patient prices, the Median Price Ratio in the public sector was 0 for
originators and 0 for generics as all medicines are provided for free. On the other
hand, prices in the private sector are high (19.3 for originators and 6 for generics).
Public sector availability of originator medicines was 0%, while availability of the
Lowest Priced Generic (LPG) medicines was 68.6 %. Availability in the private
sector was higher for originator medicines but lower for the LPG (55.7% for
originator and 54.9% for generics).
Being the Median Price Ratio of 6 for generics, the average price difference is very high
(500%) in relation to the cases at stake. For example, in the case of the product
BACTRIM the Median Price Ratio was equivalent to a difference of 916% in prices in
2008, while the data collected in Mauritius is 150% in 2019.
Therefore, it seems more convenient to assume that the difference in average prices is
equal to the percentage of the profit obtained by representatives of foreign trademarks
in relation to turnover.
To estimate the impact on importers of products with foreign trademarks and the benefit
to consumers, the data of the Top 100 Companies52 was taken. Logically, the turnover
must be greater than the sales of the imported trademark products, but it can be assumed
that there is no overestimation in the profit before tax. Indeed, the market for products in
which there is no trademark exclusivity of the distribution must be competitive and,
50 Ministry of Health and Quality of Life-World Health Organization, Pharmaceutical Country Profile. Mauritius.
51 The International reference price is the median of prices offered by international suppliers (both for profit and not
profit) as report by MHS International Price Indicator Guide
(http://erc.msh.org/mainpage.cfm?file=1.0.htm&module=DMP&language=English). For more information on the
methodology WHO/HAI pricing survey, you can download a free copy of the manual at
http://apps.who.int/medicinedocs/documents/s14868e/s14868e.pdf.
52 DCDM Research, Business Magazine, Mauritius The Top 100 Companies, 2018 Edition, op. cit.

therefore, of reduced profits; while the interdiction of parallel imports allows a margin for
higher profit margins in the market of trademarked products.
Consequently, it was estimated that the cost for foreign trademark representatives in the
pharmaceutical sector is equal to the loss of the Profit Before Tax that appears in Table 8 of
the biggest companies in the health sector, Rs 606.00 million.

The national producers of the pharmaceutical industry that could be affected by parallel
imports are those that sell in the domestic market and, therefore, to estimate the impact,
data from non-export-oriented companies has been used.53
Table 11 Production account of Non-EOE Sector by industry group, 2016, Rs million
NSI Industry Gross Intermediate Value Compensatio Taxes on Gross
C group output consumptio adde n of productio operatin
at n d at employees n g surplus
basic basic
prices price
s
21- Basic 1,503. 921.4 581.9 230.1 3.1 348.6

22 pharmaceutica 2
l and
pharmaceutica
l preparations /
Rubber and
plastic
products
Source: Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and
Economic Development, Digest of Industrial Statistics-2017. Port Louis, 2018, p. 87,
available at:
dustry/Digest_%20Industrial_Prod_Yr17.pdf
Among the Non-EOE, the pharmaceutical industry appears together with the group of
rubber and plastic products in the NSIC 21-22 category (Table 11), so there is no data
for the pharmaceutical national production. Only the sum of the data of the NSIC 21 and
NSIC 22 industrial groups is available. In the absence of more information, it was
considered that half of the value of the statistical data corresponds to the pharmaceutical
industry.
The reduction in sales prices of domestic production cannot be greater than the
estimated differential price for products imported with foreign trademarks, which is equal
53 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest of
Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 87, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf

to the ratio between Profit before tax and Turnover of the Top 100 Companies.in the
pharmaceutical sector (Table 8). The corresponding value is 11.42%.
The proposed method to estimate the impact that parallel imports could have on national
production, in the five sectors considered, begins by multiplying that price difference by
gross production at basic prices of the Non-EOE of 2016. In the pharmaceutical sector,
the value of the gross output is half of the statistical data of Rs 1,503.2 million in Table
11, equal to Rs 751.6 million.
and the price differential squared.
Considering the price reduction of 11.42% and a supply elasticity equal to 0.2 (13.1
Quantitative estimation of costs and benefits by sectors), a value of Rs 0.98 million is
obtained for area 2 of the model, so that the cost of national producers is estimated at
Rs 84.83 million.
9.3.3 Consumers
According to the proposed model, the total benefit for the consumer is equal to the sum
of areas 1, 2, 3 and 4 of The economic model.
Area 3 is the loss of representatives of foreign trademarks Rs 606 million (Table 8). This
cost of exclusive distributors is equivalent to a transfer to consumers, who would receive
a benefit of the same amount for this concept, due to the reduction of 11.42% of the
average price of pharmaceutical products.
The resulting consumer benefit would be higher, in an amount that depends on the price
elasticity of demand. The elasticity values - calculated for different developed countries,
are concentrated in the range between 0.1 and 0.2. 54 The latter were chosen, given that
the authors agree that the elasticity is greater in the countries with the lowest income
level.55 The additional benefit of consumers, for this concept is Rs 6.92 million, value
represented by the area 4 of The economic model of supply and demand.
The sum of areas 1 and 2 of the economic model of supply and demand represents the
benefit obtained by the consumer for the implicit transfer of the loss of domestic
54 Siminski, Peter, M., The Price Elasticity of Demand for Pharmaceuticals amongst High Income Older People in
Australia: A Natural Experiment, Working Paper 08-02, Department of Economics, University of Wollongong, 2008, p. 4;
Yeung, Kai/Basu, Anirban/Hansen, Ryan N./Sullivan, Sean D. Price Elasticities of Pharmaceuticals in a Value-Based-
Formulary Setting. NBER Working Paper No. 22308, 2016, available at: https://www.nber.org/papers/w22308.pdf.
55 National Economic Research Associates (NERA), The Economic Consequences of the Choice of a Regime of
Exhaustion in the Area of Trademarks, Final Report for DGXV of the European Commission, 1999, available at:
http://www.eurasiancommission.org/ru/act/finpol/dobd/intelsobs/Documents/NERA%20study_TM_exhaustion%20(m
ain).pdf

producers and for the replacement of part of the national production by imports. As
indicated, is equal to Rs 85.8 million.
So, the total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 85.81 +
606.00 + 6.92 = Rs 698.7 million.
The annual net benefit for Mauritius is represented in the graphic model by the sum of

10. Textile and Clothing Industry
In the 70s of the XX century, Mauritius began its export promotion strategy with the
enactment of the Export Processing Zone (EPZ) Act, that attracted foreign and national
investments beginning in the textiles sector.56
The government took further steps:
1. Sustainable export growth through five successive stand-by arrangements and two
structural adjustment programmes between 1980 and 1986.
2. Establishment of key institutions like the Mauritius Export Development and
Investment Authority for export promotion.
3. Monetary measures such as the devaluation of the rupee to make Mauritian exports
internationally competitive.57
The policy of trade liberalization and export promotion was successful in the textile and
garment industry in terms of income generation, job creation and capacity building for
local entrepreneurs. The export-oriented policies led to the fact that for some thirty years
the textile and clothing sector in Mauritius was the most developed in Africa South of the
Sahara.58
In addition to these policies, other factors contributed to the success of the textile and
clothing sector in Mauritius:59
1. The European Union and the United States imposed import quotas on exports from
third countries, while Mauritius had preferential access to these two main markets
through trade agreements the Benin/Cotonou Convention and The African Growth
and Opportunity Act (AGOA), respectively.
2. The appreciation of the Taiwanese dollar and the devaluation of the Mauritian
Rupee reduced the competitiveness of Taiwan and increased that of Mauritius in the
world market, which encouraged Taiwanese investment in Mauritius.
3. During the 1990s, political uncertainty about the future of the reintegration of Hong
Kong in China encouraged investors to seek a safe haven and move to Mauritius.
Peedoly, Aveeraj S. describes the rapid result of the policy followed and the
environmental factors:
At the turn of the twenty-first century, Mauritius was the world’s second-largest
fully fashioned knitwear producer, the third-largest exporter of new wool products
and Europe’s fourth-largest supplier of T-shirts.60
56 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, in: Jauch, Herbert/Traub-Merz, Rudolf (eds.), The
Future of the Textile and Clothing Industry in Sub-Saharan Africa Friedrich-Ebert-Stiftung, Bonn, 2006, p. 193.
57 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, op.cit., p. 193.
58 Ghosh, Shubha, The Implementation of Exhaustion Policies: Lessons from National Experiences, op. cit.
59 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, op.cit., p. 194.
60 Aveeraj S. Peedoly, The Textiles and Clothing Industry and Economic Development: A Case Study of Mauritius, in:
Lal, Kaushalesh/Mohnen, Pierre A. (eds.), Innovation Policies and International Trade Rules, Palgrave Macmillan,
Macmillan Publishers Limited, 2009, p. 49, available at: https://link.springer.com/chapter/10.1057/9780230246201.

At the beginning of the current century, this situation changed, because the labour cost
was raised and the margin of preference enjoyed by Mauritian textile exports to the EU
and the United States was reduced. 80% of the Mauritian textile products (sweaters, tee-
shirts, trousers) were not to be deemed within the high-quality category and faced stiff
competition from Chinese, Indian or Bangladeshi producers. Most Hong Kong investors
moved elsewhere after the ending of the favourable tax regime. Some estimates point to
a loss of 22,000 jobs in the EPZ.61
This fact forced investors and the government to rethink the textile and clothing sector in
the country. In 2003 the Textile Emergency Support Team was set up and an
independent assessor analysed the textile and clothing sector of Mauritius to formulate
a diagnosis of companies using Ramsey Productivity Models (RAPMODS),62 a tool for
measuring the contribution of each unit of input to final output.
The analysis led to the implementation of measures to facilitate the transition of textile
companies to produce superior quality goods and compete successfully in the
international market. According to Peedoly, Aveeraj S.: The experience, quality and
reliability of Mauritian producers has allowed them to secure market niches.63
Another effect was the investment in other countries with lower wage costs. According
to James: The growth of Madagascar’s clothing industry is also largely attributed to
foreign investment from Mauritius, which was attracted by Madagascar’s cheap labour
supply.64

trademarks
Table 12 Biggest companies in the textile and clothing sector
Ran-king Company Name Turnover Rs Profit Before Tax Rs
Million Million
1 Ciel Textile 10500.00 562
2 Cie. Mauricienne de Textile Ltée. 5937.80 196.30
3 Esquel (Mauritius) Ltd 2980.00 -
4 Fire Mount Textiles Ltd 2040.33 111.26
5 World Knits Ltd 1670.54 8.88
61 OECD, African Economic Outlook 2005-2006, available at: https://www.oecd.org/dev/36741476.pdf.

62 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, in: Zhihua Zeng, Douglas, Knowledge, Technology, and
Cluster-based Growth in Africa,The World Bank, Washington, 2008, p. 101.
63 Aveeraj S. Peedoly, The Textiles and Clothing Industry and Economic Development: A Case Study of Mauritius,
op.cit., p. 50.
64 James, William E., Status of Protection Facing Exporters of Textiles and Clothing from Asia and the Pacific in the
North and South Markets. In Economic and Social Commission for Asia and the Pacific (ESCAP), 2008.

6 Denim de L’lle Limited 1444.90 155.05
7 RT Knits Ltd 1393.90 40.10
8 Tex Services Ltd 1279.26 -21.60
9 Laguna Clothing (Mauritius) Ltd 945.79 80.45
10 FM Denim 882.28 24.88
11 REAL Garment 728.90 -42.07
12 Star Knitwear Group Ltd 453.39 219.80
13 St Malo Exports Ltd 452.81 14.71
14 Tara Knitwear Ltd 247.74 11.80
15 Filao Limitee 233.09 46.25
16 Universal Fabrics Ltd 214.27 -57.28
17 Jack Agencies Ltd 208.82 4.87
18 Soniawear Ltd 178.21 6.58
19 Wensum Ltd 176.47 16.03
20 Hong Kong Garments Co Ltd 172.25 0.81
21 Associated Services Textiles Ltee 168.19 15.14
22 Prosimex Industrial Company Limited 153.41 -11.84
23 Hardy Henry Textiles Ltee 114.44 26.81
24 Texto Ltee 98.19 -0.991
25 Bassa’s Textile Ltd 73.29 13.82
26 Leisure Garments Ltd 72.42 -1.41
27 Strategic Garments Manufacturers Ltee 54.50 2.04
28 Victory Garments Ltd 53.49 3.17
29 Tropical Garment Ltd 49.50 2.08
TOTAL 32,900 1,390
Source: DCDM Research. Business Magazine. Mauritius The Top 100 Companies, 2018
Edition

10.2 Contribution of companies in terms
of employment, added value,
investment and innovation
In 2015, the textile industry group represented almost 30% of gross manufacturing
domestic product of Mauritius. Textiles and Textile Articles Section was the most
important exporter in Mauritius, and its FOB exports were 2.2 times its CIF imports. As
can be observed in Table 13, taking into account only chapters 58 to 65 of the
classification, the textile sector is much more exporter than importer, since the total value
of exports and re-exports is five times greater than imports. In chapters 61 and 62
(Articles of apparel and clothing accessories) this ratio is 20 to 1 and more than 7 to 1,
respectively.65
Table 13 Trade 2015 by Chapter (Rs. Million)

Chapt Description Imports Domestic Re- Total
er (CIF) Exports Exports Export Total
(FOB) (FOB) s Exports/
(FOB) Imports
58 Special woven fabrics; tufted textile

fabrics; lace; tapestries; trimmings; 579 84 22
embroidery 106 0.18
59 Impregnated, coated, covered or

laminated textile fabrics; textile
273 6 18
articles of a kind suitable for
industrial use 24 0.09
60 Knitted or crocheted fabrics 373 1,264 3 1267 3.40
61 Articles of apparel and clothing

678 13,111 274
accessories, knitted or crocheted 13385 19.74
62 Articles of apparel and clothing

1,687 12,010 279
accessories, not knitted or crocheted 12289 7.28
63 Other made up textile articles; sets;

worn clothing and worn textile 511 49 136
articles; rags 185 0.36
64 Footwear, gaiters and the like; parts

1342 22 237
of such articles 259 0.19
65 Headgear and parts thereof 74 11 3 14 0.19
65 The Mauritius Chamber of Commerce and Industry, MCCI Annual Report 2015-2016, 2017, available at:.
https://www.mcci.org/media/139082/mcciannualreport2015-2016.pdf

TOTA
5,517 26,557 972
L 27529 4.99
Source: Own elaboration based on data from The Mauritius Chamber of Commerce and Industry.
MCCI, 2017, Annual Report 2015 | 2016, Port-Louis, p. 89
As can be seen in Table 14, employment in the industrial group wearing apparel is more
than six times that of the textile group, and this ratio has decreased from 7.10 times in
2014 to 6.14 in 2017.
Table 14 Employment in large establishments1 by Industry group March 2000, and march 2013 - 2017
NSIC 2000 2013 2014 2015 20162 20173
Textiles 9,210 5,355 5,256 5,312 5,477 5,595
Wearing apparel 72,810 36,921 37,305 36,588 35,550 34,350
Source: Own elaboration based on data from Mauritian Central Statistical Office. Cited by:
Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, op. cit.
1 Excluding government ministries and departments. 2 Revised 3 Provisional
The compensation to employees in 2016 was 4.27 times higher in the industrial group
wearing apparel than in the textile group, as shown in Table 14. The values of production
indicators (gross output, Intermediate and value added) more than tripled those of the
textile group.
The added value represents around 40% of gross output in both sectors, and only
compensation to employees represents 24% in the textile group and 31% in the wearing
apparel group.
Table 15 Production account of the Industrial Sector by industry group, 2016 (R Million)
Industry group Gross output at Intermediate Value added at Compensation of
basic prices Consumption basic prices employees
Textiles 8,125.3 4,942.4 3,182.8 1,965.4
Wearing apparel 26,993.7 15,535.3 11,458.4 8,392.2
Production account of the EOE Sector by industry group, 2016
Preparation and spinning of 4,652.0 3,063.9 1,588.1 774.4

textiles fibres / weaving of
textile
Finishing of textiles 2,562.5 1,462.3 1100.2 936.6
Other textiles 319.0 147.0 172.0 128.0
Wearing apparel, except fur 24,465.8 14,160.8 10,305.0 7,707.4

apparel

Knitted and crocheted apparel 1700.3 996.1 704.2 422.4
Production account of Non-EOE Sector by industry group, 2016
Textiles 591.8 269.2 322.5 126.4
Wearing apparel 827.6 378.4 449.2 262.4
Development. Annual Digest of Statistics – 2017. Port Luis, Mauritius, 2018.
While employment remained practically unaltered, fixed capital formation fell sharply in
2015, and it seems that investment prospects for 2019 are negative among
entrepreneurs.66
Table 16 Gross Domestic Fixed Capital Formation at current prices by type and use
2012 2013 2014 2015
Manufacturing 5,179 4,865 5,958 3,738
Annual real growth rates (%) -14.2 -6.5 +21.1 -38.5
Textile Employment (‘000) 54.2 53 53 53.6
Source: Own elaboration based on data from the Mauritius Chamber of Commerce and Industry.
MCCI, 2017, Annual Report 2015 | 2016, Port-Louis
The crisis endured by the sector must be considered a crisis of growth, because at the
end of the 20th century the employment grew and wages increased, and this contributed
to the loss of competitiveness; but this was also an important contribution to the well-
being of the population. Hourly labor costs increased at an average of 5 percent per
annum over the period 1990–2000, from US$ 0.76 to US$ 1.17.67

A characteristic of the textile sector, and in particular of the industrial group wearing
apparel in which the production of Mauritius concentrates, is the heterogeneity of its
products. For example, a dress designed by a famous French designer can cost
hundreds of times more than a dress for everyday use. In the first case the demand is
66 News on Sunday. Janvier 2019. Textile Investment News. Perspectives 2019 - Textile and Manufacturing Industry -
Ahmed Parkar: “The market is very unstable”
67 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, in: Zhihua Zeng, Douglas, Knowledge, Technology, and
Cluster-based Growth in Africa,The World Bank, Washington, 2008.

very inelastic and, on the other hand, in the second case the demand is very elastic due
to the price and the available alternatives.
That is why it is difficult to estimate monetary costs and benefits with a straightforward
theoretical study based on supply and demand curves, because "the product" to be
studied (female dress, following the example) includes products that in no way fulfil the
hypothesis that they are perfect substitutes, which implies the hypothesis that a woman
who buys a dress from i.e. the DIOR trademark is willing to replace it with a daily common
dress.
On the other hand, after the crisis of growth, the textile sector of Mauritius has
concentrated on the export of high-end products, and this trend should continue in the
future according to the indications of several experts, among others Sawkut (2007):68
Mauritius is working to position itself as a supplier of quality products, that is, as

a niche producer in the fashion market and in other segments of the industry
where the use of technology is intensive. Advanced, technology-based
production, complemented by Mauritius’ educated and skilled labor force, should
open a window for the successful production and export of high-end products.
Consequently, for most of Mauritian textile production the market is the world, not the
country; and this market will not be affected (positively or negatively) by parallel imports
that may reach Mauritius. Within the country, the EOE will not receive any negative
impact from the application of the international exhaustion regime.

Mauritius
Sales in the domestic market can be affected by parallel imports, but these sales account
for a fifth of exports, so it is not justified to estimate the impact assuming that the price
difference is equal to the ratio between profits and total turnover of the main companies.
Therefore, it was necessary to use another way of estimating the impact of parallel
imports.
In the absence of more information, it was considered that the sales of foreign
trademarks representatives in the domestic market came from imports of the sector, plus
distribution and sales costs. It was estimated that the difference between the average
price of these sales in the domestic market and possible parallel imports should be
reduced, taking into account that it is an efficient sector that competes in the international
market.
In the absence of more information, it was considered that the sales of foreign
trademarks representatives in the domestic market came from CIF imports of the sector
(Rs 5,517 million), plus 50% of distribution and sales costs (Rs 8,275.5 million) . The
impact of parallel imports was estimated at 5% of sales, an intermediate percentage
68 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, opt. cit., p. 107.

between the estimated values for the automotive and food sectors. Therefore, in the
short term, parallel imports could generate a cost of Rs 413.78 million in domestic sales
of foreign trademarks representatives in Mauritius.

In order to estimate the impact that parallel imports could have on the national production
of textiles and wearing apparel, the price diferential of 5.0% is multiplied by the Gross
output at basic prices of the NSIC groups 13 Textiles plus NSIC 14 Wearing apparel, Rs
1,419.4 million (Table 17).69
Table 17 Production account of Non-EOE Sector by industry group, 2016, Rs million

NSIC Industry Gross Intermediate Value Compensation Taxes on Gross
group output consumption added of employees production operating
at basic at surplus
prices basic
prices
13 Textiles 591.8 269.2 322.5 126.4 1.3 194.9

14 Wearing 827.6 378.4 449.2 262.4 2.3 184.5
apparel
13-14 1419.4 647.6 771.7 388.8 3.6 379.4
Source: Own elaboration based on data from Mauritian Central Statistical Office.
Statistics Mauritius. Ministry of Finance and Economic Development, 2018. Digest of
Industrial Statistics-2017. Port Louis. p. 87, available at:
dustry/Digest_%20Industrial_Prod_Yr17.pdf
and the price differential squared. Considering the price reduction of 5% and a supply
value of Rs 0.35 million is obtained for area 2 of the model, so that the cost of national
producers of textiles and wearing apparel is estimated at Rs 70.62 million.
10.3.3 Consumers
of areas 1, 2, 3 and 4 of the The economic model of supply and demand.
Prod_Yr17.pdf

Area 3 is the loss of representatives of foreign trademarks (Rs 413.78 million) .This cost
of exclusive distributors is equivalent to a transfer to consumers, who would receive a
benefit of the same amount for this concept.
elasticity of demand. The estimated values for the elasticities of the textile sector are
found around the unit, average value among those calculated for Textile Expenditure by
ESCAP.70 So the value of one was adopted.71 The additional benefit of consumers, for
this concept is Rs 10.34 million, value represented by the area 4 of The economic model
of supply and demand.
The sum of areas 1 and 2 of The economic model of supply and demand, represents the
benefit obtained by the consumer for the implicit transfer of the loss of domestic
producers and for the replacement of part of the national production by imports. As
indicated, is equal to 29.59 + 41.38 = Rs 70.97 million.
413.78 + 10.34 = Rs 495.1 million.
The annual net benefit for Mauritius is represented in The economic model by the sum
of the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
70 Economic and Social Commission for Asia and the Pacific (ESCAP), Unveiling Protectionism: Regional Responses
to Remaining Barriers in The Textiles and Clothing Trade, United Nations Publication, 2008, p. 153.
71 Martinez, Lauren A., The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre Arrangement,
Honors Projects. Paper 49, 2012, available at: http://digitalcommons.macalester.edu/economics_honors_projects/49

11. Food and beverages
About half of the territory of Mauritius is used for agriculture, most of it dedicated to the
production of sugar cane and a quarter covered in forests. In addition, Mauritius has an
Exclusive Economic Zone of the largest in the world, 1.9 million km2 of the Indian Ocean
and manages another 395,000 km2 along with the Seychelles. 72
The main concern of the government in relation to food and beverages is to guarantee
the supply of basic food products at affordable prices, thus controlling domestic
production and imports of staple foods; like onions, potatoes, garlic and its seeds, wheat
flour, bread, rice and fish. Mauritius is a net importer of food and beverages.73
In order to control the exploitation of the fishing resource, the government developed a
Fisheries Master Plan. The main beneficiaries of the program are the fishermen and the
coastal communities of the region.74

trademarks
Companies operating with foreign trademarks import processed foods, which are
distributed to consumers in supermarkets. These companies also sell other products, but
most of their sales correspond to the food and beverages sector, so that their economic
activity indicates approximately that of the sector and, therefore, the attached list
corresponds to companies engaged in distributive trade.
Some of these companies belong to important business groups that work in different
sectors of the economy.75
72 World Trade Organization Secretariat, Trade Policy Review. Report by the Secretariat. Mauritius, 2015, available at:
https://docsonline.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
DP.aspx?language=E&CatalogueIdList=130110,127036,51175,61348,65698,8452&CurrentCatalogueIdIndex=0&Ful
lTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True
73 World Trade Organization Secretariat, Trade Policy Review. Report by the Secretariat. Mauritius, 2015, available at:
https://docsonline.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
DP.aspx?language=E&CatalogueIdList=130110,127036,51175,61348,65698,8452&CurrentCatalogueIdIndex=0&Ful
lTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True.
74 FAO. Mauritius and FAO, available at: http://www.fao.org/3/a-az485e.pdf
75 For example, the Leal Group includes companies in the sectors: medicine, consumer goods, automotive, information
technology, engineering and tourism. Its Consumer Goods Department (66% of the group's total turnover) represents
multinational companies such as DANONE, UNILEVER, DIAGEO, GSK or BEIERSDORF. In addition, it creates new
products in infant nutrition, baby care, personal care, feminine hygiene, products for the care of the home, food, wine
and liquors. See http://www.lealgroup.com/default.aspx

Table 18 Biggest companies in the food and beverage sector
Ranking Company Name Turnover Rs Profit Before Tax Profit %

Million Rs Million
1 Pick and Buy Limited 6,056.17 110.51 1.82
2 Udis Ltée (Super U) 4,630.30 255.70 5.52
3 Seven Seven Co Ltd 3,749.33 41.74 1.11
4 Somags Ltée 2,367.60 66.30 2.80
5 Shoprite (Mauritius) Ltd 1,140.00 -68.0 -5.96
6 Family World Ltd 1,071.00 84.06 7.85
7 Bagatelle Distribution Ltd 1,017.60 41.51 4.08
8 Sik Yuen Limited 973.32 52.00 5.34
9 Inas & Co Ltd (Lolo Supermarket) 898.42 59.73 6.65
10 Tang Wang and Co Ltd 617.92 20.36 3.29
11 London Supermarket Ltd 617.01 36.61 5.93
12 King Savers Ltd 576.88 12.23 2.12
13 Save Mart Trading Ltd 356.24 2.41 0.68
14 Vk & K’s Supermarket Ltd 334.26 2.97 0.89
15 Expressmart Distribution Ltd 284.83 5.19 1.82
16 M. Savers Ltd 284.33 6.78 2.38
17 Simla Supermarket Co Ltd 279.64 4.37 1.56
18 Super Unic Co Ltd 243.75 11.28 4.63
19 Supercash Ltd 230.89 5.77 2.50
20 Antonio Maurer Ltd 177.77 -2.49 -1.40
21 London Distribution Co Ltd 175.54 1.12 0.64
22 Discounters Supermarket Co Ltd 137.06 2.20 1.61
23 Express Mart Ltd 103.56 1.95 1.88
TOTAL 26,323.42 754.3 2.87

Source: Own elaboration based on data from DCDM Research. Business Magazine,

A measure of the contribution of companies to the economy of Mauritius is the figure of
more than Rs 26 billion annual sales, indicated in Table 18.
There is a significant national production of food and beverages, which employs 13,873
people, including those who work in NSIC 10 and 1176 (Table 19). However, according
to the work cited,77 39.2% of these people (5,444) worked in export-oriented companies
in the food group, that does not compete with the imports of companies that operate with
foreign trademarks.
Table 19 Number of large establishments and employment,1 by industry group, March 2013 – 2017
NSIC 2013 2014 2015 20162 20173
10 Food products, number of large establishments 110 109 109 108 107
10 Employment 11,313 11,567 11,772 11,448 11,478
11 Beverages, number of large establishments 16 16 14 13 13
11 Employment 2,634 2,686 2,500 2,332 2,395
10- Number of large establishments 126 125 123 121 120

11
10- Employment 13,947 14,253 14,272 13,780 13,873

11
Source: Own elaboration based on data from Annual Digest of Statistics 2017, pp. 33-
34
1 Refer to establishments employing 10 or more persons, excluding government
ministries and departments. 2 Revised 3 Provisional78
76 NSIC: National Standard Industrial Classification of all Economic Activities. NSIC 10: Food products. NSIC 11:
Beverages. Mauritian Central Statistical Office. 2018. Statistics Mauritius. Ministry of Finance and Economic
Development, Digest of Industrial Statistics-2017. Port Louis. p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_Pro
d_Yr17.pdf
77 Mauritian Central Statistical Office. 2018. Statistics Mauritius. Ministry of Finance and Economic Development,
Digest of Industrial Statistics-2017. Port Louis. p. 60, available at:
Prod_Yr17.pdf
78 Source: Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development.
2018. Digest of Industrial Statistics-2017. Port Louis. (2013-2017), available at:

As shown in Table 19, the number of large food and drink companies in Mauritius
decreased by 5% between 2013 and 2017, while the reduction in employment was lower
(0.5%); it increased 1.5% in the industrial food group and decreased 9.1% in the
beverage group.
It should be noted that there was a relatively large reduction in the number of sugar mill
workers, because it was reduced by 238 (18%) in the same period and, nevertheless,
employment in the sector remains practically constant. 79
Table 20 Production account of the Industrial Sector by industry group, 2016 (Large establishments. Rs
Million)
Gross Intermediate Value Compensation Taxes on Gross
output80 at consumption added82 of employees production operating
Industry group surplus
basic at basic
prices81 prices
Food products 40,148.7 30,440.2 9,708.4 2,738.2 51.5 6,901.5

(incl. sugar)
% of National 30.00 38.08 18.01 12.34 16.87 22.01

Manufacturing
Beverages 12,311.60 4,781.50 7,530.00 1,033.50 41.7 6,435.00
% of National 9.20 5.98 13.97 4.66 13.66 20.53

Manufacturing
Food products & 52,460.30 35,221.70 17,238.40 3,771.70 93.20 13,336.50

beverages
% of National 39.19 44.06 31.98 17.00 30.54 42.54

Manufacturing
National 133,850.0 79,943.5 53,906.4 22,189.7 305.2 31,351.6

Manufacturing
Prod_Yr17.pdf
Prod_Yr17.pdf
80 Gross output of industries covers the market value of goods and services produced, including work-in-progress and
products for own use.
81 The basic price is the amount receivable by the producer, exclusive of taxes on products but including any subsidy
on these products.
82 The value added for a particular producer is equal to the gross output at basic prices less the value of intermediate
consumption at purchaser's prices.

Statistics Mauritius. Ministry of Finance and Economic Development. 2018. Annual
Digest of Statistics – 2017. Port Luis, Mauritius, p. 36
As shown in Table 20, the gross output of food and beverages represents an important
39.19% of national manufacturing. The participation in terms of added value is also
important, 31.98%, but the compensation to employees is considerably lower, 17%,
reflecting the greater occupation of unskilled labor in food production. On the other hand,
the contribution to the collection exceeds 30% and the profit rate is even higher, 42.54%.


Mauritius
Companies in the distributive sector sell, in addition to products with foreign trademarks,
products of national origin; in which there should be no difference in prices with respect
to parallel imports. Therefore, it is not necessary to estimate the price difference,
because the Total Profit Before Tax (Rs 754.3 million) of the companies is an estimate
of the cost that could be generated by parallel imports to foreign trademarks
representatives.
Therefore, parallel imports could generate a cost of Rs 754.3 million in domestic sales
of foreign trademarks representatives in Mauritius.

To estimate the impact that parallel imports could have on national food and beverage
production, the basic characteristics of this production in Mauritius need to be taken into
account:
First, it should be considered that export-oriented companies will not be negatively

affected by parallel imports since, by definition, their market is international, not
domestic. In any case, the impact would be positive, if parallel imports reduce the price
of their inputs.
Second, it is quite unlikely that small food producers in Mauritius will be affected by
imports of foreign-trademarked products. Rather, large domestic producers could
compete with these imports and, therefore, be affected by parallel imports.

Therefore, it seems appropriate to use the data from the Production Account of the Non-
EOE sector (excluding sugar) 2016, large establishments,83 which is shown in Table 21.
Table 21 Production account of Non-EOE Sector (excluding Sugar) Large establishments, 2016 Rs Million
Gross Value
Gross
output at Intermediate added at Compensation Taxes on
NSIC operating
basic Consumption basic of employees production
surplus
prices prices
10* 21,803.3 15,637.9 6,165.4 1,549.4 35.8 4,580.2
11-12** 12,118.4 4,708.5 7,409.9 1,009.0 41.2 6,359.7
10-33*** 74,122.2 41,146.2 32,976.0 9,301.0 184.1 23,490.9
Development, Statistics Mauritius, 2018. Digest of Industrial Statistics, p. 87
* Food products (excl. sugar)
** Beverages and tobacco products
*** Total Non - EOE (excluding Sugar)
To estimate the maximum impact of parallel imports to domestic production, the price
diferential of 2.87% is multiplied by the gross production at basic prices.
For food NSIC 10, the result is Rs 624.78 million, which corresponds to the sum of areas
1 and 2 of The economic model of supply and demand.
and the price differential squared. Considering the price reduction of 2.87% and a supply
value of Rs 1.79 million is obtained for area 2 of The economic model, so that the cost
of national producers of food is estimated at Rs 622.99 million.
But statistical information on domestic beverage production (NSIC 11) is recorded along
with the NSIC 12 of tobacco products. It is necessary to subtract the corresponding gross
output value but, the available statistics do not include it. Thus, in the Mauritius Tobacco
Atlas it is indicated that the production data is n / a, although it does state that “There
were less than 1000 metric tons of tobacco produced in Mauritius in 2014”.84
In the absence of more information, an estimate was made with additional data:
▪ The FAO web portal indicates that approximately 1,200 cigarettes are produced per
kilogram of tobacco leaves, which is equivalent to 60 packs.85
Prod_Yr17.pdf.
84 Mauritius Tobacco Atlas, available at: https://tobaccoatlas.org/country/mauritius/.
85 Food and Agricultural Organization, available at: http://www.fao.org/3/y4997s09.htm.

▪ The WHO website indicates that the "Price of lowest cost trademark of cigarettes
(Aspen)" is Mr 105.86
With these data, a sales value of Rs 6,300 million was obtained, which is approximately
half of the Groos output of Table 21. So, the cost for domestic beverage producers can
also be estimated multiplying the price diferential of 2.87% by Rs 6,059.2 million, half of
the Gross output. The result is Rs 173.90 million, which corresponds to the sum of areas
1 and 2 of The economic model of offer and demand. Area 2, which represents the
reduction in the cost of production caused by the decrease in the sale price, was
calculated in the same way as food. A value of Rs 0.50 million was obtained for area 2
of the model, so that the cost of domestic beverage producers was estimated at Rs
173.63 million.
Adding the value of the cost for domestic food producers Rs 623.96 million to the cost of
beverage producers Rs 173.63 million, the cost of the food and beverage sector of Rs
796.11 million is obtained.
11.3.3 Consumers
According to the proposed economic model, the total benefit for the consumer is equal
to the sum of areas 1, 2, 3 and 4 of the graph.
Area 3 is the loss of representatives of foreign trademarks (Rs 754.3 million). This cost
elasticity of demand. The estimated values for the elasticities of the food and beverages
sector are found around the unit, so the value of one was adopted. 87 The additional
benefit of consumers, for this concept is Rs 10.81 million, value represented by the area
4 of The economic model of supply and demand.
The sum of areas 1 and 2 represents the benefit obtained by the consumer for the implicit
transfer of the loss of domestic producers and for the replacement of part of the national
production by imports. As indicated, is equal to 624.78 (Food) + 173.63 (Beverages) =
Rs 796.11 million.
754.3 + 10.81 = Rs 1,563.5 million.
The annual net benefit for Mauritius is represented in the economic model by the sum of
86 WHO, Report on the global tobacco epidemic. Country profile Mauritius, 2017, available at:
https://www.who.int/tobacco/surveillance/policy/country_profile/mus.pdf?ua=1.
87 Martinez, Lauren A., The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre Arrangement,
Honors Projects. Paper 49, 2012, available at: http://digitalcommons.macalester.edu/economics_honors_projects/49

The net benefit is estimated by the sum of 2.29 + 10.81 = Rs 13.10 million.
12. Perfumery, cosmetic or toilet

preparations
In relation to parallel imports, one characteristic of cosmetics that should be surveyed is
their location between the tradable and non-tradable groups of goods of the usual
classification in the economic analysis of international trade.
This dichotomous classification is a great simplification of reality, because there is no

doubt that there are goods that are more tradable than others and that there must be
very few that can not be traded internationally.
That some goods are more or less tradable depends, above all, on the relationship
between the cost of transfer and the value of the product, and a measure of this
relationship is the percentage difference between the CIF and FOB prices.
In the case of the importation of cosmetics, the incidence of transfer costs is very low
because, in general, they are products of little weight and volume in relation to their
monetary value. In fact, in 2017 the difference between the CIF and FOB prices
represented 6.6% of the FOB, a percentage lower than that of most imported products.88
Also, the fact that cosmetics do not deteriorate easily, reduces transfer costs and makes
products more tradable than perishable goods; such as fruits, flowers and vegetables;
whose freight rates are so high that in Mauritius it was considered necessary to create a
compensation mechanism, the Freight Rebate Scheme and the Speed to Market
Scheme.89
This explains why there are pages on the Internet that offer a wide variety of cosmetic
products directly to the consumer, so that the product arrives from the factory (anywhere
in the world) to the address of the final consumer with only one intermediary.
For example, an office in Lisbon90 offers more than 3,000 products of the best
international trademarks, with free and fast shipping for high value orders: “Mauritius
Deliveries in 4 Days Free and Fast Shipping for orders above 117.07USD”. And
continues to introduce new trademarks and products to its offer, according to the latest
trends and to what consumers request. Inform the client with experts trained by
representatives of beauty and hairdressing trademarks, such as MESOESTETIC,
INSTITUT ESTHEDERM, NUXE, SESDERMA, BIODERMA, ISDIN, PHYTO, LIERAC,
CRESCINA, VIVISCAL and HELIOCARE. Currently all its products come from Europe,
88 See Picture of cosmetics imports of 2017 by country of origin.

89 See Ministry of Industry, Commerce and Consumer Protection (Industry Division) Annual Report July 2017 - June
2018, p. 16, available at: http://industry.govmu.org/English//DOCUMENTS/ANNUALREPORTINDUSTRY2018.PDF.
90 See
https://www.google.com/aclk?sa=L&ai=DChcSEwiQ9oyy1v_hAhXKJIYKHUxZDq8YABAAGgJ2dQ&sig=AOD64_0W
Y28N-ZopSYjSigOP4SjVXKNs3A&q=&ved=2ahUKEwjr0Iay1v_hAhXMslkKHQ-GBccQ0Qx6BAgKEAE&adurl=

are 100% original and are purchased directly from the manufacturer or authorized
distributor.
Another example is a company,91 which offers a greater number of trademarks than the
other one, and shipments at a cost of US $ 6.00 for orders whose amount is less than
US $ 35.00 and without cost for larger amounts, although the delivery times of the
product are higher.
Finally, even in Mauritius, an online makeup products store has been headquartered
since 2003, with a customer service team available every day, including Saturdays,
Sundays and holidays.92
It is expected that, with the expansion of telecommunications services, international

competition will increase further in the future.

trademarks
In other sectors considered in the present consultancy, it was found that the list of
companies of the publication entitled The Top 100 Companies93 includes the majority of
those firms, actors that operate with foreign trademarks, reason why it was used as a
base to locate them. However, said publication does not refer to the cosmetic sector,
which obliged to rely on other sources of information.
State statistics (as will be specified below) do not distinguish a cosmetic sector, but rather
large groups of products that include cosmetics.
According to information collected on the Internet,94 there are 40 cosmetics stores in

Mauritius, some dedicated exclusively to the sale of a single foreign trademark. Another
source of the Network allows interested parties to include data of their companies, where
companies operating with foreign trademarks or producing cosmetic products in
Mauritius were selected. In addition, the search for private information made it possible
to detect other companies, which allowed Table 22 to be drawn up:95
Table 22 Biggest companies in the cosmetic sector

Company Name Business Type Product/Service Employees
Sobratty Sayeed Exporter Cosmetic and essential oils 5
Sportville Co Ltd Trading Company, Beauty Products Fewer than

Distributor/ Wholesaler 5
91 https://www.cosmostore.org/
92 https://www.simple.mu/about-us/
93 DCDM Research. Business Magazine. Mauritius The Top 100 Companies, 2018 Edition. La Sentinelle Editions.
94 See https://maps.me/catalog/shops/shop-beauty/country-mauritius/.
95 See: Gmdu.net. global trades from here, available at: https://www.gmdu.net/join-31-join-118-p1.html.

Harley Street Fertility Trading Company Not Provided Not
Centre (Mauritius) Ltd Provided
Herbaline (Mauritius) Manufacturer Skin Care, Make Up 5 - 10

Ltd.
Star Agency Distributor/ Wholesaler Cosmetic products Not

Provided
Jean-Michel Janvier Trading Company, Perfume, hair shampoo, skin lotion, Not
Distributor/ Wholesaler beauty mask, nail varnish, lipstick Provided
Amenities Product Distributor/ Wholesaler wooden hangers & craft, bath & toilet, 5 - 10
Resource Ltd hotel linen, slippers, caps
Henkel Chemicals Manufacturer Detergents, Adhesives, Chemicals 51 - 100

(Mauritius) Ltd
Avahna Co Ltd Trading Company Beauty Products, Rooibos 5 - 10
LC Manufacturer, Soap, Detergent, Candles 101-500

Distributor/ Wholesaler
MAMORO Manufacturer Laundry Soap 51-100
Mauritius Cosmetics Ltd Distributor/ Wholesaler Health & beauty care, food 101-500
Mopirove Ltd Manufacturer Toilet Soaps, Laundry Soaps, 101-500

Detergents liquids
Antz Design Ltd Distributor/ Wholesaler Health & Nutritional Products, 5-10
Cosmetics and Network Marketing
Luimeme Manufacturer Soap, detergent, candles 51-100
Cosmo Products Co Ltd Distributor/ Wholesaler Cosmetics, perfumes, baby products 5-10
(powder, cream, etc)
IBL Ltd (BrandActiv) Distributor/ Wholesaler/ Food & Beverage, Frozen & Chilled 101-500
Exporter and Personal & Home Care
PNL – Pharmacie Distributor Food & Beverage, Cosmetics, Textile 101-500

Nouvelle Ltd and Pharmaceuticals
Source: Own elaboration based on data from Gmdu.net. global trades from here,
available at: https://www.gmdu.net/join-31-join-118-p1.html
In addition, companies engaged in distributive trade sell cosmetic products, but the most
important item in their sales is usually food and beverages, not cosmetics; so here they
are included only as a reference. For example; a company, markets a wide variety of
fast-moving consumer goods in Mauritius, Madagascar and Seychelles; it is divided into

three commercial categories: food and beverages, frozen and refrigerated, and personal
and domestic care, and the latter includes cosmetics, without differentiating them.
In summary, the available information does not allow to compile a list of the main
representatives of foreign trademarks in Mauritius and the corresponding turnover.
Customs data is the most detailed source of information available, in which the imported
products are grouped by tariff items. Therefore, in Table 23 the sector data are
presented, from HS Code 33011200 to 33079090.
Table 23 Imports of cosmetics, HS Code 33, 2017, in Rs
Cost
HS Code Description of goods Kg Free on board insurance
freight
Essential oils of orange (incl.
33011200 1,637 424,079 469,744
concretes and absolutes)
Essential oils of lemon (incl. concretes 76,325
33011300 75 89,921
and absolutes)
Essential oils of citrus fruit excl 1,498,445
33011900 3,852 1,618,696
bergamot, orange, lemon or lime
Essential oils of peppermint (menta
33012400 203 276,088 286,267
piperita) (incl. concretes & absolutes
Essential oils other than those of
33012900 12,145 5,726,563 6,168,941
citrus fruits, excl 330121-330126
Aqueous distillates and aqueous
33019010 2,917 3,220,257 3,415,836
solutions of essential oil
Aqueous distillate & soln of essential
33019090 62,756 10,763,886 11,312,892
oil unsuitable for medicinal use
Odoriferous alcohol preparation for
33021010 the manufacture of alcoholic 12,103 7,078,743 7,769,544
beverages
Odoriferous substances excl.
33021090 191,678 58,958,674 67,985,730
alcoholic for food or drink industries
Odiferous substances and mixtures
33029000 146,108 74,681,603 79,562,550
thereof not for food or drink industry
33030000 Perfumes and toilet waters 740,807 582,902,731 602,876,081
33041000 Lip make-up preparations 59,954 29,651,415 31,740,759
33042000 Eye make-up preparations 61,350 26,651,475 28,508,381
33043000 Manicure or pedicure preparations 77,235 26,164,068 28,114,723
Beauty or make-up powders, whether
33049100 110,722 18,429,602 19,728,949
or not compressed
Beauty/make-up preparation excl lip,
33049900 1,359,003 889,680,334 926,664,593
eye, manicure or pedicure preparation
33051000 Shampoos 842,700 154,858,295 164,177,065
Preparations for permanent waving or
33052000 28,693 3,969,129 4,313,849
straightening of the hair
33053000 Hair lacquers 37,702 8,155,698 8,731,229

Preps for hair excl shampoo, lacquer
33059000 & permanent waving/straigtening 1,259,898 217,018,074 233,420,781
preps
33061000 Dentifrices 638,143 132,213,764 137,607,553
Yarn used to clean between the teeth
33062000 6,808 1,778,607 1,914,479
(dental floss) put up for retail sale
Preparations for oral or dental hygiene
33069000 186,112 27,359,820 29,055,987
excl dentifrices and dental floss
Pre-shave, shaving or after-shave
33071000 86,745 22,890,203 24,077,056
preparations
Personal deodorants and
33072000 704,720 145,529,071 152,937,381
antiperspirants
Perfumed bath salts and other bath
33073000 46,341 5,478,065 5,983,573
preparations
Agarbatti & other odiferous 771,970 76,771,015 81,865,541
33074100
preparations which operate by burning
Preparations for perfuming or
33074900 388,825 38,050,407 42,084,805
deodorising rooms excluding agarbatti
Preparations for contact lens or
33079010 123,010 8,033,807 8,827,411
artificial eye
Depilatories, perfumery,
33079090 124,002 32,321,833 34,463,336
cosmetic/toilet preparations n.e.s.o.i
TOTAL 8,088,214 2,610,612,076 2,745,773,653
Development, Statistics. Total Imports_ Year 2017. Port Luis, Mauritius, 2018.
The tariff items in which the highest imports are recorded are:
• Beauty/make-up preparation excl lip, eye, manicure or pedicure preparation

• Perfumes and toilet waters
• Preps for hair excluding shampoo, lacquer & permanent waving/straigtening
preps
• Shampoos
• Personal deodorants and antiperspirants
• Dentifrices
While those in which the average value per kg is higher are:
• Essential oils of peppermint (menta piperita) (incl. concretes & absolutes

• Essential oils of lemon (incl. concretes and absolutes)
• Aqueous distillates and aqueous solutions of essential oil
• Perfumes and toilet waters
• Beauty/make-up preparation excluding lip, eye, manicure or pedicure preparation
• Odoriferous alcohol preparations for the manufacture of alcoholic beverages

The companies included in the previous list engage approximately 1,850 employees.
The statistical information of the cosmetic sector is included in the industrial groups 19-
21 Coke and refined petroleum products / Chemicals and chemical products / Basic
pharmaceutical products and pharmaceutical preparations; 96 so, it does not reflect with
minimum accuracy the reality of the sector.
Statistical information of the production index is available for the sub-group 2023 Soap
and detergents, cleaning and polishing preparations, perfumes and toilet preparations,
which increased by 2.1% in 2017.
As for the production of the companies, they can offer a wide variety of products; such
as ARCHEMICS,97 a chemical products company, whose cosmetic production is
marginal, since it also produces adhesives; goods for industrial cleaning, the textile and
construction sector, and professional hair care. Likewise, a holding which includes 280
companies is located in nine sectors: agriculture, construction, commerce, financial
services, hospitals, logistics, manufacturing, real estate and, finally, in the life sector that
includes businesses that offer clinical research and development for the cosmetic and
pharmaceutical industries, in an international expansion strategy based on innovation:
• One company of the holding performs clinical research and research and
development for the cosmetic and pharmaceutical industries. It operates in three
areas of activity: pharmaceutical, cosmetics and nutraceuticals. Its clients for
clinical trials now include world leaders in cosmetics and pharmaceuticals. CIDP
is present internationally for its subsidiaries, namely, in India, Singapore, Brazil
and Romania, and works for more than 70 clients in more than 20 countries.
• Another company offers analytical testing services (food, environmental,

pharmaceutical and cosmetic and others), as well as consulting and auditing
services with the help of a strategic partner. Currently, he works with 223 clients
in 21 countries.98
In contrast, a company listed on the Stock Exchange is specialized in the manufacture

and marketing of cosmetic products, hygiene products, perfumes, cologne and toilet
water.99
In 2015, a company stopped producing BLENDAX toothpaste under the license of an

American multinational and launched its new trademark DENTAMAX, which became the
96 Ministry of Finance and Economic Development, Annual Digest of Statistics – 2017. Port Luis, Mauritius, 2018.
97 See https://www.archemics.mu/content/about-us.
98 https://www.iblgroup.com/sites/default/files/IBL_INTEGRATED_REPORT_2017.pdf
99 http://www.mcbstockbrokers.mu/downloads/News/MCOS%20Rights%20Issue%20160718.pdf

market leader in Mauritius. He also manufactures KAMILL cosmetics under the license
of a german company and has a licensing partnership with a French company for
perfumes, eau de cologne and eau de toilette. In addition, it produces soap and is an
official supplier of GM products (France), which manufactures and distributes exclusive
trademarks of french products to hotels.100 It distributes products manufactured by sister
companies: toothpaste, creams and lotions, perfumes and paper products. It has internal
marketing and commercialization support, and a fleet of 13 trucks for deliveries to more
than 2,500 customers in the country. In addition, it exports to Madagascar.


Mauritius
Those that only import and do not produce would be affected, should the basic condition
for parallel imports be met: if there is a sufficiently large difference between prices in
other countries and the prices paid by consumers in Mauritius.
There is no turnover value for the sector, and it is necessary to have some estimate to
calculate the impact on the representatives of foreign trademarks. It was decided to start
from the information of Customs, which is the most reliable at stake, and assume that
turnover can be estimated by adding marketing costs to the value of the sector's imports.
The very particular characteristics of the market of cosmetic products suggest that these
costs are important:
The price of lipstick, makeup and various skin care products is driven largely by
advertising and marketing. Manufacturers know that cosmetics are often an impulse
purchase, for which consumers are usually willing to pay more. They enlist celebrities
in the marketing game, adding to the price. As a result, the average retail markup on
cosmetics is about 50 to 60 percent.101
Taking into account a difference between the CIF value of imports and billing of 50%
and, given that the value of imports in 2017 was Rs 2,746 million, the estimated turnover
is Rs 5,492 million.
Nor is there information on the difference between the average domestic price and the
lowest average in the international market, the average at which parallel imports could
enter. While there is a large dispersion in the prices of cosmetic products, both in
Mauritius and in the international market, it is unlikely that the difference between the
averages could be high. Indeed, as indicated at the beginning of this section, imports
through the Internet increase the level of competition in this market, so the difference
100 https://www.marketscreener.com/MAURITIUS-COSMETICS-LIMIT-20705910/company/
101 https://money.howstuffworks.com/personal-finance/budgeting/5-retail-markups9.htm

between prices must be relatively small. On the other hand, if the markup is 50% and
most of it is driven largely by advertising and marketing, it seems reasonable to assume
a margin of 5%. Under these assumptions, the cost for representatives of foreign
trademarks would reach a level in the order of Rs 274.6 million.

It has not been possible to estimate the impact of parallel imports on national production.
There is national production of cosmetics in Mauritius but the statistical information of
the cosmetic sector is included in the industrial groups 19-21 Coke and refined petroleum
products / Chemicals and chemical products / Basic pharmaceutical products and
pharmaceutical preparations.
To prepare this report it has been necessary to make risky estimates, based on
inaccurate information, but always with data that set limits on the value to be estimated
or suggest an order of magnitude. But in this case, the information does not reflect with
minimum accuracy the reality of the sector, so it was decided not to give an estimate of
the costs of parallel imports for domestic producers.
12.3.3 Consumers
of areas 1, 2, 3 and 4 of the graph.
Areas 1 and 2 correspond to the impact of parallel imports on the national production of
cosmetics, an impact that has not been possible to estimate, and will not be taken into
account.
Area 3 is the loss of representatives of foreign trademarks (Rs 274.6 million). This cost
The benefit to the resulting consumer would be greater, in an amount that depends on
the price elasticity of demand. A product which essentially falls into the category of
conspicuous consumption, say a cosmetic product, is likely to have high elasticity, so the
value of 2 was adopted. The additional benefit of consumers, for this concept is Rs 13.73
million, value represented by the area of triangle 4 in the graph of the economic model
of supply and demand.
Therefore, the total benefit for the consumer (the sum of areas 3 and 4) is estimated at
274.6 + 13.7 = Rs 288.33 million.
The annual net benefit for Mauritius is represented in the graphic model by the area of
tria 4, since area 3 is equivalent to a transfer from importers to consumers. Therefore,
the net profit is estimated at Rs 13.73 million.

13. Global assessment of costs and
benefits
In this section a general evaluation of the impact of the introduction of the international
trademark law regime in Mauritius will be made. First, it will try to determine the
quantitative impact of international exhaustion on the economy of Mauritius. This part of
the study will be based on the results obtained in each of the productive sectors analyzed
in the previous chapters (automobile, pharmaceutical, textiles, food and beverages and
cosmetics). Next, a qualitative analysis of the introduction of the international regime for
the exhaustion of trademark rights will be carried out. For this, the characteristics of the
five sectors are analyzed, in order to anticipate the intensity of the impact that parallel
imports could have on each of them. Further, the position expressed by the different
actors in the country regarding the exhaustion of the trademark right will be taken into
account. Finally, the risks and fears that Mauritian stakeholders have regarding the
introduction of the international trademark law regime will be discussed.
13.1 Quantitative estimation of costs and

benefits by sectors
If domestic prices in Mauritius are not much higher than in the rest of the world, there is
no reason to fear or rejoice if the international exhaustion of trademark rights is
introduced, because there will be no costs and no benefits. But, if the parallel imports
generate a substantial reduction of the domestic price of the products they import, the
representatives of foreign trademarks could be adversely affected.
With the objective, among others, of knowing the companies that would be directly
affected by the parallel imports, exclusive importers were interviewed, who indicated that
their companies would be seriously affected.
However, most representatives of foreign trademarks in Mauritius argue that there is not
a price difference, and none of those who accepted that there is a difference provided
an estimated percentage on the average of said difference.102
In the absence of information, it was necessary to apply values similar to the usual price
differences in other countries103 or the average ratio between profit and turnover of the
main companies in the sector.104 Likewise, average values of the elasticities of other
countries were taken.105
102 Information based on the survey submitted to the private sector

103 NUMBEO, Cost of Living Comparison Between Two Countries, available at: https://www.numbeo.com/cost-of-
living/compare_countries.jsp
104 DCDM Research, Business Magazine, Mauritius The Top 100 Companies, 2018 Edition. La Sentinelle Editions.
105 Martinez, Lauren A., The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre
Arrangement, Honors Projects. Paper 49, 2012, available at:
http://digitalcommons.macalester.edu/economics_honors_projects/49

According to the proposed economic model,106 the benefit that consumers would receive
would be greater than the sum of the losses of representatives of foreign trademarks and
domestic producers, plus the impact of price elasticities.
The data, estimates and hypotheses used are found in the studies by sector, under the
title Social costs and benefits of the eventual transition to international exhaustion of
trademark rights.107 The results of the calculations performed are shown in the Tables
24 and 25 that summarize the costs and benefits.
The procedure executed to obtain the estimations incorporated into these tables
comprised the following:
1. To study the sectors that, according to the international experience and the
information obtained in Mauritius, would be the most affected by the introduction of
an international regime of parallel imports, namely: automobiles and their spare parts,
pharmaceutical, textile, food industry, and cosmetics
2. Identify statistical information that could approximately reflect that of the stakeholders
operating with foreign trademark licenses.
3. Using the information corresponding to the largest companies in the selected sectors.
When apparently reasonable results were not obtained, the convenience of using
alternative data was analysed.
To estimate the impact on importers of products with foreign trademark and the benefit
to consumers, the data of the Top 100 Companies108 was taken. Logically, the turnover
must be greater than the sales of the imported trademark products, but it can be assumed
that there is no overestimation in the profit before tax. Indeed, the market for products in
which there is no trademark exclusivity of the distribution must be competitive and,
therefore, of reduced profits; while the interdiction of parallel imports makes possible a
margin for higher profit margins in the market of trademarked products.
Consequently, it was estimated that the cost for foreign trademark representatives is
equal to the loss of their earnings before taxes in the automotive, pharmaceutical, and
food and beverage sectors. The corresponding values are included in the Cost column
of Table 24.
In the cases of textiles and cosmetics, it was not possible to use these data, because
the aforementioned publication does not include information on cosmetics and 80% of
the production of the textile sector goes to export, which will not be affected by parallel
imports. As indicated when presenting these sectors, the alternative considered was to
take the value of imports, increased by a percentage that covered the marketing costs.
106 See supra 7.

107 See 8.3, 9.3,10.3, 11.3, and 12.3
108 DCDM Research. Business Magazine. Mauritius The Top 100 Companies, 2018 Edition, op.cit.

Table 24 Total estimation of parallel import costs for representatives of foreign trademarks and consumer
surplus, Rs million, 2017
Price Price Benefit Benefit to

Sector Turnover Cost
diferential elasticity increase consumers
Automotive 0.0591 14,317.6 846.07 2.0 50.00 896.07
Pharmaceutical 0.1142 5,308.0 606.00 0.2 6.92 612.92
Textile and
0.0500 8,275.5 413.78 1.0 10.34 424.12
clothing
Food and
0.0287 26,323.4 754.30 1.0 10.81 765.11
beverages
Cosmetics 0.0500 5,492.0 274.60 2.0 13.73 288.33
TOTAL 2,894.75 91.80 2,986.54
To estimate the impact that parallel imports could have on national production, it should
be taken into account that EOEs will not be adversely affected by parallel imports since,
by definition, their market is international, not domestic. In any case, the impact would
be positive if parallel imports reduce the price of their inputs.
On the other hand, it is likely that the products of small producers in Mauritius are not
substitutes for imported products with a foreign trademark and, therefore, will not be
affected by parallel imports; while large domestic producers could compete with these
imports and, therefore, be affected by parallel imports.
Therefore, it seems appropriate to use the data from the Production Account of the non-
EOE sector (excluding sugar) 2016, large establishments, which are shown in Table
25.109
To calculate the cost to national producers, the price diferential (as taken from the Table
23) is multiplied by the Gross output at basic prices. The corresponding value is included
in the Cost to national producers column of the Table 25.
There are no estimated values of the price elasticity of the supply of the sectors in
Mauritius, and the estimated values for other countries are not reliable because they
differ so much from each other.110
On the other hand, estimates of the price elasticity of the supply of industrial groups are
calculated, almost always, assuming that an increase in prices will cause an increase in
supply. Therefore, elasticity depends on the ability of producers to respond more or less
quickly to the price increase and raise the amount of product they bring to the market.
The supply is supposed to be elastic when the inputs on which production depends
(especially raw materials) can be easily found at existing market prices, if the production
109 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest
of Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 76, available at:
Prod_Yr17.pdf
110 Edgerton, Jesse, Estimating Machinery Supply Elasticities Using Output Price Booms. Federal Reserve Board,
Staff working papers in the Finance and Economics Discussion Series (FEDS), Washington, D.C., 2010, p. 3,
available at: https://www.federalreserve.gov/pubs/feds/2011/201103/201103pap.pdf

capacity is not fully utilized, the production factors are easily transferred from one good
to another, etc.111
But, in the present case, a price reduction is expected, so the criteria to be applied must
be different from those normally used.
Since the profitability of non-EOE production is high (the gross operating surplus
represents more than 20% of gross production in the five sectors) and much greater than
the price reduction expected by the impact of parallel imports (less than 12 % in all
sectors), profitability will remain high and it is logical to assume that there will be no
significant reduction in production. Therefore, and in the absence of more information,
an offer price elasticity of 0.2 has been considered to estimate the expected reduction in
production in all sectors.
111 See World Health Organization (WHO), Pharmaceutical pricing policy. 9.3, available at:
http://apps.who.int/medicinedocs/documents/s19585en/s19585en.pdf

Table 25 Total estimation of the costs of parallel imports for domestic producers and the surplus of
consumers, Rs million, 2016
Gross
Gross Cost to Price
output at Price Benefit Benefit to
Industry group operating national elasticity
basic diferential increase consumers
surplus** producers of supply
prices***
Motor vehicles,
trailers and semi-
trailers/
1,845.9 770.2 0.0591 304.05 0.2 1.81 305.9
Manufacture of
other transport
equipment
Basic
pharmaceutical
and 751.6 174.3 0.1142 84.83 0.2 0.98 85.8
pharmaceutical
preparations
Textiles 591.8 194.9 0.0500 29.44 0.2 0.15 29.6
Wearing apparel 827.6 184.5 0.0500 41.17 0.2 0.21 41.4
Food products
21,803.3 4,580.2 0.0287 624.78 0.2 1.79 624.8
(excl. sugar)
Beverages 6,059.2 3,179.9 0.0287 173.63 0.2 0.50 173.6
TOTAL 31,879.4 9,084.0 1,261.04 5.43 1,261.0
Statistics Mauritius. Ministry of Finance and Economic Development, Digest of Industrial
Statistics-2017. Port Louis. (2013-2017), 2018, p. 76
** Gross operating surplus is defined as the excess of value added over the cost of
employees' compensation and other taxes on production and imports, net of subsidies.
*** Gross output of industries covers the market value of goods and services produced,
including work-in-progress and products for own use. Gross output is valued at basic
prices. The basic price is the amount receivable by the producer, exclusive of taxes on
products but including any subsidy on these products.
The total benefit for Mauritius consumers is equal to the sum of the estimated benefits
for each of the sectors, presented in Tables 24 and 25. In the same way, the net benefit
for the society is equal to the sum of the net benefits of sectors.
The results are found in Table 26.
Table 26: Total benefit to consumers and net social benefit, Rs million
Sector Net social benefit Benefit to consumers
Automotive
51.80 1,201.9
Pharmaceutical
7.90 698.7
Textile and Clothing
10.70 495.1

Food and beverages
13.10 1,563.5
Cosmetics
13.73 288.3
TOTAL
97.23 4,247.6
In summary, the sum of the values of the Tables 24 and 25 shows that, for consumers,
the total estimated annual benefit of adopting the international exhaustion regime is close
to Rs 4,250 million and the net benefit to society would be about Rs 100 million per year.
13.2 Qualitative assessment of costs and

benefits by sectors
In the particular case of the Republic of Mauritius, the application of the proposed simple
model had to face the lack of information on the most important variable to estimate the
impact of parallel imports, the condition for which they exist:
For grey markets to operate there must be a source of supply, easy access from
one market to another, and price differentials that are large enough to make the
venture financially viable.112
Therefore, in the cited document there are two conditions (a source of supply is an
evident condition) for parallel imports to exist: easy access between the market of origin
and Mauritius, and a substantial difference between the prices of both markets.
Access to Mauritius is not easy, because its insular geography increases transport costs,
so that those threatened by competition from parallel imports enjoy the shelter of natural
elements. The level of this protection depends on the relationship between transportation
costs and the price of each particular product.
Consequently, the main driver of parallel imports is the difference between the prices in
the market of destination and the price of origin of parallel imports; engine that acts when
the importers can earn in the operation, that is, when the difference between prices is
substantial, high enough to cover the costs and risks of the import operation. If there is
no substantial difference between these prices, there are no parallel imports and there
are neither costs nor benefits.
13.2.1 Automotive Industry

Some entrepreneurs, who currently import vehicles with a foreign trademark have
already faced a greater challenge with the unfair competition of the so-called "Dumping
112 Kitchen, Philip/Eagle, Lynne/Rose, Lawrence/Moyle, Brendan, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38, The University of Hull Business School,
UK, 2003, available at:
https://www.researchgate.net/publication/242642165_The_Impact_of_Gray_Marketing_and_Parallel_Importing_on_
Brand_Equity_and_Brand_Value.

of used cars",113 and it seems that they handled it well. It is an industrial sector that has
proven to know how to respond to adverse situations.
In this case, different scenarios can be drawn according to the way in which
representatives of foreign trademarks react to the authorization of parallel imports. One
possible way of reacting is to diversify its offer by including lower-priced vehicles (even
lower-quality ones) to better take advantage of the different income levels of the
population. That is, introducing themselves into the business of parallel imports, for which
they have the advantage of a better positioning in the market.
At this point, it is convenient to consider the Chinese experience, but not exactly that of
the great country but that of its free trade zones, which are more similar territories to the
geography of Mauritius.
Indeed, a recent pilot scheme launched in the new Shanghai Free Trade Zone (SFTZ),
later extended to Tianjin, Guangdong and Fujian, admits the parallel imports of cars,
especially luxury cars that are much more expensive in the PRC than in the US.
(…)
For some time, the issue of parallel imports in China has been somehow underestimated.
However, the rise in prices following the economic growth, development, increasing
wealth and the abolition of many restrictions to the establishment of foreign business in
the country have begun to attract more foreign entrepreneurs and, therefore, more
parallel traders. One of the most interesting openings of the Chinese market to parallel
imports occurred in the context of the Shanghai Free Trade Zone (SFTZ). This one is the
first free-trade zone in mainland China and features among its goals the promotion of
trade and investment in China.
Recently, on 15 January 2015, the SFTZ launched a pilot programme for the
parallel imports of cars, allowing car dealers to import vehicles directly from
overseas without authorisation from any particular car maker. The goal of the plan
was to exploit the huge price differential between the luxury cars sold in the US
and those marketed in China. For example, an Audi Q7 sports utility vehicle costs
$48,300 in the US and parallel importers sell it in China for $106,000, i.e. at a
price that is 20 per cent cheaper than that charged by the official German
manufacturer’s authorised retailers. At the end of May 2015, the Chinese
Government announced that the programme would be extended to the city of
Tianjin, and the pilot project was launched on 8 June and later extended to Fujian
and Guangdong’s FTZs.114
In this sense, another appointment to consider is the text of Moorghen:
113 Centre for Science and Environment (CSE), Clunkered: Combating Dumping of Used Vehicles -- A roadmap for
Africa and South Asia, 2018, available at: https://www.cseindia.org/clunkered-combating-dumping-of-used-vehicles-
8863.
114 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience, op.
cit., p. 3.

With all that being said, there is no doubt that the automotive industry is set to
face challenging times ahead. However, given the market in Mauritius and the
poor public transport system, the industry is set to thrive for years to come.115
13.2.2 Pharmaceutical Industry

Parallel imports should not be expected to affect the research and development activities
of pharmaceutical products in Mauritius, because they constitute activities aimed at
developing export products, or services to cater the growing healthcare needs of both
national and international patients.
As for the expenditure on advertising that has been incurred to publicize the foreign
trademark in the domestic market, the experience of other countries that have gone
through the regime of international exhaustion of the trademark right, suggests that it is
likely to increase, since the companies must invest to maintain the loyalty of their
customers and inform consumers of possible quality differences between products; as
well as to make changes in the labeling or marking, packaging, color or special shape of
the products, and all this without greatly increasing the price.116
It should be remembered that, although the exclusive right over the trademark is
exhausted internationally, its owner maintains the right to prohibit third parties from
making acts of using the trademark that may harm the value of the trademark or
confusing the consumer public about the true origin of the trademark product.
On the other hand, the use of trademark law to prevent access to products that save or
preserve lives, as is the case of pharmaceutical products, would require a different
response, one that takes into consideration not the value of the trademark, but rather the
value (commercial value, intrinsic features and qualities) of the underlying product or
service.117
According to the Three-Year Strategic Plan 2017/18-2019/20 of the Ministry of Finance

and Economic Development, there are huge opportunities for the export of high value-
added pharmaceutical products.118
About 27% of the health needs of the population are catered to by the private sector.
115 Moorghen, Shanda, Industry: facing the challenges, 2017, available at: https://www.lexpress.mu/node/307525.
116 Kitchen, Philip/Eagle, Lynne/Rose, Lawrence/Moyle, Brendan, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38, The University of Hull Business School,
Brand_Equity_and_Brand_Value.
117 Ghosh, Shubha, The Implementation of Exhaustion Policies: Lessons from National Experiences. ICTSD
Programme on Innovation, Technology and Intellectual Property, 2013, available at:
https://www.ictsd.org/sites/default/files/downloads/2014/01/the-implementation-of-exhaustion-policies.pdf
118 Ministry of Finance and Economic Development, Three-Year Strategic Plan 2017/18-2019/20, available at:
http://budget.mof.govmu.org/budget2017-18/2017_183-YearPlan.pdf

Public hospitals are free in Mauritius, but there are also several private clinics. Mauritius’
healthcare infrastructure includes 18 private multi-specialty clinics, 11 private specialized
clinics, and 28 medical laboratories.
In the past few years several global companies have invested in “centers of excellence”
to cater to the growing healthcare needs of both national and international patients. In
2017, Mauritius attracted more than 11,500 foreign patients for treatment in specialty
areas such as cosmetic surgery and procedures, orthopedics, cardiology, fertility
treatment, and ophthalmology.
There are potential opportunities for establishing:
▪ Specialized diabetes research and treatment centers

▪ Specialized centers for elderly care and rehabilitative medicine
▪ Specialized centers for novel treatments/stem-cell therapies
▪ Plastic reconstructive surgery clinics
▪ Clinics for dental surgery and dentofacial orthopedics
▪ Convalescence and pain clinics providing specialized care to patients suffering from
acute and chronic conditions
There are also significant opportunities in pharmaceutical manufacturing, medical

devices and clinical trials. Preferential access to the European and African markets for
Mauritian exports has attracted several international companies to set up medical
devices and pharmaceutical manufacturing facilities in Mauritius. It should be noted that
exports of most medical devices and pharmaceuticals from Mauritius to the United States
are also duty-free. Furthermore, there are four companies currently conducting clinical
trials in the country.119
As of July 2018, there were 371 registered private drugstores and 38 registered
pharmaceutical wholesalers in Mauritius. Of the US$ 114 million of pharmaceuticals
imported in 2017, the private sector accounted for 75% of the import value. Mauritius
imports the vast majority of its pharmaceuticals.
The medical device manufacturing industry has also experienced a sustained growth
over the last few years. Due to the preferential market access that Mauritius enjoys with
the EU, leading medical device manufacturers (mostly from France and Germany) have
established operations here. They produce high-precision medical devices such as
catheters/stents; cardiovascular, orthopaedic, and ophthalmic equipment; dental
implants; artificial skin; and biomedical products.
13.2.3 Textile and clothing Industry

It is possible that the smaller companies that sell in the domestic market competing
against low cost producers have to go through a process of adaptation to the new
119 Export.gov Helping US Companies Export. Healthcare Resource Guide: Mauritius.

https://2016.export.gov/industry/health/healthcareresourceguide/eg_main_116239.asp#P179_12554

conditions. If this is the case, the Mauritian government could adopt temporary policies
and measures that help the industry correct weaknesses; particularly to restructure its
operations, improve technology, improve quality and design, innovate, and focus on the
production of high added value for niche markets.120
The aforementioned argument of Peedoly, Aveeraj S., raised ten years ago, could be
inscribed in the theory of industrialization by substitution of imports, applied to countries
that maintain a reduced exchange rate due to the inflow of foreign currency from the
export of natural resources. Theory that, after decades, was presented as the so-called
Dutch disease; because of the abundant foreign exchange income generated by the
exploitation of the North Sea oil. But the basic argument is different, because it is not a
matter of compensating a high exchange rate, but rather facilitating the transformation
of the textile production of Mauritius, of competition via prices (based on cheap labour)
to the competition for quality in high-end products.
In 2018, after nine years, in the opinion of the Manufacturers Association of Mauritius
(AMM), a local manufacturer often rivals locally with international products and
trademarks, and proposes a temporary collaboration between the public and private
sectors:
… the AMM has identified its added value for local manufacturers with four thrusts
leading to collaborative projects over the next three years: train, innovate,
internationalise, maximise the social and environmental responsibility.121
In summary, the AMM requests a temporary subsidy so that the Non-EOE can face the
current competition of textile imports, become EOE and sets out to compete in the
international market; but they are not representatives of foreign trademarks and do not
receive, nor will they receive, any negative impact of parallel imports.
13.2.4 Foods and beverages Industry

The majority of interviewed businessmen consider that there are no notable differences
between the prices of the products sold in the domestic market and international prices.
If it is the case, there will be no parallel imports.
On the other hand, those who support the transition to the new regime of international
exhaustion of trademark rights consider that there are notable differences in prices,
which would be affecting the country's competitiveness. The fact that companies in the
sector have applied to be included in the Single Amnesty Program of the Competition
Commission is an indication that their domestic sales prices are higher than international
120 Peedoly, Aveeraj S., The Textiles and Clothing Industry and Economic Development: A Case Study of
Mauritius, op. cit., p. 141, available at: https://link.springer.com/chapter/10.1057/9780230246201
121 Le Défi Media Group. (multimedia news provider) https://defimedia.info/bruno-dubarry-manufacturing-sector-
needs-national-strategy

ones, because this is a particular form of restrictive commercial practice known as resale
price maintenance.122
Whoever might be right in this discrepancy of opinions, there do not seem to be any
sound economic reasons for those who engage in distributive trade to oppose the regime
of international exhaustion. In fact, assuming that there are large price differences and
that parallel imports occur, it is possible that distributive trade entrepreneurs have greater
gains in the new situation. For example, if they take advantage of parallel imports to
expand the range of products they offer and attract new customers for products with
famous trademarks at reduced prices.
In the denied assumption that distributive trade entrepreneurs do not take any action to
adapt to the new situation, they could see their sales level reduced if there are parallel
imports.
13.2.5 Cosmetics Industry

Since the cosmetic sector of Mauritius is very varied, the impact of parallel imports will
also have to be very varied, and it is convenient to review the impact that could arise in
each of the different areas:
In the first place, it is necessary to distinguish between national production destined for
export and that destined for the domestic market.
Exporters would not be affected, unless they can buy cheaper inputs through parallel
imports, which would represent a positive impact.
Domestic producers, whose market is not the world but the island of Mauritius, would be
affected by increased competition if cosmetic products enter the country at a lower price.
However, it must be taken into account that these domestic producers have already had
to endure competition from exporters from Mauritius itself, as it is normal practice for
export balances to be sold at a reduced price in the country of origin, which makes it
difficult that parallel imports enter to compete massively in the national market.
In this sense, it should be noted that the national production benefits from the findings
made in phytotherapy research centres created to supply the demand for new
ingredients for the cosmetic and pharmaceutical sectors, sectors where it is necessary
to innovate to compete in the world market.123 This makes the national producers
interested in bringing out to the world new aromas, cosmetics, medicines and therapies
implementing local medicinal plants.
By using their expertise to add value to ancestral traditional knowledge on locally-

used and lesser-known plants, they promote the sustainable use of biodiversity
122 Competition Commission of Mauritius, available at: http://www.ccm.mu/English/Documents/News_2019/MR-

First%20batch%20of%20RPM%20Amnesty%20Decision.pdf.
123 CIDP Group Communication & Business Development, Editorial - Journal for Clinical Studies – April, 2014,
available at: http://www.samedanltd.com/uploads/pdf/white_paper/963fc249f387706c5ca3f553fe0a4d08.pdf

and provide leads for the above-mentioned sectors. Mauritius’ objective is to
validate the rich biodiversity in this unique eco-region, and to propose
comprehensive portfolios for the above-mentioned sectors, and help promote the
development of innovative products.124
It is difficult, therefore, that domestic producers with such a level of competitiveness may
be affected by the eventual additional competition from parallel imports. Thus, the impact
on national production and employment would be minimal in this sector.
Rather, since the trademark in the cosmetic sector is an important factor in the
establishment of prices, the indicated difference could be high. On the other hand, they
are very tradable products, which would make the difference quite low.
In the sector of importers that sell in the domestic market, it is expected that the
appearance of parallel imports will result in an increase in the total volume of imports of
cosmetic products, an increase in import operations and, consequently, a higher level of
imports job.
Finally, given the greater magnitude of the world market, it is convenient that the country
concentrates on the production of high-end goods, those whose high prices make the
incidence of the transaction costs of exports lower. As we have seen, this is the case of
many cosmetic products, and the growth of production in recent years shows that
entrepreneurs have responded accurately to the particular conditions of geography.
13.3 Qualitative evaluation of the

arguments in favor of national
exhaustion
As indicated before, the arguments in favor of national exhaustion that come from
developed countries reflect the interest of consumers and owners of the trademark rights
of those countries and, therefore, it was considered important to focus on the analysis of
the position of the private sector.125
However, it was found that the Position Paper cited included similar arguments to those
of the International Trademark Association (INTA) and the International Chamber of
Commerce (ICC).
Most of the arguments are based on studies on the exhaustion of patent (non-trademark)
rights and, for example, refer to what an international monopolist would do to
demonstrate that parallel imports should be banned in developed countries.
124 CIDP, Group Communication & Business Development, Editorial - Journal for Clinical Studies – April., op. cit.
125 MCCI Position Paper, International Exhaustion of IP Rights in Mauritius, November 2016. MCCI Position
Papers/ 2016/ No. 1.

Next, the arguments of the private sector are presented and analyzed briefly, in the same
order in which they are presented in its Position Paper:
a) Does international exhaustion of rights benefit the consumer?
• The Position Paper cited a document of The London School of Economics,126

which is a research on six European countries, where “Pharmaceutical parallel
imports are defined as the legal importation into a country where a patent has
been registered for the same product which is patented and legally marketed in
another country without the authorization of the patent holder”. There is no doubt
that the problem referred to in the document is the international exhaustion of
patent law, not the international exhaustion of trademarks rights.
• The citation127 of the OECD document128 “The high entry cost together with
rapidly decreasing margins from parallel imports due to country size are likely to
limit the number of parallel imports in a small country - the resulting oligopolistic
market structure could leave little benefit for the customer” refers to the low
probability of parallel imports entering a small country, something that may be in
the interests of the current representatives of foreign trademarks, but in no way
allows concluding that parallel imports could raise consumer prices in Mauritius.
On the other hand, the comparison with a Mediterranean country, with borders
with four developed countries and with a GDP equal to 65 times that of Mauritius,
does not allow to reach that conclusion either.
• The Position Paper also cites the document of Müller-Langer, “Does Parallel
Trade Freedom Harm Consumers in Small Markets?” and reproduces the
affirmation “Parallel trade limits the scope for third-degree price discrimination in
the sense that the price in a low-income country with a high price elasticity of
demand is likely to increase as a result of parallel trade, whereas the price in a
high-income country with a low price elasticity of demand is likely to fall”.129 But,
it happens that the economic model used by Müller-Langer considers only two
countries, that the producer has the patent and the legal monopoly of the market
in both countries, and that using his monopoly power discriminates prices to
maximize his total utility. The application of this model to the case of Mauritius
implies that the rest of the world is the producer country, and that parallel exports
start from Mauritius and the products return to the producing country. It is not
"international exhaustion of rights in Mauritius" but the exhaustion in the rest of
the world that allows the author to conclude that the "parallel trade flowing from
low-income countries to high-income countries should be prohibited".130 In short,
126 “The Economic Impact of Pharmaceutical Parallel Trade, Special Research Paper, LSE, p. 15 (sic).
127 OECD Economic Surveys: Switzerland, 2004, p. 120.
128 Giorno, C./Jimenez, M./Gugler, P., Product Market Competition and Economic Performance in
Switzerland, OECD Economics Department Working Papers, No. 383, OECD Publishing, Paris, 2004, available
at: https://doi.org/10.1787/336304241158.
129 Müller-Langer, Frank, Does Parallel Trade Freedom Harm Consumers in Small Markets? Croatian Economic
Survey 2008, 2008.
130 Müller-Langer, op.cit., p. 25.

what represents the main concern for the owners of patents in developed
countries is the re-enter to their market of products that they sold at a low price
in developing countries; they are not in any way worried about the exhaustion of
trademark law in Mauritius.
• The reference in the Position Paper to "TRIPS, pharmaceuticals, developing

countries and the DOHA solution, 2002"131 repeats the preceding argument,132
because the document "A Study on the Effect of TRIPS in Developing Countries
- Pharmaceutical Patents" also refers to the international exhaustion of patent
law in developed countries.
b) Parallel importer rent and 'free rider' situation
• It is noted that companies that import in parallel exploit a price difference between
the exporting and importing countries of approximately 21 percent of the price of
the original manufacturer in Sweden. However, this fact is an argument in favour
of international exhaustion, because it shows that the "exclusive" distributor was
taking advantage of that margin or higher and that parallel imports could reduce
that margin in favour of Swedish consumers.
• The following argument is an extension of the previous one: "Unless parallel trade
can operate dynamically on prices, it creates inefficiencies because most, but not
all, of the financial benefits accrue to the parallel trader rather than the heath care
system or patient".The parallel importer increases competition, which benefits the
consumer, but it is criticized that its benefit is greater than that of the consumer.
The logical conclusion would be that more parallel importers are required, and no
less, to reduce the financial benefits that the first parallel operator receives.
• Then it is pointed out that economic theory “suggests”, does not demonstrate, the
risk of shortages if there is international exhaustion of patent law (not the right of
trademarks) in a developed country.
• The following argument also refers to the protection of patented products.
• Finally, a real fact stands out: Parallel importers get a free ride in the market
demand and the trademark image of the product created by the authorized
distributor, without sharing the efforts and expenses of marketing
communications that have generated the demand and the associated image.133
In the face of increased competition, authorized channels will have to face the
cost of marketing to maintain their sales.
131 Available at:

https://www.academia.edu/12368235/A_Study_on_the_Effect_of_TRIPS_in_Developing_Countries_Pharmaceutical
_Patents
132 “Some intellectual property owners may set their retail prices lower in less developed countries to reflect local
economic conditions, such as lower per capita incomes. The example of HIV/AIDS Drugs were taken. In the absence
of parallel import restrictions, a seller would lose this ability to price discriminate. This could force the seller to raise
prices in those countries to the detriment of their consumers”.
133 However, the OECD citation refers to the owners of patents, not trademarks.

c) Impact on R&D activities
The studies cited in the Position Paper refer to the possible effects of parallel imports of
products with patent in force in developed countries, not to products with a foreign
trademark in the Mauritius market.
d) Brand equity & after sale services
Consumers may purchase parallel imported trademarked goods without being aware of
the difference between these goods and those purchased through 'official' distribution
channels. If problems arise, and customers find that they do not get the expected post-
sale service and warranty protection, it may be the goodwill established by the 'official'
distributor/trademark owner which will suffer.134 Indeed, the quality of goods imported in
parallel may be lower than those sold in the countries of origin or those imported through
official distribution channels, forcing consumers to be diligent in obtaining adequate
information before buying, and obliges the State and official distributors to provide that
information to consumers. In this sense, by means of a relevant example and
emphasizing an aspect as serious as the passenger safety of vehicles, there are some
official distributors that discriminate against developing countries.135 This has been
verified in Latin America by an independent institution, Latin NCAP, that crash tests
vehicles in order to provide accurate information for consumers about the safety
performance of their cars.136
In summary, the valid arguments included in the Position Paper coincide with the main
arguments of those who promote parallel imports, some of which involve costs for
stakeholders operating with foreign trademark licenses and others imply a greater risk of
confusion for the consumer. However, the costs are those normally assumed by
companies in a competitive regime, and the risks of confusion are those incurred by
diligent consumers.
13.4 Qualitative evaluation of the

arguments in favor of international
exhaustion
A reliable and excellent summary of the problem of academic analysis on parallel imports
can be found in a document cited by the Position Paper:
The practice of parallel importing represents an uneasy balance between the

protection of intellectual property rights such as trademark and patent rights and
134 Philip Kitchen/Lynne Eagle/Lawrence Rose/Brendan Moyle,The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38. The University of Hull Business School,
2003.
135 Millicent Awialie Akaateba. 2012. Comparing Road Safety Performance of Selected EU and African Countries
Using a Composite Road Safety Performance Index. Journal of Natural Sciences Research ISSN 2225-0921 Vol.2,
No.8. Available at: https://pdfs.semanticscholar.org/542b/784b81932619abce2a44e51c6090d97e9a09.pdf
136 Latin NCAP offers consumers the opportunity to compare the safety performance of similar mass vehicles with
their chosen vehicle. Available at: https://www.latinncap.com/en/results

the liberalization of trade in goods and services promoted by organizations such
as the World Trade Organization.137
Indeed, the balance between the protection of intellectual property and the principle of
free trade is difficult, by which goods must circulate between countries in the same way
as within their country of origin: no obstacles to export in the country of origin, borders
or destination.
The balance is particularly difficult in the case of patents, because – as already

mentioned - they grant monopoly power to the patent titleholder over the patented
product for a period of several years; as an incentive to creation and as compensation
for the cost of the invention. But, the right of trademarks does not confer monopoly power
over the trademarked products. Competitors can still commercialize alternative products
matching equivalent needs but differentiated with another trademark, alluding to a
different entrepreneurial origin.
From this point of view, the argument in favor of the application of international
exhaustion of trademark rights derives, as a logical conclusion, from the priority accorded
to freedom of trade; so it would only be necessary to demonstrate that free trade is better
than imposing restrictions on the transit of goods and services, to conclude that it is
appropriate to authorize parallel imports.
The most discussed trade restriction has been the imposition of tariffs on imports, a
subject that is briefly presented below. It should be noted that the argument begins,
paradoxically, stating that the country that imposes tariffs gets a benefit.
In manuals of international economics courses it is demonstrated that the optimal import

tariff is always positive,138 and that the benefit for the country that imposes this trade
restriction is greater in larger countries, for they may affect the international price of the
products. However, in practice it happens that the unilateral application of tariffs leads
very quickly to reprisals from partner countries, so that the initial benefit obtained by a
country becomes a loss for all the countries of the world.
This was what happened before the Second World War, which was preceded by a
commercial war; with tariffs, other restrictions on trade and combat devaluations. The
experience of both wars led most nations to sign the General Agreement on Tariffs and
Trade (GATT) consecrating the general principle that goods should circulate between
countries as they circulate within each one, without any restriction,139 and the principle
of free circulation of goods and services is the basis for the creation of the WTO and of
137 Philip Kitchen, Lynne Eagle, Lawrence Rose and Brendan Moyle, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38. The University of Hull Business School,
Brand_Equity_and_Brand_Value
138 Krugman, Paul R./Obstfelt, Maurice, Economía Internacionel. Teoría y Política. McGrow-Hill/Interamericana de
España, S. A. Madrid, 1995.
139 The last of the recitals of the General Agreement on Tariffs and Trade of 1947 is: Being desirous of contributing
to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial
reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international
commerce.

multiple regional agreements, because it promotes growth and well-being, both in
developed countries and in developing countries. Thus, in practice it was shown that,
even for countries that can impact the world market, trade restrictions are harmful for
everyone.
In the study Trade, Growth and the Size of Countries,140 a step is taken in the analysis,
since it is affirmed that trade restrictions tend to cause more damage in small countries
than in large ones. The assertion is demonstrated with an economic model and factual
evidence. Some conclusions of the study are cited below:
• In a regime of free trade, small countries can prosper, while in a world of trade
barriers, being large is much more important for economic prosperity.
• small countries have a particularly strong interest in maintaining free trade, since
so much of their economy depends upon international markets.
• Spolaore and Wacziarg (2005) also treat openness as an explicitly endogenous

variable, and show empirically that larger countries tend to be more closed to
trade.
• Smaller countries do adopt more open trade policies.
• the costs of smallness can be avoided by being open. In other words, the impact
of size on growth is decreasing in openness.
• The city-states of Italy and the Low Countries of the Renaissance in Europe
represent a clear example of a political entity that could prosper even if very small
because they were taking advantage of world markets. Free trade was the key to
prosperity of these small states. A contemporary observer described Amsterdam
as a place were “commerce is absolutely free, absolutely nothing is forbidden to
merchants, they have no rule to follow but their own interest. So when an
individual seems to do in his own commercial interest something contrary to the
state the state turns a blind eye and pretends not to notice”. 43 The other reason
why city-states could afford to be small is that the state did not provide many
public goods, so that not much was lost in terms of tax burden from being small.
Thus, the combination of a small states who provided very few public goods and
complete freedom of trade allowed for the city state to reach unprecedented level
of wealth based on trade.
In this line of thinking, Stucki141 specifically questions the ability of the owners of
trademark rights to avoid parallel imports because the economic function of trademarks
is limited to:
140 Alesina, Alberto/Spolaore, Enrico/Wacziarg, Romain, Trade, Growth and the Size of Countries, in: Aghion,
Philippe/Durlauf, Steven N. (eds.), Handbook of Economic Growth, Volume 1B, Chapter 23, 2005, available at:
https://www.anderson.ucla.edu/faculty_pages/romain.wacziarg/downloads/2005_handbook.pdf.
141 Stucki, Marc, Trademarks and Free Trade. An Analysis in Light of the Principle of Free Movement of Goods, the
Exhaustion Doctrine in EC Law and of the WTO Agreements, Stampfli Verlag AG, Bern, 1997.

1) Inform consumers about the origin of the products, improving their ability to judge the
quality thereof.
2) Represent the value of the investments made by the owner to maintain the quality of
their products, which allows them to fight against piracy and unfair competition.
Consequently, any sign, or any combination of signs, capable of distinguishing the goods
or services of a company from those of other companies may constitute a registered
trademark.
Given this definition, Stucki's question is: Why should a trademark right empower its
owner to prohibit the importation of legally acquired, non-counterfeit products that legally
bear an identical, although usually foreign mark?
It should be mentioned that, in the conflict between trademark law and the economic
principle of freedom of trade, the United Nations (UN) considers that restrictive business
practices include:
Restrictions on the importation of goods which have been legitimately marked

abroad with a trademark identical with or similar to the trademark protected as to
identical or similar goods in the importing country where the trademarks in question
are of the same origin, i. e. belong to the same owner or are used by enterprises
between which there is economic, organizational, managerial or legal
interdependence and where the purpose of such restrictions is to maintain
artificially high prices;142
From another point of view, it should be noted that Mauritius has concentrated on high-
end production, and this trend should continue in the future, so that what was affirmed in
a World Bank study applies to several productive sectors: 143
Mauritius is working to position itself as a supplier of quality products, that is, as

a niche producer in the fashion market and in other segments of the industry
where the use of technology is intensive. Advanced, technology-based
production, complemented by Mauritius’ educated and skilled labor force, should
open a window for the successful production and export of high-end products.
For most of Mauritian production, the market is the world, not the country itself; and this
worldwide market will not be affected (positively or negatively) by parallel imports that
may reach Mauritius.
142 United Nations Conference on Trade and Development, The United Nations Set of Principles and Rules on
Competition, available at: https://unctad.org/en/Pages/DITC/CompetitionLaw/The-United-Nations-Set-of-Principles-
on-Competition.aspx.
143 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, op. cit.

13.5 Comments on concerns collected in
Mauritius
In terms of employment, no significant impact is expected on the services of import and
distribution of products, since these services will be replaced by those needed to carry
out parallel imports. The employment provided by current activities would not be reduced
if they were replaced by parallel imports that require the employment of a similar number
of people, or could increase, as export activities increase to meet the increase in
consumption.
It is not clear that the companies that represent foreign trademarks will suffer a significant
economic impact, since they will be in a privileged position to assume the trade of parallel
imports, and thus expand their offer in the market with products of different qualities and
prices.
As for advertising expenses incurred to publicize the foreign trademark in the domestic
market, the expenditure is likely to increase, since the companies must invest to maintain
the loyalty of their customers and inform consumers of possible differences in quality
between products.
It must be remembered that, although the exclusive right over the trademark is exhausted
at the international level, its owner maintains the right to prohibit third parties from making
acts of using the trademark that may damage the value of the trademark or confusing
the consumer about the true origin of the product.
The merchants who are exclusively dedicated to the activity of importing and selling the
products, without any transformation, will not be negatively affected by the legalization
of parallel imports. Rather, they could benefit from the increase in imported volume.
The state may incur a higher cost of control to maintain the validity of quality standards
and prevent the entry into the country of counterfeit products.
Parallel imports should not be expected to affect the research and development activities
of export pharmaceutical products, or services designed to meet the growing health care
needs of domestic and foreign patients.
Likewise, those who carry out parallel imports will also require the services associated
with these activities, such as marketing, which will offset the reduction in the advertising
demand of the companies affected negatively.
It is possible that the smaller companies that sell in the domestic market competing
against low cost producers, have to go through a process of adaptation to the new
conditions. If this is the case, the government could adopt temporary policies and
measures that help the industry correct weaknesses.
In the opinion of the Manufacturers Association of Mauritius (AMM), a local manufacturer

often competes locally with international products and trademarks, and proposed in 2018
a temporary collaboration between the public and private sectors:

… the AMM has identified its added value for local manufacturers with four thrusts
leading to collaborative projects over the next three years: train, innovate,
internationalise, maximise the social and environmental responsibility. 144
The danger that must be avoided is that, after three years, the beneficiary companies try
to maintain indefinitely those collaborative projects, which would be a permanent burden
for the other sectors of the economy, given that "there is no free lunch" (sic). To compete
in the world market, it is convenient that all productive sectors are highly competitive
because, if not, exporters (and the country) will be penalized by the higher cost of inputs
purchased from less competitive producers.
And it is expected that, with the expansion of telecommunications services, international

competition will increase further in the future.
Finally, an island in the middle of the ocean offers the natural protection of the freight to
the national production destined to the internal market, and it is also a natural barrier for
those who produce for the world market. And, given the greater magnitude of this market,
it is convenient that the country concentrates on the production of high-end goods, those
whose high prices make the incidence of transaction costs of exports lower. In addition,
exporters should be able to purchase their inputs at the lowest prices on the world
market, which can be achieved through greater trade freedom from parallel imports.
144 See https://defimedia.info/bruno-dubarry-manufacturing-sector-needs-national-strategy.

14. Possible displacement of existing
industries in Mauritius
A few of the entrepreneurs interviewed stated that the authorization of parallel imports
would lead them to close down their businesses.
However, from what has been stated in the previous analysis, it is not expected a
significant impact of the eventual opening of the market of Mauritius to parallel imports
that could justify the abandonment of the market by the companies of each of the sectors
considered.
In fact, even in the pharmaceutical sector (where apparently parallel imports could be
important due to the large difference between domestic and external prices) the impact
would not be so high, given that the prices of products with a patent in force would not
be affected by the parallel effect. Imports, and those that import and distribute these
products with patent in force would have no reason to exit the market.
And in all sectors, unless employers decide not to take management measures
appropriate to the new situation, it seems unlikely that representatives of foreign
trademarks can be drastically affected by parallel imports. As indicated, one possibility
is to take advantage of their position in the market to expand their offer by carrying out
these parallel imports themselves. It is possible that this happens in the automotive
sector, given that:
… in Mauritius at the very least, car dealers manage to thrive by selling a variety of
different cars, ranging from luxury cars to compact cars suited to the streets of Port
Louis. ... For the time being, the industry has been better off with the increased
competition.145
Some vehicle importers have expressed concern about the increased competition that
parallel imports would generate. However, they have already overcome a greater
challenge, the unfair competition of the "Discharge of used cars"; and a fortiori, they will
not succumb to the lesser impact of parallel imports.
Furthermore, as indicated, representatives of foreign trademarks can take advantage of

parallel imports themselves to diversify their offer and attract new customers in the lower-
income population; for which they have the advantage of their positioning in the market.
At this point, it is convenient to take into account the experience of the Chinese free trade
zones, (Shanghai Free Trade Zone, Tianjin, Guangdong and Fujian) territories similar to
the geography of Mauritius that chose to admit the parallel imports of automobiles.
The textile sector of Mauritius, which has focused on the export of high-end products,
will not leave the business because of parallel exports, because these will allow it to buy
its inputs at the lowest prices in the world.
145 Moorghen, Shanda, op. cit.

Domestic cosmetics producers, who have endured competition from sales of export
balances in the domestic market, will not leave the business because of the minor
challenge of parallel imports.
In general, it is difficult for companies that participate in the economic dynamics of growth
in Mauritius, to abandon the business perspectives that are open to all sectors at present.
15. The Madrid Protocol
15.1 Objective
The Madrid Protocol is an international treaty, administered by the International Bureau
of the World Intellectual Property Organization (WIPO), that aims to facilitate obtaining
and maintaining trademark registrations.
States and intergovernmental organizations party to the Protocol are referred to

collectively as Contracting Parties. As of March 2019, the Madrid system has
103 Contracting Parties, of which 102 countries and one intergovernmental organization
(the European Union) are members of the Protocol.146
It was adopted in 1989 and essentially provides a method of achieving expanded

international protection for a trademark that has already been applied for or registered in
the applicant’s home country (the country of origin).
An international registration can be extended to any of the contracting parties (states or

groups of states) of the Madrid Protocol that the applicant chooses to designate at any
time following the granting of the international registration. The applicant needs not to
select all jurisdictions to be covered by the international registration at once, because
additional designations may be made later.
If any country or group of countries join the Madrid Protocol after protection has been
obtained, then the trademark owner can apply to have its trademark protection extended
to the new contracting party by way of a subsequent designation.
15.2 Advantages for the trademark owner

The main advantages for trademark owners consist of the simplicity of the international
registration system and the financial savings made (expenses related to translation,
exchange-related fees and fees for local representatives) when obtaining and
maintaining the protection of their marks abroad.
146 For a complete list of Contracting Parties, see:

http://www.wipo.int/export/sites/www/treaties/en/documents/pdf/madrid_marks.pdf.

After registering the basic mark, or filing an application for registration, with the Office of
origin, the trademark owner has only to file one international application, in one language,
and pay one fee, in one currency.
This procedure takes place instead of filing separately in the trademark Offices of the
various Contracting Parties, in different languages and paying fees to each Office, in
different currencies. Different national/regional procedures, involving different languages
and fees payable in different currencies, give rise to translation and exchange-related
expenses.
Where trademark protection is sought by filing direct to national/regional Offices, most of

these Offices require the applicant to appoint a local representative to act on his behalf
before the Office, at the time of filing of the application. With the Madrid system, the
designated Contracting Parties may only require that the holder appoints a local
representative in case the holder has received a notification of a provisional refusal and
the holder intends to contest this decision before the Office concerned.
The companies most affected by the considerable cost involved in registering and
maintaining marks abroad are Small and Medium Enterprises (SMEs). While a large
company may afford to devote considerable funds to protect its marks abroad, an SME
can ill-afford the registration of marks abroad, due to the high procedural costs. The
Madrid system is used by one-third of worldwide applicants seeking protection of their
marks through the Madrid system. Of these, about 80 per cent may be categorized as
an SME, having a small portfolio of one or two marks.
In the current economic context, the possibility of providing easy, low-cost protection for
marks provides a welcome advantage for companies and individuals as a factor that will
favour exports.
Moreover, the holder does not have to wait for the Office of each Contracting Party in
which protection is sought to take a positive decision to protect the mark. If no refusal is
notified by an Office within the applicable time limit, the mark is automatically protected
in the Contracting Party concerned. In some cases, the holder does not even have to
wait until the expiry of this time limit in order to know that the mark is protected in a
Contracting Party, since he may, before the expiry of the time limit, receive a statement
of grant of protection from the Office of that Contracting Party.
A further important advantage is that amendments subsequent to registration, such as a
change in the name or address of the holder, or a modification (total or partial) in
ownership or a limitation of the list of goods and services may be recorded with effect for
several designated Contracting Parties through a single, simple and centralized
procedure before the International Bureau of the World Intellectual Property Organization
(WIPO) (the International Bureau) and with the payment of a single fee. Moreover, there
is only one expiry date and only one registration to renew, which makes for easy portfolio
management.

15.3 Advantages for the country and
trademark offices
The Madrid system supports the country’s exports to the extent that it simplifies
protecting trademarks abroad. Furthermore, it allows individuals and companies
established in other Contracting Parties of the Madrid system to have easier access to
the protection of their marks in the country/regional territory, since they can seek
protection of the mark in any of the applicable Contracting Parties by merely designating
these in the international application, or in a subsequent designation. This facility helps
to strengthen the climate for foreign investment.147
International registration can also be to the advantage of trademark Offices. The Offices
do not need to examine for compliance with formal requirements, or to classify the goods
or services, or publish the marks, as such formalities will have already been undertaken
by the International Bureau, and they can focus on their substantive examination. Here
it must be differentiated between those Offices that only do a formal examination of the
application and those ones that do a formal and a substantive examination.
Moreover, they are compensated for the work that they perform; the individual fees
collected by the International Bureau are transferred to the Contracting Parties in respect
of which they have been paid, while the complementary and supplementary fees are
distributed annually among the Contracting Parties not receiving individual fees, in
proportion to the number of designations made of each of them.
15.4 Disadvantages
One of the challenging characteristics of the Madrid Protocol is the dependency of the
international registration on the home application or registration. This can lead to a
problem dubbed as a "central attack." That is, if the basic application or registration is
amended, denied, withdrawn, or cancelled during the five years after the International
Registration (IR) is issued, the associated international registration is treated likewise,
and rights in the designated contracting parties are similarly affected. That means that
all foreign applications and registrations that are based on the IR will be automatically be
cancelled as well. The cancelled local trademarks can be converted to standard national
marks, but at significant expense and effort.148 This “dependency” lasts for the first five
years after an international registration issue.
Once the international registration has been in effect for five years, it becomes
independent from the basic registration. At that point, the possible limitation,
abandonment or cancellation of the basic application or registration no longer has any
effect on the international registration.
147 See WIPO, https://www.wipo.int/madrid/en/f.

148 Wells, Nicholas, Eight Reasons Not to Use the Madrid Protocol for Trademark Protection in the United States,
available at: https://www.wellsiplaw.com/eight-reasons-not-to-use-the-madrid-protocol-for-trademark-protection-in-the-
united-states/.

The Madrid Protocol provides for a limited period during which an international
registration may be transformed into new national or regional applications in the
designated contracting parties. But as already mentioned that could only be done at
significant expenses.
If issues arise during examination or following publication of an international trademark

application in a contracting party, this may reduce or eliminate savings of professional
fees if assistance from a local trademark agent is required.
Another limitatation of the Madrid Protocol is that the owner of the International
Registration cannot transfer ownership of any dependent trademarks to an owner that is
not resident in a Member country. This means, for example, that trademarks obtained
under the Madrid Protocol cannot be transferred to a South African owner without first
withdrawing the marks from the Madrid System at great expense.149
After a trademark has been submitted to WIPO to become an International Registration

under the Madrid Protocol, the trademark itself cannot be changed. However some
countries – like the United States - allow “non-material” changes to a mark, both during
prosecution and after issuance of a registration (via Section 7(e) of the Trademark
Act).150
15.5 Accession Procedures

Any State which is a party to the Paris Convention may become a party to the the
Protocol. In addition, an intergovernmental organization may become a party to the
Protocol, where the following conditions are fulfilled: at least one of the member States
of the organization is a party to the Paris Convention and the organization maintains a
regional office for the purposes of registering marks with effect in the territory of the
organization.
A State or intergovernmental organization may become a party to the Madrid Protocol

by depositing an instrument of accession.
The instrument of accession must be signed by the Head of State or Government, or by

the Minister of Foreign Affairs, in accordance with the country’s legal system, and
deposited with the Director General of WIPO. Annex V contain a model instrument of
accession.
The treaty will enter into force three months after the date of deposit of the instrument of
accession.
The instrument of accession may contain certain declarations. Some declarations can
be made only at the time of accession while others may be submitted after the accession.
149 Wells, Nicholas, op.cit.

150 Wells, Nicholas, op.cit.

It would therefore be very useful for the potential member of the Madrid system to discuss
possible declarations with the International Bureau prior to acceding to the system. 151
The most frequently made declarations are, in particular, the following:
• a declaration that, with respect to each international registration in which

the Contracting Party is designated and with respect to the renewal of an
international registration, it wishes to receive an individual fee. The
amount of that fee, in local currency, must be stated in the declaration,
but may be amended by a subsequent declaration.
• a declaration that, for international registrations in which the Contracting

Party has been designated, the period of one year during which its Office
must give notification of a provisional refusal of protection will be replaced
by a period of 18 months.
Domestic Legislative or Regulatory Implications
The main substantive obligation deriving from accession to the Madrid system will be to
give effect to Article 4(1) of the Agreement and the Protocol. Under this provision, a mark
registered in the International Register, in which the Contracting Party has been
designated, must be protected from the date of international registration (or, in the case
of a Contracting Party designated subsequently, from the date of that subsequent
designation), in the same way as if that mark had been applied for directly with the
national or regional trademark Office. That Office is, however, fully entitled to carry out
a substantive examination of the mark and may, within the period stipulated, refuse to
grant protection to the mark (either totally or partially). If the Office does not issue a
provisional refusal within the applicable period, the mark is deemed to be protected in
the same way as if it had been registered directly with that Office.
Then acceding to the Madrid system, the country must also be in a position to give full
effect to the provisions of the relevant treaty. The International Bureau will provide any
necessary advice and technical assistance required for that purpose. One service that is
offered to potential members of the Madrid system is to analyse the domestic legislation
and provide comments on its compatibility with the Madrid system. Model Provisions
have been established to provide information and assistance to these potential
members. See Annex VI for such Model Provisions.
15.6 Effects of Accession

Statistics show that the accession of a country to the Madrid system will gradually
produce an increase in the total number of marks for which protection is requested in the
country (resulting from combining the number of applications received at the national
151 For a complete list of possible declarations a Contracting Party may make in connection with accession, please
see: http://www.wipo.int/madrid/en/madridgazette/remarks/declarations.html.

level and the designations received internationally)152. This may be explained by the fact
that it is relatively easy and economical wise for the owner of a mark to designate a
country/regional territory in an international application.
As regards the workload of the national trademark Office, accession to the Madrid
system has been seen not to bring an overwhelming number of new applications, but
rather a gradual increase in registration activity. Moreover, although the Office should
carry out, in respect of the marks filed through the Madrid system, the usual substantive
examination, it will not need to carry out the formalities examination, or to publish the
mark, since those procedures will already have been conducted by the International
Bureau.
16. Conclusions
1. The national exhaustion regime of trademark law imposes a restriction on
international trade.
2. Free transit is the optimal international trade regime.153
3. With a mathematical model and empirical evidence it is shown that large countries
are in advantage to achieve economic prosperity and the cost of being a small country
can be avoided with openness.154
4. The Government of Mauritius has embraced radical changes in its economic policy
through structural reforms with greater emphasis on open and competitive sectors
that are fully integrated into the global economy.
5. The information available is related to companies or productive sectors, but is not

associated with foreign trademark licenses, which is the information required to
conduct the study. Unfortunately, this information is not available in Mauritius, which
forced the search for secondary information to replace the unavailable data.
6. The choice between the regime of national or international exhaustion of trademark

law is a State decision that requires taking into account all available sources of
information; of a political, historical, economic and sociological nature.
152 See, for example, the experience of Japan. Madrid Experience Sharing Report.
Japan’s Experience in Joining and Using the Madrid System, available at:
http://www.ipo.gov.tt/downloads/Madrid_Protocol/wipo_pub_2014_madrid_japan.pdf.
153 Krugman, Paul R. And Maurice Obstfelt. 1995. Economía Internacionel. Teoría y Política. McGrow-
Hill/Interamericana de España, S. A. Madrid
154 Alesina, Alberto, and Enrico Spolaore and Romain Wacziarg. 2005. Trade, Growth and the Size of Countries, in
Aghion, Philippe and Steven N. Durlauf (Ed) Handbook of Economic Growth, Volume 1B. Ch. 23. Available at:
https://www.anderson.ucla.edu/faculty_pages/romain.wacziarg/downloads/2005_handbook.pdf

7. From a historical perspective, this decision comes after 50 years of advance of free
trade (1944-1994) to 25 years of pressure from some countries to achieve stronger
protection of intellectual property rights.
8. The core function of trademarks is to serve as indicators of the commercial origin and
quality of the products and/or services it is used for, not to lead its holder to generate
market division by controlling the distribution of its offer.
9. Some countries follow the principle of national exhaustion (like Mauritius, Cambodia,
Laos), while others follow international exhaustion (Singapore, United States,
Canada, Mexico, Australia, New Zealand, Andean Countries).
10. According to the referential studies of international scope, in particular, car

components and auto spare parts, compact discs and records, clothes, motorcycles,
shoes, sporting goods, perfumes and cosmetics, consumer electronics, photographic
equipment, optics, watches, tires, food and champagne will have varying market
shares in the countries imported from 3% and 15% in parallel.
11. The previous international experience and the information obtained in Mauritius led
to the conclusion that the industrial sectors that would be most affected by the
implementation of an international regime of parallel imports would be: automobiles
and their spare parts, pharmaceuticals, textiles, food and beverages, and cosmetics.
12. In all five sectors, quantitative estimates of the impact on foreign trademark dealers
are an approximation.
13. The impact on domestic producers is also an approximation, the accuracy of which
depends on the extent to which the statistical data correspond to the production of
substitutes for products imported with foreign trademarks.
14. Increasing competition in a productive sector reduces the profits of companies, so

it is valid to assume that the maximum impact of parallel imports on the income of
companies operating with foreign trademarks is the elimination of benefits.
15. A reduction in the price of vehicles in Mauritius, caused by parallel imports, may
affect the prices of complementary goods and services.
16. The automotive sector has proven to know how to respond to adverse situations
(“Dumping of used cars”). In the case of parallel imports, different scenarios can be
drawn. One possible way of reacting is to diversify its offer by including lower-priced
vehicles (even lower-quality ones) to better take advantage of the different income
levels of the population.
17. The difference between the current prices of pharmaceutical products in Mauritius
and the prices at which they could be imported in parallel vary greatly between
medicines.
18. The textile sector is much more exporter than importer: The total value of exports
and re-exports is five times greater than imports. The market is the world, not the

country; and this market will not be affected (positively or negatively) by parallel
imports that may reach Mauritius.
19. Employment in the industrial group wearing apparel is more than six times that of
the textile group, the compensation to employees is 4.27 times higher in the wearing
apparel than in the textile group, and the values of production indicators (gross output,
Intermediate and value added) more than tripled those of the textile group.
20. A characteristic of the textile sector, and in particular of the industrial group wearing
apparel in which the production of Mauritius concentrates, is the heterogeneity of its
products.
21. In the food and beverage sector, a part of the stakeholders is of the opinion that
there are no large price differences between international prices and prices in
Mauritius. If this is the case, parallel imports are not likely to occur. But if they occur,
foreign trademark distributors can expand the range of products they offer and attract
new consumers at a reduced price.
22. Statistical information on the national production of cosmetics in Mauritius is

included in industrial groups 19-21 Coke and refined petroleum products / Chemicals
and chemical products / Basic pharmaceutical products and pharmaceutical
preparations.This information does not allow estimating the reality of the sector with
minimal precision, so it has not been possible to estimate the impact of parallel
imports on national production.
23. For consumers, the total estimated annual benefit of adopting the international
exhaution regime is close to Rs 4,250 million. The net benefit to society would be
about Rs 100 million per year (Table 26).
24. An important impact of the application of the international exhaustion of trademark

law in Mauritius is not expected. Indeed, the estimated quantitative results are
relatively small, qualitative evidence suggests that those negatively affected have the
possibility of taking measures to adapt to the new situation without major cost, and it
is not known that in other countries there has been an important impact. Therefore, it
is recommended to begin the process of adopting the regime of international
exhaustion of trademark rights.
25. However, if the authority perceives great fear among those affected, the measure
can be applied gradually, starting in only one sector of the production, as a pilot
project, or grant transition deadlines for stakeholders to design their strategies.
26. Most of the arguments gathered in Mauritius against the regime of international
exhaustion of trademark law refer to patent law and its possible negative impact on
the economy of developed countries, not to trademark law in the economy of
Mauritius.
27. Representatives of foreign trademarks in Mauritius have expressed their fear of

losing their rights of defense if the regime of international exhaustion of trademark law
is adopted. It is not correct that with an international exhaustion of trademark rights to

parallel importer can use the genuine trademark in a way that can damage the
reputation of the mark or modify the original product without any restriction and
maintain the genuine trademark.
28. The net benefit for the society of Mauritius is positive, the majority of the inhabitants
will benefit, but the government will have to assume costs to overcome some
inconveniences, such as:
o If the number of suppliers of the product with a trademark increases, it

will be more difficult to establish responsibility in the event of a quality
problem.
o The current processing capacity of customs import operations may be

insufficient if the number of imports increases.

17. Recommendations
17.1 Exhaustion regime of trademark law

Recommendation 1: Begin the process of adopting the regime of international exhaustion
of trademark rights.
Recommendation 2: Monitor each of the productive sectors to determine how the

process of adapting parallel imports in Mauritius develops. If necessary, intervene to
implement corrective measures.
17.2 Capacity building programs

Recommendation 3: Train the stakeholders of the intellectual property system on the
content and scope of trademark rights as well as the content and scope of the
international exhaustion of trademark rights.
Recommendation 4: Start a dissemination campaign to explain that, under the

international exhaustion regime, the protection of trademark rights remains fully in force,
stating in that campaign that:
▪ The owner may oppose the marketing of the imported product when there is a risk of
creating confusion in the public about the essential characteristics of the product or
its commercial origin.
▪ The authority will not allow a trademarked product to be presented with substantial
modifications that could damage the reputation of the trademark.
▪ Neither is advertising permitted that could mislead the consumer about the
commercial origin of the product.
▪
Recommendation 5: Train public officials in sensitive sectors that may be affected, such
as food and health sectors, so that measures to ensure guarantees for food safety and
public health are reinforced.
17.3 Enforcement
Recommendation 6: Train staff to meet the needs of the titleholders, whose intellectual
property rights are infringed.
Recommendation 7: Train Mauritian customs staff sufficiently in advance, including with

the advice of experts from other countries, so that, from the first moment of the new
legislation's validity, the entry of illegal goods is avoided.
Recommendation 8: Improve the procedures for the enforcement of intellectual property

rights, accelerating and making the processes more predictable.
Recommendation 9: Train specialists in the enforcement of intellectual property rights.

ANNEX I: Persons interviewed
1. EU Delegation to the Republic of Mauritius (Mr. Arunsingh Ramduny)
2. International Trade Division, Ministry of Foreign Affairs, Regional Integration and
International Trade (Mr. Sunil Boodhoo, Mrs. Natasha Ponen, Mrs. Marie-Georgia
Ricco)
3. Industrial Property Office (Mr. Ranjiv Beergaunot)
4. Ministry of Health and Quality of Life (Mr. Sharma Ramphue)
5. Statistics Mauritius (Mr. Bhavna Ramjus)
6. MR Customs Dept. (Mr. Ootam Persand)
7. Competition Commission
8. Ministry of Industry, Commerce and Consumer Protection (Mr. Bhooyasheel Akshay
Seedoyal)
9. Ministry of Industry, Commerce and Consumer Protection (Import Division)
10. Economic Development Board (EDB)
11. Mauritius Chamber of Commerce and Industry (MCCI) (Mr. Azeem
Salehmohamed)
12. Business Mauritius (Mr. Ramanathan (Daden) Venkatasawmy)
13. PNL (Mr. Daniel d’Arifat, Mr. Jean Noel Lennon)
14. Grays Inc Ltd (Mr Harel and Mr De Chasteau Neuf)
15. HM Rawat (Mr. Mohamad Ali H. Rawat)
16. Intermart Ltd. (Mr. Andrew Sin Yan Too)
17. Super U (Mr. Pascal Tsin)
18. Edendale Distributors (Mr. Patrice Liew Tat Mun)
19. Nestlé Mauritius (Mr. Erkan Konak)
20. Leal & Co. Ltd. (Mr. Vivian Serret)
21. Scott & Co. Ltd. (Mr. Matthew Taylor, Mrs. Sonia Donat, Mrs. Gabrielle
Halbwachs, Mr. Javed Jeetoo)
22. Eclosia (Mr. Lagesse)
23. Edendale
24. Innodis Group (Mr. Sonny swl. Wong, Ms. Christina Sam See Moi)
25. Brand Activ (Mr. Hubert Adam, Mr. Aldo Létimier)
26. PKL Autoparts (Mr. James Fong Shao)
27. Phoenix Bev. (Mr. Bernard Theys)
28. Winners (Mr. Jean-Michel Rouillard)
29. Zario Part (Mr. Assad Ramatall)
30. Mr. Maudhoo Sudher
31. Mr. Zeuel Ameer
32. GMS Trading Ltd (Mr. Tanoj Seetohv)
33. AP Cassamally Spare Parts Co. Ltd. (Mr. A.R. Cassamahy)
34. Bronze Peacock Ltd. (Mr. Dooroovarben Sockalingum)
35. Indian Chamber of Commerce
36. Association of Mauritian Manufacturers (AMM) (Mr. Bruno Dubarry)
37. Consumer Advocacy Platform (Mr. Mosadeq Sahebdin)
38. Association des Consommateurs de l’Ile Maurice (Mr. J Chellum)
39. University of Mauritius (Mr. S Subbarayan)

40. IBL (Mr. Ruben Payen)
41. IPvocateAfrica (Mr. Marius Schneider)
42. Eversheds-Sutherland (Mr. Nitish Hurnaum)
43. Geroudis Law Firm (Mr S Ghurburrun)

ANNEX II: Survey (template)
Please indicate your company name:
Please indicate your company’s sector

AUTOMOBILE FOOD BEVERAGES COSMETIC TEXTILE PHARMACEUTICALS
Please indicate below if your company:

supports is against does not feel strongly
about having a regime of international exhaustion of trademarks and,

the reasons for your position:
Are wholesale prices for your products higher than comparable foreign wholesale prices:
Yes No Difference (%+ or %-)
How many times have your company initiate a complaint against a parallel importer?
Please indicate your company’s:

value of imports of products, at CIF price
turnover
% turnover/value of fixed assets
Contribution to the economy in terms of:
employment
social responsibility
value addition
investment
innovation
another relevant indicator

ANNEX V: MODEL INSTRUMENT OF
ACCESSION TO THE PROTOCOL RELATING
TO THE MADRID AGREEMENT CONCERNING
THE INTERNATIONAL REGISTRATION
OF MARKS
(To be deposited with the Director General of WIPO in Geneva)
The Government of [name of State] hereby declares that [name of State] accedes
to the Protocol Relating to the Madrid Agreement Concerning the International
Registration of Marks, adopted at Madrid on June 27, 1989.
Done at ............................................., [date] ....................................
(Signature)*
(Capacity)
* This instrument must bear the signature of the Head of State, Head of Government or Minister of Foreign Affairs.

ANNEX VI: THE PROTOCOL RELATING TO
THE MADRID AGREEMENT CONCERNING
THE INTERNATIONAL REGISTRATION OF
MARKS
MODEL PROVISIONS AND INFORMATION FOR THE IMPLEMENTATION

OF THE MADRID PROTOCOL
NAME OF THE COUNTRY OR INTERGOVERNMENTAL ORGANIZATION]
NOVEMBER 2017
Table of Contents
Part I Model Provisions

Part II Notes on the Model Provisions
Part III Issues for Further Consideration
Part IV Principal Declarations that May Be Made in Connection with Accession to
the Madrid Protocol
Part V Links to the Legal Framework of the Madrid Protocol and to other Reference
Material
Part VI Model Forms
INTRODUCTION
[Name of the country or intergovernmental organization] is not yet party to the Madrid
System for the International Registration of Marks (“the Madrid System”). If and when
[name of the country or intergovernmental organization] becomes party to the Madrid
System, it will accede to the Protocol Relating to the Madrid Agreement Concerning the
International Registration of Marks (“the Madrid Protocol”) only.
This document provides information on the Model Provisions. The Model Provisions are
the minimum requirements that should be included in the legislation of a member of the
Madrid System. It is very important that [a country] [an intergovernmental organization],
at the time of accession to the Madrid Protocol, has legislation that is fully compatible
with the Madrid Protocol. Each member will need to decide how this may be done.
One possibility is to have a bill of accession acknowledging the Madrid Protocol, placing
all relevant provisions of the Madrid Protocol in a Chapter to the Regulations. This
chapter could be entitled, for example, “International Registration of Marks under the
Protocol Relating to the Madrid Agreement Concerning the International Registration of
Marks”.
Another option may be to have all relevant provisions of the Madrid Protocol in the
Trademarks [Law] itself. The more detailed provisions of the Madrid System may be

placed in the Regulations, as it is often easier to amend provisions in the Regulations
than the [Law] itself.
This document has six parts:

– Part I contains the Model Provisions;
– Part II contains comments to these provisions;
– Part III addresses specific issues which [name of the country or
intergovernmental organization] would need to consider or address prior to
implementing the Madrid System;
– Part IV contains information on declarations that [name of the country or
intergovernmental organization] may consider for its future accession to the Madrid
Protocol;
– Part V provides the links to the legal framework of the Madrid Protocol, meaning
the provisions of the Madrid Protocol, the Common Regulations under the Madrid
Agreement Concerning the International Registration of Marks and the Protocol
Relating to that Agreement (the “Common Regulations”) and the Administrative
Instructions, and to other reference material; and
– Part VI lists the current model forms available for the use by Offices for the
various communications an Office of a Contracting Party may make in the Madrid
System.
These Model Provisions and the following commentary have been prepared in the
context of the Trademark [Law No. XXX] [and the Trademark [Regulation] No. XXX].
The Government of [name of the country or intergovernmental organization] would need
to make choices with respect to the use of forms and payment of fees. Where such
choices are required, text in square brackets suggests alternatives for example, in Model
Provisions 6, 21(1)(b), 22(2)(a) and (b).
The references to Article 5(2) of the Madrid Protocol that appear between brackets in
Model Provisions 10(1), 13(1) and 17, would depend on whether [name of the country or
intergovernmental organization] makes a declaration under paragraphs (2)(b) and (c) of
that Article.
Model Provision 12 would be required if [name of the country or intergovernmental
organization] makes a declaration under Article 5(2)(c) of the Madrid Protocol.
The text in Model Provision 21(2)(vi) would be optional as it relates to the optional content
of the notification made under Rule 21(1)(iii), second sentence, of the Common
Regulations.
Further details may, from time to time, be dealt with in the corresponding [national]
[regional] regulations or in administrative instructions issued by the [national] [regional]
industrial property authority (“the [Registrar]”).
PART I – MODEL PROVISIONS
1. DEFINITIONS

For the purpose of this [Law][Chapter]:
(i) “the [Law]” shall be intended to mean references to the [Law] No. [XXXXXX],
[Law on the Protection of Intellectual Property] and any amendments thereof or any
governing regulatory instruments;
(ii) “Madrid Agreement” means the Madrid Agreement Concerning the International
Registration of Marks of April 14, 1891, as amended;
(iii) “Madrid Protocol” means the Protocol Relating to the Madrid Agreement
Concerning the International Registration of Marks, adopted in Madrid on June 27, 1989,
as amended;
(iv) “Common Regulations” means the Common Regulations under the Madrid
Agreement and the Madrid Protocol;
(v) “Contracting Party” means any country or intergovernmental organization party
to the Madrid Protocol;
(vi) “International Bureau” means the International Bureau of the World
Intellectual Property Organization;
(vii) “International Register” means the official collection of data concerning
international registrations of marks maintained by the International Bureau;
(viii) “international application” means an application to obtain registration of a
mark under the Madrid Protocol;
(ix) “Office of origin” means the Office of the Contracting Party where, in
accordance with Article 2(2) of the Madrid Protocol, the international application was
filed;
(x) [“Registrar”] means the [XXX] of the [name of the country or intergovernmental
organization];
(xi) “applicant” refers to the natural person or legal entity in whose name an
international application is filed with the Office of origin;
(xii) “basic application” means an application for registration of a mark, filed with
the [Registrar] under the [Law], and which is used as a basis to file an international
application under the Madrid Protocol;
(xiii) “basic registration” means a mark registered by the [Registrar] under the
[Law], and which is used as the basis to file an international application under the Madrid
Protocol;
(xiv) “international registration” means the registration of a mark effected under
the Madrid Protocol;
(xv) “holder” refers to the natural person or legal entity in whose name an
international registration is recorded in the International Register;
(xvi) “designation” means the request for extension of protection (“territorial
extension”) under Article 3ter(1) or (2) of the Madrid Protocol, as the case may be; it also
means such extension as recorded in the International Register;
(xvii) “subsequent designation” means the request for extension of protection
(“territorial extension”) under Article 3ter(2) of the Madrid Protocol; it also means such
extension as recorded in the International Register;
(xviii) “designated Contracting Party” means a Contracting Party for which the
extension of protection (“territorial extension”) has been requested under Article 3ter(1)

or (2) of the Madrid Protocol, as the case may be, or in respect of which such extension
has been recorded in the International Register;
(xvix) “invalidation" means a final decision by the competent authority (whether
administrative or judicial) of [name of the country or intergovernmental organization]
revoking or cancelling the effects, in the territory of [name of the country or
intergovernmental organization], of an international registration with regard to all or some
of the goods or services covered by the designation of [name of the country or
intergovernmental organization].
2. LANGUAGE
(1) Any international application for transmittal to the International Bureau through
the intermediary of the [Registrar] shall be in [English] [French] [Spanish].
(2) Any communication concerning an international application or an international
registration addressed to the International Bureau by the [Registrar] shall [, subject to
Rule 17(2)(v) and (3), and Rule 6(2)(ii) of the Common Regulations,] be in [English]
[French] [Spanish].
INTERNATIONAL APPLICATIONS ORIGINATING FROM [NAME OF THE COUNTRY

OR INTERGOVERNMENTAL ORGANIZATION]
3. ENTITLEMENT TO FILE AN INTERNATIONAL APPLICATION

Any natural person or legal entity, that is a national of [name of the country] [a member
State of the intergovernmental organization], is domiciled in [name of the country or
intergovernmental organization] or has a real and effective industrial or commercial
establishment in [name of the country or intergovernmental organization], is entitled to
file an international application with the [Registrar], provided the basic application or
basic registration, as the case may be, used as a basis to file the international application
is in the name of that natural person or legal entity.
4. EXAMINATION OF INTERNATIONAL APPLICATIONS WHERE [NAME OF THE

COUNTRY OR INTERGOVERNMENTAL ORGANIZATION] IS THE OFFICE OF
ORIGIN
Where an international application is filed with the [Registrar] for transmittal to the
International Bureau, the [Registrar] shall verify that the Office of [name of the country or
intergovernmental organization] may be considered as the Office of origin for that
application, and that the relevant particulars appearing in the international application
correspond to those appearing in the basic application or basic registration, as the case
may be, in accordance with the provisions of the Madrid Protocol and the Common
Regulations.
5. CERTIFICATION BY THE [REGISTRAR]

(1) Where the international application complies with the prescribed requirements,
the [Registrar] shall certify the international application, also indicating the date of its
receipt and shall forward the international application to the International Bureau.

(2) Where the international application does not comply with the prescribed
requirements, the [Registrar] shall not forward the international application to the
International Bureau, and shall inform the applicant accordingly.
6. HANDLING FEE
[The prescribed fee shall be due and payable to the [Registrar] in connection with the
filing of an international application originating in [name of the country or
intergovernmental organization].]
7. CEASING OF EFFECT OF THE BASIC APPLICATION OR BASIC REGISTRATION

Where, in accordance with Article 6 of the Madrid Protocol, the basic application, the
registration resulting from such application, or the basic registration, ceases to have
effect, the [Registrar] shall inform the International Bureau accordingly and shall request
the cancellation of the international registration for the goods and services affected.
(B) INTERNATIONAL REGISTRATIONS WHERE [NAME OF THE COUNTRY OR

INTERGOVERNMENTAL ORGANIZATION] IS A DESIGNATED CONTRACTING
PARTY
8. EFFECTS OF AN INTERNATIONAL REGISTRATION

(1) An international registration designating [name of the country or
intergovernmental organization] shall have the same effects, as from the date of the
international registration or of the subsequent designation of [name of the country or
intergovernmental organization], as the case may be, as an application for the
registration of the mark filed directly with the [Registrar] under the [Law].
(2) If no refusal is notified by the [Registrar] to the International Bureau in
accordance with the Madrid Protocol and the Common Regulations, or if a refusal has
been so notified but has been subsequently withdrawn, or if a statement of grant of
protection is sent by the [Registrar], the protection of the mark in [name of the country or
intergovernmental organization] shall be the same as if the mark had been registered
directly by the [Registrar] on the date of the international registration or of the subsequent
designation of [name of the country or intergovernmental organization], as the case may
be.
9. EXAMINATION OF INTERNATIONAL REGISTRATIONS

The [Registrar] shall examine the marks that are the subject of international registrations
designating [name of the country or intergovernmental organization] in relation to
provisions in [Articles XXX and XXX] of the [Law].
10. EX OFFICIO PROVISIONAL REFUSAL OF PROTECTION

(1) Where the [Registrar] finds that, in accordance with the [Law] of [name of the
country or intergovernmental organization], the mark that is the subject of an international
registration designating [name of the country or intergovernmental organization] cannot
be accepted, the [Registrar] shall, before the expiry of the refusal period specified in

Article 5(2)[(a)][(b)] of the Madrid Protocol, notify to the International Bureau of a
provisional refusal of protection, complying with the requirements of the Madrid Protocol
and the Common Regulations.
(2) The holder of that international registration shall enjoy the same remedies as if
the mark had been filed for registration directly with the [Registrar].
11. PUBLICATION OF INTERNATIONAL REGISTRATION; OPPOSITION

(1) Where [name of the country or intergovernmental organization] has been
designated in an international registration and [the mark has been accepted], the
[Registrar] shall publish the international registration as provided for in the [Law].
(2) Opposition to the international registration shall be governed by the provisions
of the [Law] regarding opposition, mutatis mutandis.
12. POSSIBLE NOTIFICATION OF PROVISIONAL REFUSAL BASED ON

OPPOSITION IN ACCORDANCE WITH ARTICLE 5(2)(C) OF THE MADRID
PROTOCOL
[Where the period to file an opposition against an international registration ends after the
expiry of the refusal period specified in Article 5(2)(b) of the Madrid Protocol or the
[Registrar] considers that it will end too late for the [Registrar] to send a notification under
[Model Provision 13] within that refusal period, the [Registrar] shall send a
communication informing that fact to the International Bureau, complying with the
requirements of the Madrid Protocol and the Common Regulations.]
13. PROVISIONAL REFUSAL BASED ON AN OPPOSITION

(1) Where an opposition is filed with the [Registrar] against an international
registration designating [name of the country or intergovernmental organization], the
[Registrar] shall, before the expiry of the refusal period specified in Article 5(2)[(a)][(b) or
in accordance with Article 5(2)(c)] of the Madrid Protocol, notify that fact to the
International Bureau as a provisional refusal based on an opposition, complying with the
requirements of the Madrid Protocol and the Common Regulations.
(2) The holder of the international registration concerned shall enjoy the same
remedies as if the mark had been filed for registration directly with the [Registrar].
14. NO GROUNDS FOR REFUSAL – STATEMENT OF GRANT OF PROTECTION

Where all procedures before the [Registrar] have been completed, the [Registrar] has
not found grounds to refuse protection[, has not received a notice of opposition] and, as
a result, has not notified a provisional refusal in accordance with [Model Provision 10] or
[Model Provision 13], the [Registrar] shall, as soon as possible and before the expiry of
the refusal period applicable under Article 5(2) of the Madrid Protocol, send a statement
to the International Bureau to the effect that protection is granted to the mark in [name
of the country or intergovernmental organization].
15. DECISIONS BY THE [REGISTRAR] FOLLOWING THE NOTIFICATION OF A

PROVISIONAL REFUSAL

(1) Statement of Grant of Protection Following the Notification of a Provisional Refusal
Where the [Registrar] has notified the International Bureau of a provisional refusal of
protection in accordance with [Model Provision 10] or [Model Provision 13] and, all the
procedures before the [Registrar] having been completed, the mark is either totally or
partially protected, the [Registrar] shall send to the International Bureau
(i) a statement to the effect that the provisional refusal is withdrawn and that
protection of the mark is granted in [name of the country or intergovernmental
organization] for all the goods and services for which protection has been requested, or
(ii) a statement indicating the goods and services for which protection of the mark
is granted in [name of the country or intergovernmental organization].
(2) Confirmation of Total Provisional Refusal
Where the [Registrar] has sent to the International Bureau a notification of total
provisional refusal in accordance with [Model Provision 10] or [Model Provision 13] and,
all the procedures before the [Registrar] having been completed, the [Registrar] has
decided to confirm such refusal of protection of the mark in [name of the country or
intergovernmental organization] for all the goods and services for which protection has
been requested, the [Registrar] shall send to the International Bureau a statement to that
effect.
16. APPEALS
[Any person aggrieved with any decision made by the [Registrar] concerning
international registrations designating [name of the country or intergovernmental
organization] may appeal therefrom to the [Court]. Appeals against those decisions shall
be governed by the provisions of the [Law] regarding appeals, mutatis mutandis.]
17. FURTHER DECISION AFFECTING THE PROTECTION OF A MARK

Where a notification of provisional refusal has not been sent within the applicable time
limit under Article 5(2)[(a)][(b) or in accordance with Article 5(2)(c)] of the Madrid
Protocol, or, where following the sending of a statement in accordance with [Model
Provision 14] or [Model Provision 15], a further decision, taken by the Office or other
authority, affects the protection of a mark in [name of the country or intergovernmental
organization], the [Registrar] shall, to the extent that it is aware of that decision, without
prejudice to [Rule 19 of the Common Regulations [or Model Provision 18], send to the
International Bureau a further statement indicating the status of the mark and, where
applicable, the goods and services for which the mark is protected in [name of the country
or intergovernmental organization].
18. INVALIDATION
Where the effects of an international registration are invalidated in [name of the country
or intergovernmental organization] and the invalidation is no longer subject to appeal,
the [Registrar] shall, provided that the [Registrar] is made aware of that decision, notify
the International Bureau in accordance with Rule 19 of the Common Regulations.

19. RENEWAL OF INTERNATIONAL REGISTRATIONS DESIGNATING [NAME OF
THE COUNTRY OR INTERGOVERNMENTAL ORGANIZATION] AND RECORDINGS
IN THE INTERNATIONAL REGISTER
(1) International registrations which, in accordance with Article 7 of the Madrid
Protocol, have been renewed in respect of [name of the country or intergovernmental
organization] as a designated Contracting Party shall continue to have effect in [name of
the country or intergovernmental organization].
(2) Any recording made in the International Register concerning an international
registration, shall, to the extent that it applies to [name of the country or
intergovernmental organization] as a designated Contracting Party, have the same effect
as if it had been recorded by the [Registrar] in the Register of marks.
(3) Where, under the laws of [name of the country or intergovernmental
organization], the [Registrar] considers that the recording referred to in paragraph (2)
has no effect in [name of the country or intergovernmental organization], the [Registrar]
shall, where so provided for in the Common Regulations, send a communication to the
International Bureau to this effect, in accordance with the relevant provisions of the
Common Regulations.
20. [COLLECTIVE], [CERTIFICATION] [AND/OR GUARANTEE MARKS]

(1) [Collective], [certification] [and/or guarantee marks] in international registrations
designating [name of the country or intergovernmental organization] shall be governed
by the provisions of the [Law] regarding such marks, mutatis mutandis.
(2) Where an international registration designating [name of the country or
intergovernmental organization] is a [collective mark][, a certification mark] [or a
guarantee mark], a copy of the regulations governing the use of such marks shall be
submitted directly, by the holder of that international registration, to the [Registrar], within
the prescribed time limit.
21. REPLACEMENT
(1) (a) Where:
i) a mark registered in [name of the country or intergovernmental organization]
is also the subject of an international registration, and the protection resulting
therefrom extends to [name of the country or intergovernmental
organization], and
(ii) the same person is recorded as holder of the registration in [name of the
country or intergovernmental organization] and of the international
registration, and
(iii) all the goods and services listed in the registration in [name of the country or
intergovernmental organization] are also listed in the international
registration in respect of [name of the country or intergovernmental
organization], and
(iv) the extension of that international registration to [name of the country or
intergovernmental organization] took effect after the date of registration of
the mark in [name of the country or intergovernmental organization],

the holder of the international registration may request the [Registrar] to take note of that
international registration in the Register of marks.
(b) A request filed with the [Registrar] in accordance with paragraph (a), shall
be made on Form […] and [shall be subject to the payment of the prescribed fee] [shall
not be subject to the payment of a fee].
(2) Where the [Registrar] has taken note of an international registration in
accordance with paragraph (1)(a), the [Registrar] shall notify the International Bureau
accordingly. Such notification shall indicate the following:
(i) the number of the international registration in question,
(ii) where some only of the goods and services listed in the international
registration are concerned, those goods and services,
(iii) the filing date and number of the application for registration of the mark in
[name of the country or intergovernmental organization],
(iv) the registration date and number of the registration in [name of the country
or intergovernmental organization],
(v) the priority date, if any, of the registration in [name of the country or
intergovernmental organization], and
[(vi) information relating to other rights acquired by virtue of the registration in
[name of the country or intergovernmental organization].]
22. TRANSFORMATION
(1) (a) Where an international registration designating [name of the country or
intergovernmental organization] is cancelled at the request of the Office of origin, in
accordance with Article 6(4) of the Madrid Protocol, for all or some of the goods and
services listed in the international registration, an application may be made to the
[Registrar], within three months from the date on which the international registration was
cancelled, by the person who was the holder of the international registration at the date
of its cancellation, for registration of the same trademark (“an application resulting from
transformation”), for goods and services covered by the list of goods and services
contained in the international registration.
(b) Subject to paragraphs (2) and (3), the provisions applicable to a
trademark application filed directly with the [Registrar] shall apply mutatis mutandis to an
application resulting from transformation.
(2) (a) An application resulting from transformation shall be made on Form […] and
shall, in addition, include the following:
(i) a statement that the application is made by way of transformation,
(ii) the international registration number of the international registration which
has been cancelled,
(iii) the date of the said international registration or the date of the subsequent
designation, as appropriate,
(iv) the date on which the cancellation of the international registration was
recorded,
(v) where applicable, the date of any priority claimed in the international
application and recorded in the International Register.

(b) An application resulting from transformation [shall be subject to the
payment of the prescribed [transformation] fee[s]] [shall not be subject to the payment of
[a] [the standard application] fee].
(3) (a) Where a mark that is the subject of an international registration has become
protected in [name of the country or intergovernmental organization] on or before the
date on which the international registration was cancelled and, provided that all the
requirements relating to an application resulting from transformation have been met, that
trademark shall be registered by the [Registrar]. The date of registration shall be the
date of the cancelled international registration or the date of the subsequent designation,
as appropriate, and that registration shall enjoy any priority enjoyed by the cancelled
international registration.
(b) Where a mark that is the subject of an international registration has not
yet become protected in [name of the country or intergovernmental organization] on or
before the date on which the international registration was cancelled, any procedures or
measures already undertaken on or before the date on which an application resulting
from transformation is filed for the purpose of the international registration shall be
considered as having been undertaken for the purposes of the application resulting from
transformation. The filing date of the application resulting from transformation shall be
the date of the international registration or the date of the subsequent designation, as
appropriate.
23. FURTHER DETAILS CONCERNING INTERNATIONAL REGISTRATIONS

Further details concerning international registrations may be included in the
implementing regulations or instructions issued by the [Registrar].
24. CONFLICT BETWEEN THE [LAW] AND THE MADRID PROTOCOL

In the event of conflict between the provisions of the [Law] and those of the Madrid
Protocol, the provisions of the Madrid Protocol and the Common Regulations shall
prevail.
PART II – NOTES ON THE MODEL PROVISIONS
MODEL PROVISION 1: DEFINITIONS

For the sake of legal certainty, a number of expressions used in the context of the
international procedure should be defined in the [Law][Chapter], those expressions being
defined as having the same meaning as in the Madrid Protocol and the Common
Regulations. In addition, reference is made in the definitions to the [national] [regional]
legislation on trademarks (i.e. the [Law]).
MODEL PROVISION 2: LANGUAGE

Under Rule 6(1) of the Common Regulations, an international application may be filed in
English, French or Spanish, according to what is prescribed by the Office of origin.

The implementing legislation of [name of the country or intergovernmental organization]
should therefore state that international applications are required to be filed through the
[Registrar] in the language, or languages, indicated in this provision.
[Name of the country or intergovernmental organization] would also need to decide on
which language it will communicate with the International Bureau concerning
international applications or international registrations designating [name of the country
or intergovernmental organization]. There can be only one language of communication.
For further information, reference is made to Rule 6 of the Common Regulations and to
the Guide to the International Registration of Marks under the Madrid Agreement and the
Madrid Protocol (“the Guide”).
(A) INTERNATIONAL APPLICATIONS ORIGINATING FROM [NAME OF THE

COUNTRY OR INTERGOVERNMENTAL ORGANIZATION] - THE OFFICE OF [NAME
OF THE COUNTRY OR INTERGOVERNMENTAL ORGANIZATION] AS OFFICE OF
ORIGIN
MODEL PROVISION 3: ENTITLEMENT TO FILE AN INTERNATIONAL APPLICATION

This provision governs the entitlement to use the Madrid System; the applicant needs to
be a national of [name of the country] [a member State of the intergovernmental
organization], be domiciled or have a place of business (a real and effective industrial or
commercial establishment) in [name of the country or intergovernmental organization].
In addition, the applicant needs to have a basic mark, meaning an application filed with
or a registration effected by the [Registrar].
MODEL PROVISION 4: EXAMINATION OF INTERNATIONAL APPLICATIONS

WHERE THE OFFICE OF [NAME OF THE COUNTRY OR INTERGOVERNMENTAL
ORGANIZATION] IS THE OFFICE OF ORIGIN
This provision defines the principal role of the Office of [name of the country or
intergovernmental organization] as Office of origin, namely, the fact that the [Registrar]
is required, before transmitting an international application to the International Bureau,
to check that the Office of [name of the country or intergovernmental organization] may
be considered as the Office of origin and that the relevant particulars appearing in the
international application correspond to those appearing in the basic application or basic
registration, as the case may be.
The [Registrar] is required also to indicate the actual date on which the [Registrar]
received the international application (which will become, in principle, the date of the
international registration – see Article 3(4) of the Madrid Protocol and Rule 15 of the
Common Regulations).
The [Registrar] cannot require the applicant to meet any further conditions to assign a
date to the international application; for example, the [Registrar] cannot require that the
applicant pay a fee to the Office before assigning a date to the international application.
If the international application does not meet the applicable requirements (either because
the Office of [name of the country or intergovernmental organization] cannot be
considered as Office of origin, or because the particulars appearing in the international
application, and requiring certification, do not correspond to those appearing in the basic

application or basic registration), the [Registrar] should not transmit the international
application to the International Bureau.
The [Registrar] may require that the applicant pay a fee to the [Registrar] before
transmitting the international application to the International Bureau (see Model
Provision 6).
For further information, see Rule 9 of the Common Regulations and the Guide.
MODEL PROVISION 5: CERTIFICATION BY THE [REGISTRAR]
If the [Registrar] is satisfied that the Office of [name of the country or intergovernmental
organization] may be considered as the Office of origin and that the relevant particulars
appearing in the international application correspond to those appearing in the basic
application or basic registration, as the case may be, then the [Registrar] is required to
certify accordingly in item 13 of the international application form, and transmit the
application to the International Bureau.
MODEL PROVISION 6: HANDLING FEE
Under Article 8(1) of the Madrid Protocol, the [Registrar] may establish and collect a fee
in connection with the filing of the international application. The aim of this fee is to cover
the cost of the work involved in the reception, certification and transmittal of the
international application to the International Bureau. However, charging such fee is
optional.
MODEL PROVISION 7: CEASING OF EFFECT OF THE BASIC APPLICATION OR
BASIC REGISTRATION
Model Provision 7 deals with the so-called “ceasing of effect” of the basic application or
basic registration during the five-year dependency period referred to in Article 6 of the
Madrid Protocol.
Under paragraph (4) of Article 6, where the basic application or basic registration ceases,
either totally or partially, to have effect within that period, the Office of origin is required
to inform the International Bureau accordingly and request the cancellation of the
international registration for the goods and services affected.
For example, if the basic application is withdrawn, abandoned or not accepted, in whole
or in part, within the dependency period (or as a result of actions initiated within the
dependency period), the [Registrar] must notify the International Bureau of this fact and
request that the international registration concerned be cancelled to the same extent.
Moreover, if the basic registration (or the registration resulting from a basic application)
is cancelled, renounced, revoked, invalidated or is not renewed, within the dependency
period (or as a result of actions initiated within the dependency period), the [Registrar]
must notify this fact to the International Bureau and request that the international
registration concerned be cancelled accordingly.
(B) INTERNATIONAL REGISTRATIONS WHERE [NAME OF THE COUNTRY OR

INTERGOVERNMENTAL ORGANIZATION] IS A DESIGNATED CONTRACTING
PARTY
INTRODUCTION
International registrations designating [name of the country or intergovernmental
organization] should be subject to examination as to substantive grounds for refusal in

the same way as applications filed directly with the [Registrar] and should be subject to
the same possibility of opposition as [nationally] [regionally] filed applications.
Accordingly, holders of international registrations designating [name of the country or
intergovernmental organization] should have the same means of recourse and remedies
as provided for regular applications filed directly with the [Registrar].
Please note that a Contracting Party may not refuse protection of an international
registration, even partially, on the ground that the applicable legislation permits
registration only in a limited number of classes or for a limited number of goods or
services. Even if that legislation requires that an application made directly to that Office
must be in one class only, the Office must accept that an international registration may
be protected in that Contracting Party for several (or even all 45) classes of goods and
services.
In this part, the proposed Model Provisions dealing with examination of an international
registration designating [name of the country or intergovernmental organization] follow a
logical progression, [similar to the one in the [Law]].
– Model Provision 8 deals with the effects of international registrations in which
[name of the country or intergovernmental organization] is a designated
Contracting Party;
– Model Provision 9, with the grounds for refusal;
– Model Provision 10, with marks that are refused by the [Registrar] ex officio;
– Model Provision 11, with the publication, for opposition purposes, of marks that
are accepted by the [Registrar];
– Model Provision 12, with possible notification of a provisional refusal based on
opposition beyond the expiry of the refusal period;
– Model Provision 13, with a notification of provisional refusal based on
opposition;
– Model Provision 14, with marks that are accepted by the [Registrar] without
reservation, published for opposition and not opposed;
– Model Provision 15, with the communication on the final decision by the
[Registrar], following a provisional refusal ex officio or based on opposition;
– Model Provision 16, with appeals against the final decision by the [Registrar];
– Model Provision 17, with further decisions affecting the protection of a mark;
– Model Provision 18, with invalidation;
– Model Provision 19, with the renewal of international registrations and other
recordings in the International Register;
– Model Provision 20, with collective, certification and guarantee marks;
– Model Provisions 21 and 22 deal with, respectively, replacement and
transformation; and
– Model Provisions 23 and 24, deal with, correspondingly, possible further
provisions, in the form of regulations or directives, and hierarchy of laws.
WHAT IS “REFUSAL” UNDER THE MADRID SYSTEM?

In the context of the Madrid System, a “refusal” by the [Registrar] does not mean that a
final determination must have been reached concerning the protection of a mark that is
the subject of an international registration. What is required is that, within the applicable
refusal period, the [Registrar] notify to the International Bureau a “provisional” objection
(a “provisional refusal”), indicating the grounds which may eventually lead to a definitive
refusal. There are strict time limits for the notification of a provisional refusal, but no
limits on the notification of the eventual final decision.
Accordingly, under the Madrid System, where the [Registrar] finds grounds for refusal of
an international registration where [name of the country or intergovernmental
organization] is designated, the [Registrar] must, within a time limit of 12 months from
the date of notification by the International Bureau of the designation, send its provisional
refusal to the International Bureau.
However, it is possible, by making a declaration to that effect, to extend this period to
18 months, and to further extend this period in the case of refusals following third party
opposition (this is often referred to as “18 months plus”). Please, see Part IV below for
possible declarations under the Madrid Protocol.
MODEL PROVISION 8: EFFECTS OF AN INTERNATIONAL REGISTRATION
The effects in [name of the country or intergovernmental organization] of an international
registration designating [name of the country or intergovernmental organization] should
be stated by transposing the substance of Article 4(1)(a) of the Madrid Protocol.
Model Provision 8 provides that a mark that has been registered in the International
Register shall be protected in [name of the country or intergovernmental organization]
as if the mark had been the subject of an application for registration filed directly with the
[Registrar] (paragraph (1)); and that, if no refusal of protection has been issued – or if a
refusal has been notified to the International Bureau but has been subsequently
withdrawn – or if a statement of grant of protection has been sent, the protection of the
mark will be the same as if it had been directly registered by the [Registrar] (paragraph
(2)).
MODEL PROVISION 9: EXAMINATION OF INTERNATIONAL REGISTRATIONS

According to Article 4(1)(a) of the Madrid Protocol, an international registration has the
effects of an application for the registration of a mark filed directly with the [Registrar].
Therefore, the [Registrar] shall examine the mark that is the subject of that international
registration for its acceptance, in accordance with the [Law].
MODEL PROVISION 10: EX OFFICIO PROVISIONAL REFUSAL OF PROTECTION

International registrations designating [name of the country or intergovernmental
organization] will be subject to examination as to substantive grounds for refusal in the
same way as applications filed directly with the [Registrar].
Where the [Registrar] finds that the mark is not acceptable for protection, based on
absolute grounds or because of third party rights, or considers that the international
registration can be accepted subject to certain conditions, the [Registrar] must notify the
International Bureau of an ex officio provisional refusal of protection.
The [Registrar] must ensure that ex officio examination can be completed well within the
confines of the time limit to notify a provisional refusal. It is important to stress that if a
provisional refusal is not notified to the International Bureau before the expiry of the

applicable refusal period, the mark is deemed to be protected in [name of the country or
Holders of international registrations for which the [Registrar] has sent an ex officio
provisional refusal shall have the same means of recourse and remedies as provided in
respect of regular applications filed directly with the [Registrar].
The [Registrar] may use Model Form 3A to notify an ex officio total provisional refusal,
(i.e. one that affects all goods and services) and Model Form 3B to notify an ex officio
partial provisional refusal (i.e. one that affects some goods and services) (see Part VI).
MODEL PROVISION 11: PUBLICATION OF INTERNATIONAL REGISTRATION;

OPPOSITION
The publication of the international registration in [name of the country or
intergovernmental organization] – additional to the publication undertaken by the
International Bureau in accordance with the Madrid Protocol shall be effected ex officio
to initiate the opposition period. The [Registrar] cannot charge any fee for such
publication.
Accordingly, once the international registration has passed the ex officio examination
and there are no grounds for refusal, the [Registrar] shall publish the international
registration for opposition.
Opposition procedures shall be governed by the provisions of the [Law], mutatis
mutandis.
MODEL PROVISION 12: POSSIBLE NOTIFICATION OF PROVISIONAL REFUSAL

BASED ON OPPOSITION IN ACCORDANCE WITH ARTICLE 5(2)(C) OF THE MADRID
PROTOCOL
This provision would only apply if [name of the country or intergovernmental organization]
makes a declaration under Article 5(2)(c) of the Madrid Protocol (along with a declaration
under Article 5(2)(b)). Under that declaration, the [Registrar] may send a provisional
refusal based on opposition after the expiry of the 18-month refusal period specified in
Article 5(2)(b), provided such refusal is sent no later than seven months from the start
date and no later than one month from the end date of the opposition period.
However, to send a provisional refusal based on opposition under Article 5(2)(c), the
[Registrar] must first inform the International Bureau of this possibility before the expiry
of the 18-month refusal period specified in Article 5(2)(b) and also inform the start and
end dates of the opposition period to the International Bureau, as soon as those dates
are known.
The opposition period does not have to end after the expiry of the 18-month refusal
period specified in Article 5(2)(b). The [Registrar] can send information in accordance
with Article 5(2)(c) when the opposition period is deemed to end too late for the
[Registrar] to send a notification of provisional refusal within the 18-month refusal period.
Finally, should the opposition period be extendable, the [Registrar] may send a
communication under Article 5(2)(c) indicating the start date of the opposition period
only. This date is sufficient because, according to Article 5(2)(c), a provisional refusal
based on opposition must be sent no later than seven months from the start date of the
opposition period.

The [Registrar] may use Model Form 1 to inform the International Bureau about possible
oppositions, in accordance with Article 5(2)(c), and Model Form 2 to inform the
International Bureau of the start and end dates of the opposition period, if those dates
were not included in the initial communication (see Part VI).
MODEL PROVISION 13: PROVISIONAL REFUSAL BASED ON OPPOSITION

Where, following publication in accordance with Model Provision 11, an opposition is
filed, the [Registrar] is required to notify this fact to the International Bureau, and Model
Provision 13 provides accordingly. Such notification must be communicated to the
International Bureau within the applicable refusal period, in the same way as the
notification under Model Provision 10.
The [Registrar] may use Model Form 3A to notify a total provisional refusal based on
opposition and Model Form 3B to notify a partial provisional refusal based on opposition
(see Part VI).
MODEL PROVISION 14: NO GROUNDS FOR REFUSAL – STATEMENT OF GRANT

OF PROTECTION
Model Provision 14 deals with paragraph (1) of Rule 18ter of the Common Regulations.
That paragraph requires that Office of a designated Contracting Party to send a

statement of grant of protection where:
(a) all the procedures before the Office have been completed;
(b) the Office has not found any grounds to notify an ex officio refusal of protection
of the mark;
(c) an opposition has not been filed against the international registration within the
applicable time limit; and
(d) the applicable refusal period, according to Article 5(2) of the Madrid Protocol,
has not yet expired.
That is to say, the mark has been examined and accepted by the [Registrar], the mark
has then been published for opposition purposes, no opposition has been filed, and the
period for filing such opposition has expired – all of this before the applicable Madrid
Protocol refusal period has expired. The benefit of sending such a statement of
protection, as far as the holder is concerned, is that, where the mark has been fully
cleared for protection in advance of the expiry of the refusal period, the holder does not
have to wait for the expiry of that period to know that his/her mark is protected in [name
of the country or intergovernmental organization].
This latter situation is often referred to as “tacit acceptance”, according to which, under
Article 5, paragraphs (1) and (2) and Article 5(5) of the Madrid Protocol, a mark that is
not refused within the applicable refusal period in a designated Contracting Party is
deemed automatically to be protected.
Please note that the holder may find it useful to receive a statement of grant of protection
from the [Registrar], where the conditions indicated in subparagraphs (a) to (c), above,
have been met, even after the refusal period has expired. In such situation, the mark
will automatically be deemed to be protected in [name of the country or
intergovernmental organization] and the statement is not strictly necessary. However,

the holder would receive some comfort from having received a statement from the
[Registrar] indicating that the mark is protected.
The [Registrar] may use Model Form 4 to send a statement of grant of protection (see
Part VI).
MODEL PROVISION 15: DECISIONS FOLLOWING THE NOTIFICATION OF A

PROVISIONAL REFUSAL
While the Madrid System requires that a provisional refusal be notified to the
International Bureau within the applicable refusal period, there is no time limit for the
eventual communication to the International Bureau of the outcome, once the Office has
completed all its procedures. However, the [Registrar] is required to communicate to the
International Bureau the particulars of any such “final decision”, once all the procedures
have been completed.
(1) Statement of Grant of Protection Following the Notification of a Provisional Refusal

When the [Registrar] has notified the International Bureau of a provisional refusal within
the applicable refusal period, whether such provisional refusal was ex officio or followed
the filing of an opposition, then, in due course, the [Registrar] is required to communicate
to the International Bureau the outcome, as far as the protection of the mark is
concerned. This is often referred to as the “final decision”, to the extent that the
[Registrar] is required to send it to the International Bureau only after all the procedures
before the [Registrar] have been completed. Such final decision may take a number of
forms.
Model Provision 15(1)(i): Protection Granted to All of the Goods and Services
Following the notification of a provisional refusal, all the procedures before the [Registrar]
have been completed and the mark is finally protected in [name of the country or
intergovernmental organization] for all the goods and services for which protection has
been requested, then the [Registrar] is required to send a statement of grant of protection
to that effect to the International Bureau. This is in accordance with Rule 18ter(2)(i) of
the Common Regulations.
Please note that this statement provided for by Model Provision 15(1)(i) follows the
earlier notification of a provisional refusal, so it is not the same statement as provided for
in Model Provision 14 above.
Model Provision 15(1)(ii): Protection Granted to Some of the Goods and Services
Following the notification of a provisional refusal, all the procedures before the [Registrar]
have been completed and the mark is protected for some of the goods and services in
[name of the country or intergovernmental organization], then the [Registrar] is required
to send a statement of grant of protection to that effect to the International Bureau. This
is in accordance with Rule 18ter(2)(ii) of the Common Regulations.
The Office may use Model Form 5 to send a statement of total or partial grant of
protection following a provisional refusal (see Part VI).

(2) Confirmation of Total Refusal
Following the notification of a total provisional refusal, all the procedures before the
[Registrar] have been completed and the [Registrar] has decided to confirm such total
provisional refusal of protection of the mark in [name of the country or intergovernmental
organization], then the [Registrar] is required to send a statement of confirmation of total
refusal to the International Bureau. This is in accordance with Rule 18ter(3) of the
Common Regulations.
The Office may use Model Form 6 to send a statement confirming a total refusal (see
Part VI).
MODEL PROVISION 16: APPEALS

It is advisable to include a provision that reasserts the right of the holder and third parties
to appeal to the [Court] a decision made by the [Registrar] with respect to an international
registration designating [name of the country or intergovernmental organization].
MODEL PROVISION 17: FURTHER DECISION AFFECTING THE PROTECTION OF

A MARK
This provision implements the requirement under Rule 18ter(4) of the Common
Regulations for the [Registrar] to communicate to the International Bureau the particulars
of any further decision affecting the protection of the mark in [name of the country or
This is to be distinguished from the “final” decision covered by Model Provisions 15(1)
and (2). Those communications follow the earlier sending by the [Registrar] of a
notification of provisional refusal and are required to be sent to the International Bureau
once all the regular procedures before the [Registrar] have been completed.
The communication under Model Provision 17 would be any later decision taken
concerning the scope of protection of an international registration designating [name of
the country or intergovernmental organization]. It could be a decision by another
administrative or judicial authority concerning an appeal of a decision made by the
[Registrar]. It could also be a decision unrelated to the examination procedures of the
[Registrar], for example, concerning a request for cancellation due to non-use, whether
this decision would be by the [Registrar] or the Court, or another administrative or judicial
body. The [Registrar] should communicate any such further statement to the
International Bureau where the [Registrar] is aware of any such decision, and, only to
the extent that any such decision actually affects the status of protection of the mark.
Rule 18ter(4) will be amended from November 1, 2017. The text of Model Provision 17
follows the new wording. The current wording of Rule 18ter(4) is available on the Madrid
System website, at the following address:
www.wipo.int/wipolex/en/treaties/text.jsp?file_id=397995.
The [Registrar] may use Model Form 7 to communicate a further decision affecting the
protection of a mark (see Part VI).
MODEL PROVISION 18: INVALIDATION

In the Common Regulations, the term “invalidation” is intended to mean any final decision
by a competent authority in [name of the country or intergovernmental organization]

revoking or cancelling the effects in [name of the country or intergovernmental
organization] of an international registration for all or some of the goods and services.
This provision requires the [Registrar], where the [Registrar] is aware of a decision to
terminate in [name of the country or intergovernmental organization] the protection of the
international registration, to notify the International Bureau accordingly.
The [Registrar] may use Model Form 10 to notify the invalidation in [name of the country
or intergovernmental organization] of an international registration (see Part VI).
MODEL PROVISION 19: RENEWAL OF AN INTERNATIONAL REGISTRATION AND

RECORDINGS IN THE INTERNATIONAL REGISTER
This Model Provision implements the principle of centralized management of
international registrations, whereby the renewal of an international registration and any
recording made in the International Register in respect of an international registration for
which [name of the country or intergovernmental organization] is a designated
Contracting Party shall have the same effect as if it had been made directly in its Register
of marks.
The Common Regulations envisage the recording in the International Register of
licenses, restriction of the holder’s right of disposal, changes in the name, address and
legal nature of the holder, changes in ownership, cancellations, renunciations and
limitations.
Those recordings, to the extent that they concern [name of the country or
intergovernmental organization] as a designated Contracting Party, have full effect in
[name of the country or intergovernmental organization], without further requirements or
formalities, and the [Registrar] must update its [national] [regional] database or Registry,
as the case may be, accordingly.
The Common Regulations also envisage that an Office may declare that certain
recordings have no effect. Under Rule 20bis(5) and 27(4) and (5), an Office may declare
that the recording of a given license, a change in ownership or a limitation has no effect.
Where, in accordance with the laws of [name of the country or intergovernmental
organization], the [Registrar] considers that a given license, a change in ownership or a
limitation has no effect in [name of the country or intergovernmental organization], the
[Registrar] must send a statement to this effect to the International Bureau within the time
limits specified in the abovementioned Rules.
For example, the [Registrar] may consider that a recorded limitation is, in fact, an
expansion of the original scope of protection. In that case, the [Registrar] may send the
corresponding declaration.
The Common Regulations also envisage recordings concerning representation before
the International Bureau. The Offices of the designated Contracting Parties are notified
of such recordings for their information only.
Holders of international registrations are not required to have representation before the
Offices of the designated Contracting Parties, unless they wish or need to address those
Offices directly. In that case, holders must comply with the requirements for local
representation, if any.
The [Registrar] may use Model Forms 11 and 12 to send, correspondingly, a declaration
that a change in ownership has no effect and the final decision therefrom; and, Model

Forms 13 and 14 to send, correspondingly, a declaration that a limitation has no effect
and the final decision therefrom (see Part VI).
MODEL PROVISION 20: COLLECTIVE, CERTIFICATION AND/OR GUARANTEE

MARKS
[A country] [An intergovernmental organization] may have provisions in its domestic
legislation, which would allow for protection of collective, certification and/or guarantee
marks. The domestic legislation may also specify that it would only one or two of these
marks.
This Model Provision relates to the requirement under the [law] of [name of the country
or intergovernmental organization] that applications to register collective, certification
and guarantee marks must be accompanied by a copy of the regulations governing the
use of such marks. Since copies of those regulations may not be filed with the
International Bureau with an international application, it should be specified that the
holders of those marks are required to submit those copies directly to the [Registrar].
Moreover, the regulations that govern the use of such marks must be submitted
according to the relevant [articles] in the [Law].
MODEL PROVISION 21: REPLACEMENT

Article 4bis of the Madrid Protocol provides that where an international registration
relates to a mark that is already registered in a designated Contracting Party for the same
goods or services and in the name of the same person or entity, the international
registration is deemed to replace the [national] [regional] registration, and that the Office
of the designated Contracting Party should, upon request, take note of the international
registration.
To implement Article 4bis, it should be provided that, where the holder of the international
registration so requests, the [Registrar] will take note of the international registration in
the Register of marks in connection with the record of the [national] [regional] registration.
However, the fact that the holder requests the [Registrar] to take note of the international
registration should not entail a cancellation of the corresponding [national] [regional]
registration of the mark. There is no physical replacement of the marks, despite the term
used; both registrations should be allowed to co-exist, and cancellation or limitation of
the [national] [regional] registration should only be effected upon express request from
the holder of that registration.
MODEL PROVISION 22: TRANSFORMATION

Paragraph (1)(a) of this Model Provision is based on Article 9quinquies of the Madrid
Protocol. Paragraph (1)(b) establishes the principle that an application resulting from
transformation is, to all intents and purposes, the same as a standard [national] [regional]
trademark application, subject to the special provisions of this Model Provision.
Paragraph (2) provides for the furnishing of additional information to enable the
[Registrar] to confirm compliance with the conditions for transformation under Article
9quinquies. Applications resulting from transformation may be filed using the same
official form as for the filing of ordinary applications, or a special form for transformation,
although such form might not be necessary.

Paragraph (3)(a) provides that where, by virtue of an international registration, a mark
had already become protected in [name of the country or intergovernmental
organization], an application resulting from transformation should automatically lead to
the registration of the mark in question (if all formal requirements have been met).
Paragraph (3)(b) provides that, where the mark that is the subject of an international
registration had not yet become protected in [name of the country or intergovernmental
organization] on the date of cancellation of the international registration, but certain steps
have already been taken by the [Registrar] with regard to the substantive examination of
a mark that is the subject of an international registration, the benefit of those steps should
accrue to the application resulting from transformation and the remaining procedure
should continue thereafter as for a standard application. This approach avoids
unnecessary duplication of work and expense, both for the holder and the [Registrar].
[Name of the country or intergovernmental organization] would need to decide, in the
provision itself, whether a special form is to be used and a fee is payable for this.
MODEL PROVISION 23: FURTHER PROVISIONS CONCERNING INTERNATIONAL

REGISTRATIONS
For purposes of flexibility, it may be useful to introduce a general provision in accordance
with which further provisions to facilitate procedures concerning international
registrations may be included in the trademark regulations or in Office administrative
instructions.
MODEL PROVISION 24: CONFLICT BETWEEN THE [LAW] AND THE MADRID
PROTOCOL
It is useful to have a provision along the lines of that proposed in Model Provision 24 to
address situations of conflict between the [Law] and the Madrid Protocol.
PART III – ISSUES FOR FURTHER

CONSIDERATION
EXAMINATION OF INTERNATIONAL AND [NATIONAL] [REGIONAL] APPLICATIONS

AND ADMINISTRATION OF REGISTRATIONS
In the context of the accession to, and the operation of the Madrid System, there are a
number of issues for consideration beyond the mere implementation of provisions in the
[national] [regional] law. They relate, more specifically, to certain differences between
the processing of [national] [regional] and international applications and registrations, to
which attention should be drawn in the following paragraphs.
INTERNATIONAL APPLICATIONS AND INTERNATIONAL REGISTRATIONS

At the outset, it is recalled that, within the Madrid System, the [national] [regional]
trademark Office will deal with two categories of cases: (i) international applications
which are filed with it as Office of origin; and (ii) international registrations where [name
of the country or intergovernmental organization] is the designated Contracting Party.

International applications are examined for formalities in accordance with the relevant
provisions of the Madrid Protocol and the Common Regulations. Provisions in [national]
[regional] trademark law regarding [national] [regional] applications are not applicable.
As a consequence, relevant provisions of the Madrid Protocol and the Common
Regulations apply to international applications instead of requirements which apply to
[national] [regional] applications. This particularly concerns provisions relating to filing
requirements, payment of fees and evidence to be provided.
[Certain kinds of trademarks (for example [associated trademarks ([Article] XX of the
[Law])] or [series of trademarks ([Article] XX of the [Law])]) are not recognised by the
Madrid System and cannot be applied for as such in international applications.] With
respect to collective, certification and/or guarantee marks, the international application
cannot be accompanied by the regulations governing the use of such marks. These
regulations have to be submitted by the holder of the international registration separately
and directly to the Office of the designated Contracting Party.
International registrations, in which [name of the country or intergovernmental
organization] has been designated, have already undergone a formality examination in
the Office of origin and in the International Bureau before being registered in the
International Register. While the Trademark Office of the designated Contracting Party,
in principle, examines those international registrations received in the same way as
[national] [regional] applications for trademark protection, those formality requirements
which have been subject to formality examination on the international level cannot be
questioned during the [national] [regional] examination and diverging [national] [regional]
requirements will not apply.
Moreover, the Madrid System provides for a centralized management of international
registrations with effect for the designated Contracting Parties. This means that a
number of requests for recording will be made in the International Register, which will
have effect for [name of the country or intergovernmental organization] on the date when
they are recorded in the International Register. Therefore, on the [national] [regional]
level, no further formality requirements, beyond what is foreseen in the Madrid Protocol
and the Common Regulations, will apply. For details on the central management of
international registrations, please refer to the specific paragraphs below.
DATE OF THE INTERNATIONAL REGISTRATION

The date of the international registration, which is the equivalent to the filing date, follows
from Article 3(1) and (4) of the Madrid Protocol. This means that the international
registration shall bear the date on which the international application was received in the
Office of origin. The date of receipt as indicated under Model Provision 5(1) has to be
the date of the real receipt of the documents and cannot depend on the payment of a fee
(not even the handling fee). Should the [Registrar] decide to require the payment of a
handling fee for international applications, the only sanction available for the [Registrar]
would be to transmit the international application to the International Bureau only once
the payment has been received.
Where [name of the country or intergovernmental organization], in the future, will be a
designated Contracting Party, the notification to the [Registrar], informing of the
designation, will contain this date of the international registration. Where the territorial
extension to [name of the country or intergovernmental organization] is made
subsequently to the international registration (subsequent designation), the applicable
date would be the date of the subsequent designation. See also Rule 24 of the Common
Regulations.

CLAIMS TO PRIORITY
Checking priority claims is part of the formality examination undertaken by the
International Bureau. A priority claim accepted by the International Bureau, will be
binding on a designated Contracting Party. As a consequence, the [Registrar], when
[name of the country or intergovernmental organization] is designated, cannot ask for
any further evidence as to priority claims. Specifically, the formalities prescribed by
Article 4, Section D of the Paris Convention do not need to be complied with.
CLASSIFICATION
The classification of goods and services will be controlled for international applications
by the International Bureau in association with the Office of origin in accordance with
Article 3(2) of the Madrid Protocol. In the event of disagreement with the [Registrar], the
opinion of the International Bureau will prevail.
However, where [name of the country or intergovernmental organization] is designated
in an international registration, the [Registrar] would not be bound by the indication of
classes of goods and services with regard to the determination of the scope of protection
of the mark (Article 4(2) of the Madrid Protocol).
PUBLISHING FOR OPPOSITIONS

Under the Madrid System, it is not necessary, in principle, for an Office to re-publish
marks that have been registered under the Madrid System and published in the WIPO
Gazette of International Marks. See also above on Model Provision 11. However, where
the [national] [regional] law provides an opposition system, it is advisable that the Office
re-publish the mark to provide clear information on the start and end of the opposition
period, which enhances legal security on trademark rights for right holders and third
parties, having prior rights in [name of the country or intergovernmental organization].
If a [national] [regional] re-publication were to take place, the [Registrar] should ensure
the mark to be advertised, without the holder needing to do anything; meaning the
[Registrar] cannot charge fee for publication or require that the holder request such
advertisement.
CERTIFICATE
Under the Madrid System, the [Registrar] is required to issue, as the case may be, either
notifications of provisional refusal (Article 5 of the Madrid Protocol, Rules 16 and 17 of
the Common Regulations) or statements of grant of protection (Rule 18ter of the
Common Regulations), which will provide precise information about the scope of
protection of the mark in [name of the country or intergovernmental organization]. The
statement of grant of protection would be equivalent to the [national] [regional] certificate
that the [Registrar] will issue for [national] [regional] registrations.
ADDRESS FOR SERVICE / LOCAL REPRESENTATIVE IN [NAME OF THE COUNTRY

OR INTERGOVERNMENTAL ORGANIZATION]
It is important to note that, under the Madrid System, the applicant – and later the holder
– of an international application is not required to engage a local representative or

provide a local address for service in the designated Contracting Parties. The [national]
[regional] law can require a holder to engage a local representative or provide a local
address for service only where the Office of the designated Contracting Party concerned
is refusing protection of the mark and where the holder would like to contest that decision
by the [Registrar].
CENTRAL MANAGEMENT OF AN INTERNATIONAL REGISTRATION

The international registration is protected for ten years from the date of international
registration, with the possibility of renewal for further periods of 10 years, upon payment
of the required fees.
Renewal of an international registration is covered by a central procedure, which would
prevail over the [national] [regional] procedure. The international registration will be
renewed directly before the International Bureau, which will inform all the concerned
designated Contracting Parties of the renewal.
The International Bureau will collect the renewal fees and distribute these accordingly;
the distribution time will depend on whether the Contracting Party concerned is under
the standard fee regime (annually) or has declared individual fees (the following month).
Where an international registration is not renewed, the International Bureau will also
inform the concerned Contracting Parties of this non-renewal. The grace period with
respect to the renewal of an international registration is six months in accordance with
Article 7(4) of the Madrid Protocol.
The Madrid System provides a central management of an international registration,
which allows that specified events concerning an international registration, such as
amendments or changes, be recorded by the International Bureau in the International
Register with effect in all the designated Contracting Parties concerned. Such central
management covers particularly the recording of a limitation of the list of goods or
services, the recording of a license or amendment to such license, the recording of a
change in the name or address of the holder or the representative or the recording of a
change in ownership. Where such changes have been recorded in the International
Register, the Contracting Parties concerned will be notified of the changes and these
changes will have effect in the Contracting Parties from the date of recording in the
International Register. This means that [name of the country or intergovernmental
organization] as a designated Contracting Party should not require any specific
documentation or evidence or payment of fees provided for in [national] [regional]
provisions with respect to the recording of these changes.
However, the Madrid System does not bind as to the substantive effect of certain
changes and, on a case by case basis, the [Registrar] could declare that the recording
of a change in ownership has no effect (Rule 27(4) of the Common Regulations), that
the recording of a limitation has no effect (Rule 27(5) of the Common Regulations) or
that the recording of a license has no effect (Rule 20bis(5) of the Common Regulations).
PART IV – PRINCIPAL DECLARATIONS THAT

MAY BE MADE IN CONNECTION WITH
ACCESSION TO THE MADRID PROTOCOL

A detailed explanation of all declarations provided for in the Madrid System may be found
in the Guide.
There are possibly [five] declarations that may be of interest for [name of the country or
The declarations mentioned below that are set out in the Articles in the Protocol must be
signed by the same authority which may sign the instrument of accession, namely the
Head of State, Head of Government or the Minister of Foreign Affairs. For other
declarations, for example, under Rule 20bis(6) of the Common Regulations, it will be up
to the Contracting Party to decide who should sign, the entities mentioned above or the
IP Office.
1. EXTENSION OF THE REFUSAL PERIOD (ARTICLE 5(2)(B) OF THE MADRID

PROTOCOL)
[A country] [An intergovernmental organization] acceding to the Madrid Protocol may
declare that, in connection with an international registration in which it is designated, the
time limit for the Office to notify the International Bureau of a provisional refusal of
protection shall be 18 months, instead of 12 months. Such declaration may also be
made after the [country] [intergovernmental organization] has acceded to the Madrid
Protocol, in which case the declaration will enter into effect three months after its receipt
by the Director General of WIPO, or at any later date indicated in the declaration.
2. FURTHER EXTENSION OF THE REFUSAL PERIOD WHERE THE REFUSAL IS

BASED ON AN OPPOSITION (ARTICLE 5(2)(C) OF THE MADRID PROTOCOL)
[A country] [An intergovernmental organization] may further declare that, in the case of
refusals based on an opposition, such refusals may be notified after the expiry of the
18-month time limit. Such declaration may be made at the time of its accession or at any
later time, in which case that declaration will enter into force three months after its receipt
by the Director General of WIPO, or at any later date indicated in the declaration.
3. INDIVIDUAL FEE (ARTICLE 8(7) OF THE MADRID PROTOCOL)

[A country] [An intergovernmental organization] acceding to the Madrid Protocol may
declare that, in connection with each international registration in respect of which it is
designated, and in connection with the renewal of such international registration, it
wishes to receive an individual fee.
The amounts of the individual fee must not be higher than the fees that would be payable
for registering the mark by means of an application made directly to the [Registrar], and
should be lower than those fees by an amount reflecting the savings resulting from the
international procedure.
The amounts of the individual fee should be expressed in the [national] [regional]
currency. The Director General of WIPO will, in consultation with the Contracting Party
concerned, establish the amounts of the fee in Swiss currency based on the official
exchange rate of the United Nations. The first declaration under Article 8(7) must be
signed by the Head of State, Head of Government or the Minister of Foreign Affairs, but
any later declarations of changes in the amount can be made by the Office.

4. LICENSES (RULE 20BIS OF THE COMMON REGULATIONS)
The Office of a Contracting Party may make certain declarations concerning licensing,
depending upon the legislation in that regard at the [national] [regional] level. This should
be discussed with the International Bureau in advance of accession by a Contracting
Party.
(a) Rule 20bis(6)(a)

Under Rule 20bis(6)(a) of the Common Regulations, the Office of a Contracting Party
whose legislation does not provide for the recording of trademark licenses may notify the
Director General of WIPO that the recording of licenses in the International Register has
no effect in that Contracting Party.
Such declaration may be made at any time.
(b) Rule 20bis(6)(b)

Under Rule 20bis(6)(b) of the Common Regulations, the Office of a Contracting Party
whose legislation does provide for the recording of trademark licenses may notify the
Director General of WIPO that the recording of licenses in the International Register has
no effect in that Contracting Party.
However, such notification may only be made before the date on which the Contracting
Party becomes bound by the Madrid Protocol.
[5. DECLARATION OF INTENTION TO USE THE MARK (RULE 7(2) OF THE

COMMON REGULATIONS)
As provided for by Rule 7(2) of the Common Regulations, a Contracting Party may notify
the Director General of WIPO that it requires, when that Contracting Party is designated
under the Madrid Protocol, a declaration of intention to use the mark.
Such notification may be made in the instrument of accession. It may also be made
subsequently, in which case it will come into effect three months after its receipt by the
Director General of WIPO, or at a later date indicated in the notification.]
PART V – LINKS TOTHE LEGAL FRAMEWORK

OF THE MADRID PROTOCOL AND TO OTHER
REFERENCE MATERIAL
The full text of the Madrid Protocol can be found here

www.wipo.int/treaties/en/text.jsp?file_id=283484
The full text of the Common Regulations can be found here
www.wipo.int/wipolex/en/treaties/text.jsp?file_id=397995.

The full text of the Administrative Instructions can be found here
www.wipo.int/treaties/en/text.jsp?file_id=281226.
The Guide to the International Registration of Marks under the Madrid Agreement and
the Madrid Protocol can be found here
www.wipo.int/madrid/en/guide/.
Making the Most of the Madrid System, a handbook with information and practical tips
on how to use specific forms, can be found here
www.wipo.int/export/sites/www/madrid/en/forms/docs/making_the_most_of_the_madri
d_system_mm_forms.pdf.
Information regarding replacement can be found here
www.wipo.int/madrid/en/services/open_forum.html.
Information on the practice of Offices concerning replacement can be found here
www.wipo.int/madrid/en/members/replacement.html and
www.wipo.int/edocs/mdocs/madrid/en/mm_ld_wg_12/mm_ld_wg_12_5.pdf.
PART VI – MODEL FORMS
The International Bureau makes available to Offices a number of model forms for use in
connection with Madrid procedures.
Copies of the model forms are reproduced below and the forms are available on the
Madrid System website at the following address:
www.wipo.int/madrid/en/contracting_parties/model_forms.html.
The model forms are as follows:
Model Form 1: Information Relating to Possible Oppositions (Rule 16 of the Common
Regulations)
Model Form 2: Dates on which Opposition Period Begins and Ends (Rule 16(1)(b) of
the Common Regulations)
Model Form 3A: Total Provisional Refusal of Protection (Rule 17(1) of the Common
Regulations)
Model Form 3B: Partial Provisional Refusal of Protection (Rule 17(1) of the Common
Regulations)
Model Form 4: Final Disposition on Status of a Mark – Statement of Total Grant of

Protection (Rule 18ter(1) of the Common Regulations)
Model Form 5: Final Disposition on Status of a Mark – Statement of Total or Partial

Grant of Protection Following a Provisional Refusal (Rule 18ter(2) of
Model Form 6: Final Disposition on Status of a Mark –Confirmation of Total

Provisional Refusal (Rule 18ter(3) of the Common Regulations)
Model Form 7: Further Decision Affecting the Protection of a Mark (Rule 18ter(4) of
Model Form 8: Completion of Ex Officio Examination – Interim Status of a Mark

(Rule 18bis of the Common Regulations)

Model Form 9: Ceasing of Effect of the Basic Application, of the Registration Resulting
Therefrom, or of the Basic Registration, and Request for Cancellation
of the International Registration (Rule 22(1)(a) or (c) and (2)(b) of the
Common Regulations)
Model Form 10: Invalidation (Rule 19 of the Common Regulations)
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4) of
Model Form 12: Final Decision That a Change in Ownership Has No Effect
(Rule 27(4)(e) of the Common Regulations)
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the Common
Regulations)
Model Form 14: Final Decision Stating That a Limitation Has No Effect (Rule 27(5)(e)
of the Common Regulations)
Model Form 1: Information Relating to Possible Oppositions (Rule 16 of the

Common Regulations) [Note for filing]
This form may only be used by an Office that has made the declaration under
Article 5(2)(b) and (c) of the Protocol. The Office should send this form to the
International Bureau when the period during which an opposition may be made, for a
given international registration, will end too late for this Office to send a notification of a
provisional refusal based on an opposition within the 18-month time limit referred to in
Article 5(2)(b) of the Protocol.
The Office shall indicate the dates on which the opposition period begins and ends, if
these dates are known at the time of this notice to the International Bureau. If those
dates are not yet known, they shall be communicated to the International Bureau as soon
as they are known (by using Model Form 2). If the opposition period is extendable, the
Office may communicate only the date on which the opposition period begins.
Model Form 1: Information Relating to Possible Oppositions (Rule 16 of the
Common Regulations)
I. Office communicating the information:
II. Number of the international registration:
III. Name of the holder:
IV. Dates of the opposition period:

Please choose only one of the following options and, where applicable, indicate the
dates of the opposition period:
Dates on which the opposition period begins and ends are known and indicated
below:

The opposition period is extendable and only the date on which the opposition
period begins is indicated below:
Dates on which the opposition period begins and ends are not yet known.
– Date on which the opposition period begins:
– Date on which the opposition period ends:
V. Signature or official seal of the Office communicating the information:
VI. Date of notification to the International Bureau:
[End of Model Form 1]
Model Form 2: Dates on Which Opposition Period Begins and Ends (Rule 16(1)(b)
of the Common Regulations) [Note for filing]
This form may only be used where an Office has previously notified the International
Bureau of possible oppositions using Model Form 1, but the dates of the opposition
period were not known at that time. This form may be used by the Office to communicate
those dates to the International Bureau.
Model Form 2: Dates on Which Opposition Period Begins and Ends (Rule 16(1)(b)
I. Office communicating the information:
IV. Dates of the opposition period:

Please choose only one of the following options and indicate the date or dates, as the
case may be, of the opposition period:
Dates on which the opposition period begins and ends are known and indicated
below:
The opposition period is extendable and only the date on which the opposition
period begins is indicated below:
– Date on which the opposition period begins:
– Date on which the opposition period ends:
V. Signature or official seal of the Office communicating the information:
VI. Date of notification of the International Bureau:

Model Forms 3A and 3B: Total or Partial Provisional Refusal of Protection (Rule
17(1) of the Common Regulations) [Note for filing]
An Office can use this form to communicate to the International Bureau a decision to
refuse protection of the international registration in the Contracting Party, following ex
officio examination (ex officio provisional refusal), opposition (provisional refusal based
on opposition), or both.
The Office would need to specify to the International Bureau whether the provisional
refusal is total, meaning for all the concerned goods and services, or only partial, for
specific goods and services. To do this, the Office can choose between using Model
Form 3A or 3B:
– Model Form 3A should be used where the Office is refusing protection for all the
concerned goods and services (total refusal).
– Model Form 3B should be used where the Office is refusing protection for only
a part of the goods and services (partial refusal).
Once all procedures before the Office have been completed, the Office shall
communicate to the International Bureau a statement regarding the final decision on the
status of protection of the mark. At that time, the Office should use Model Form 5
(Statement of grant of protection following a refusal) or Model Form 6 (Confirmation of
total provisional refusal).
Where the provisional refusal is based on an opposition, alone or together with an ex
officio refusal, the name and address of the opponent should also be provided.
Where a total refusal affecting all the goods or services is being notified, the indication
under item V should read “all goods (or all services) in class X”.
In cases of partial refusal, a clear indication of those goods and/or services that are
affected or those that are NOT affected should be provided.
Where the provisional refusal is based on an earlier mark, the indication required under
item VII may be given by annexing a printout from the register or database.
If the Office requires that the holder accept a specific disclaimer to overcome the
provisional refusal, the Office should indicate the disclaimer under item IX (iv) “Other
requirements, if any”.
Model Form 3A: Total Provisional Refusal of Protection (Rule 17(1) of the
Common Regulations)
I. Office making the notification:
IV. Information concerning the type of provisional refusal:

Please indicate the type of refusal by checking only one of the following options:

Total provisional refusal based on an ex officio examination
Total provisional refusal based on an opposition
Total provisional refusal based on both an ex officio examination and an
opposition
Where the refusal is based on an opposition, please indicate the name and address of
the opponent:
(i) Name of the opponent:
(ii) Address of the opponent:
V. Information concerning the scope of the provisional refusal:

Total provisional refusal affects all the goods and/or services.
VI. Grounds for refusal [(where applicable, see item VII)]:
VII. Information relating to an earlier mark:

(i) Filing date and number, and, if any, priority date:
(ii) Registration date and number (if available):
(iii) Name and address of the owner:
(iv) Reproduction of the mark:
(v) List of the relevant goods and/or services (this list may be in the language of the
earlier application or registration):
VIII. Corresponding essential provisions of the applicable law:
IX. Information relating to the possibility to request a review or file an appeal:

(i) Time limit for requesting review or appeal:
(i) Authority to which such request for review or appeal should be made:
(i) Whether the request for review or appeal has to be filed in a specific language
and/or through the intermediary of a representative whose address is within the
territory of the Contracting Party:
(ii) Other requirements, if any:
X. Signature or official seal of the Office making the notification:
XI. Date of the notification to the International Bureau:
[End of Model Form 3A]
Model Form 3B: Partial Provisional Refusal of Protection (Rule 17(1) of the
Common Regulations)

IV. Information concerning the type of provisional refusal:

Please indicate the type of refusal by checking only one of the following options:
Partial provisional refusal based on an ex officio examination
Partial provisional refusal based on an opposition
Partial provisional refusal based on both an ex officio examination and an
opposition
Where the refusal is based on an opposition, please indicate the name and address of
the opponent:
(i) Name of the opponent:
(ii) Address of the opponent:
V. Information concerning the scope of the provisional refusal:

Please indicate the scope of the refusal, by choosing one of the two listed options below
and, where applicable, list the relevant goods and/or services:
Partial provisional refusal affects only the following goods and/or services:
Partial provisional refusal does NOT affect the following goods and/or services:
List of goods and/or services:
VI. Grounds for refusal [(where applicable, see item VII)]:
VII. Information relating to an earlier mark:

(i) Filing date and number, and, if any, priority date:
(ii) Registration date and number (if available):
(iii) Name and address of the owner:
(iv) Reproduction of the mark:
(v) List of the relevant goods and/or services (this list may be in the language of the
earlier application or registration):
VIII. Corresponding essential provisions of the applicable law:
IX. Information relating to the possibility to request a review or file an appeal:

(ii) Authority to which such request for review or appeal should be made:

(iii) Whether the request for review or appeal has to be filed in a specific language
and/or through the intermediary of a representative whose address is within the
territory of the Contracting Party:
(iv) Other requirements, if any:
X. Signature or official seal of the Office making the notification:
XI. Date of the notification to the International Bureau:
[End of Model Form 3B]
Model Form 4: Final Disposition on Status of a Mark – Statement of Total Grant

of Protection (Rule 18ter(1) of the Common Regulations) [Note for filing]
This form may only be used where the Office has completed all its procedures and has
found no ground to refuse protection before the expiry of the refusal period applicable
under Article 5(2) of the Protocol.
Protection is granted to the mark for all the goods and/or services listed in the
international registration. It is not appropriate to list the goods and/or services in this
form.
Where the Office has previously communicated to the International Bureau a provisional
refusal, it needs to follow up with a statement regarding the final decision on the status
of protection of the mark, using either Model Form 5 or 6.
Model Form 4: Final Disposition on Status of a Mark – Statement of Total Grant of
Protection (Rule 18ter(1) of the Common Regulations)
I. Office sending the statement:
IV. Protection is granted to the mark that is the subject of this international registration for
all the goods and/or all the services for which protection has been requested.
V. Signature or official seal of the Office sending the statement:

Grant of Protection Following a Provisional Refusal (Rule 18ter(2) of the Common
Regulations) [Note for filing]
An Office may use this form where it has previously notified the International Bureau of
a total or partial provisional refusal (using Model Form 3A or 3B) and, after having
completed all its procedures, has now decided to grant protection to some or all of the
goods and services listed in the international registration. This decision concluded all
procedures before the Office.
The Office shall tick only one of the boxes in item (iv) to indicate whether protection is
total or partial.
required in item (iv).
Where protection is granted to some of the goods and services, a clear indication of the
goods and services that are protected shall be provided. This indication could be, for
instance, “all goods (or all services) in class X”.
Where a further review or appeal against this decision before an authority outside the
Office is still possible, the Office should provide the information in item (vi), where
available.
Grant of Protection Following a Provisional Refusal (Rule 18ter(2) of the Common
Regulations)
IV. The Office has completed all its procedures and this is the decision by the Office:
Total protection is granted for all the goods and/or services (Rule 18ter(2)(i))
Partial protection is granted to the following goods and/or services
(Rule 18ter(2)(ii)):
V. Disclaimer or Reservation:
Please specify the element(s) of the mark for which protection cannot be granted:
Please also specify, by checking only one of the options below, whether the disclaimer
or reservation applies to:
All of the goods and/or services
Only the following goods and/or services:

VI. Where a further review or appeal against this decision before an authority outside the
Office is still possible, the Office should provide the following information, where
available:
(i) Whether the request for review or appeal has to be filed in a specific language or
through the intermediary of a representative whose address is within the territory
of the Contracting Party:
VII. Signature or official seal of the Office sending the statement:
VIII. Date of notification to the International Bureau:
Model Form 6: Final Disposition on Status of a Mark – Confirmation of Total

Provisional Refusal (Rule 18ter(3) of the Common Regulations) [Note for filing]
An Office may use this form where it has previously notified the International Bureau of
a total provisional refusal (using Model Form 3A) and, after having completed all its
procedures, has now decided to confirm the total refusal of the international registration.
This decision concluded all procedures before the Office.
Where a further review or appeal against this decision before an authority outside the
Office is still possible, the Office should provide the information in item (v), where
available.
MADRID PROTOCOL
Model Form 6: Final Disposition on Status of a Mark – Confirmation of Total
Provisional Refusal (Rule 18ter(3) of the Common Regulations)
IV. The Office has completed all its procedures and this is the decision by the Office:
Protection of the mark is refused for all the goods and/or services.
V. Where a further review or appeal against this decision before an authority outside the
Office is still possible, the Office should provide the following information, where
available:

(i) Whether the request for review or appeal has to be filed in a specific language or
through the intermediary of a representative whose address is within the territory
of the Contracting Party:
VI. Signature or official seal of the Office sending the statement:
VII. Date of notification to the International Bureau:

MADRID PROTOCOL
Model Form 7: Further Decision Affecting the Protection of a Mark (Rule 18ter(4)
This form may be used where there is a further decision which affects the scope of the
protection of the mark and either one of the following facts has happened:
– the applicable refusal period under Article 5(2) of the Madrid Protocol has
expired without the Office sending a notification of provisional refusal; or,
– the Office has sent a statement of total grant of protection (Rule 18ter(1) of
the Common Regulations using Model Form 4); or,
– the Office has sent a statement of total or partial grant of protection following
a provisional refusal (Rule 18ter(2) of the Common Regulations using Model
Form 5); or,
– the Office has sent a confirmation of total provisional refusal (Rule 18ter(3)
of the Common Regulations using Model Form 6).
The decision can be by an authority outside the Office, where a subsequent decision is
resulting from an appeal decision. The decision can also be by the Office, where a further
decision, following the completion of its regular procedures, is resulting from a request
for reinstatement of rights or restitutio in integrum.
Model Form 7: Further Decision Affecting the Protection of a Mark (Rule 18ter(4)
IV. Goods and Services affected by the further decision:

Please check the box that applies (only one box) and indicate, where applicable, the
goods and services that are now protected:
Total protection is granted for all the goods and/or services
Partial protection is granted to the following goods and/or services:
Total refusal for all the goods and/or services

IVbis. Disclaimer or Reservation:
Please specify the element(s) of the mark for which protection cannot be granted:
Please also specify, by checking only one of the options below, whether the disclaimer
or reservation applies to:
All of the goods and/or services
Only the following goods and/or services:
V. Signature or official seal of the Office sending the statement:

(Rule 18bis of the Common Regulations) [Note for filing]
This form can be used where an Office wishes to inform that ex officio examination has
been completed, without finding any grounds for refusal, but where protection of the mark
is still subject to opposition or observations by third parties.
This form can be used whether a notification of provisional refusal has been previously
communicated or not.
The Office would need to communicate a notification to the International Bureau at a
later date under Rules 17 or 18ter of the Common Regulations, using Model Form 3, 4
or 5, depending on the situation:
– Where an opposition is later filed, the Office should notify of a provisional refusal
based on opposition under Rule 17, using Model Form 3A or 3B, depending on
whether the provisional refusal is total or only partial.
– Where no opposition is later filed, the Office should notify of a statement of grant
of protection under Rule 18ter(1), using Model Form 4, or notify of a statement of
grant of protection following a provisional refusal under Rule 18ter(2), using Model
Form 5.
Please note that if an Office has made the declaration under Article 5(2)(c) to allow the
notification of provisional refusal based on opposition after the 18-month time limit, it
would be necessary for the Office to use Model Form 2 to inform the International Bureau
in accordance with Rule 16(1).
(Rule 18bis of the Common Regulations)
II. Number of the International Registration:

IV. Information concerning a possible previous notification of provisional refusal:

A notification of provisional refusal:
has NOT been communicated by the Office (Rule 18bis(1)(a))
has been communicated by the Office (Rule 18bis(1)(b))
V. Information concerning the opposition period or the period to file observations:

(i) Date on which the opposition period or the period to file observations
begins:
(ii) Date on which the opposition period or the period to file observations ends:
VI. Signature or official seal of the Office sending the statement:
VII. Date of notification to the international Bureau:
Model Form 9: Ceasing of Effect of the Basic Application, of the Registration

Resulting Therefrom, or of the Basic Registration, and request for cancellation of
the international registration (Rule 22(1)(a) or (c) and (2)(b) of the Common
Regulations) [Note for filing]
This form should be used where the protection resulting from the international
registration may no longer be invoked, in whole or in part, because:
– the basic application is the subject of a final decision of rejection or has been
withdrawn; or,
– the basic registration is canceled, renounced, revoked, invalidated or has
lapsed,
provided that this happens within a period of five years from the date of the international
registration or as a result of an action commenced within that period. Where this is the
case, the Office is required to request the cancellation of the international registration, in
accordance with Article 6(4) of the Madrid Protocol.
The goods and/or services to be indicated here are as follows:
– those goods and/or services in the international registration concerned which
are affected by the facts and decisions, or
– if there has already been a partial cancellation, those, out of the remaining
goods and/or services, which are affected by the facts and decisions.
Where all the goods or services included in a given class are affected, the indication
should read “all goods (or all services) in class X”. In all cases, a clear indication of those
goods and/or services that are affected or those that are NOT affected should be
provided.

Model Form 9: Ceasing of Effect of the Basic Application, of the Registration
Resulting Therefrom, or of the Basic Registration, and request for cancellation of
the international registration (Rule 22(1)(a) or (c) and (2)(b) of the Common
Regulations)
IV. Facts and decisions affecting the basic application, the registration resulting therefrom,
or the basic registration and their effective date:
Please briefly state these facts and decisions:
Voluntary information:
Not resulting from an action brought by a third party
Resulting from an action brought by a third party, for example, an opposition or a
request for cancellation (“central attack”).
V. Effective date of these facts and decisions:
VI. Goods and services affected by the facts and decisions:

Please choose only one of the following options and, where applicable, list the goods
and/or services:
Total cancellation:
The facts and decisions affect all the goods and/or services of the international
registration
Partial cancellation:
The facts and decisions affect only the goods and/or services of the international
registration listed below
The facts and decisions do not affect the goods and/or services of the international
List of goods and /or services:
VII. Request for the cancellation of the international registration:

In accordance with Article 6(4) of the Madrid Protocol, the undersigned Office hereby
requests the cancellation of the international registration to the extent indicated under
item VI.
VIII. Signature or official seal of the Office making the notification:

IX. Date of notification to the International Bureau:
Model Form 10: Invalidation (Rule 19 of the Common Regulations) [Note for filing]
This form may only be used where the competent authorities of a designated Contracting
Party have invalidated (including, for example, revoked, annulled or canceled) the effects
of an international registration in its territory in accordance with Article 5(6) of the Madrid
Protocol and Rule 19 of the Common Regulations, and the invalidation is no longer
subject to appeal.
Invalidation can be pronounced because the holder has not complied with provisions of
the law of the Contracting Party, for example, concerning the use of the mark, the mark
has become generic or misleading or because it has been established that the mark
should have been refused when the designation was originally examined.
Where all the goods or services included in a given class are affected, the indication
should read “all goods (or all services) in class X”. In all cases, a clear indication of those
goods and/or services that are affected or those that are NOT affected should be
provided.
Model Form 10: Invalidation (Rule 19 of the Common Regulations)
III. Date of notification by WIPO:
IV. Name of the holder:
V. Authority which pronounced the invalidation:
VI. Date on which the invalidation was pronounced and its effective date:
– Date on which the invalidation was pronounced:
– Effective date of the invalidation (if possible):
VII. Scope of the invalidation:

Please indicate the scope of the invalidation by choosing only one of the three options
listed below and, where applicable, listing the goods and services concerned:
Total invalidation:
The invalidation concerns all the goods and/or services of the international
registration

Partial invalidation:
The invalidation concerns only the goods and/or services of the international
The invalidation does NOT concern the goods and/or services of the international
VIII. Signature or official seal of the Office making the notification:

The undersigned Office hereby states the fact that the invalidation is no longer subject
to appeal.
IX. Date of notification to the International Bureau:
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4)
This form may only be used where the Office of a designated Contracting Party, which
has been notified by the International Bureau of a change in ownership, declares that
this change in ownership has no effect in its territory.
Any such declaration must be sent to the International Bureau before the expiry of
18 months from the date on which the International Bureau sent the notification of the
change in ownership to the Office.
The goods and/or services to be indicated under item VI are those goods and/or services
in the international registration concerned that were the subject of the change in
ownership and that are affected by the declaration. Where all the goods or services
included in a given class are affected, the indication should read “all goods (or all
services) in class X”.
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4)
I. Office making the declaration:
IV. Reasons for which the change in ownership has no effect:
V. Corresponding essential provisions of the applicable law:

VI. Goods and/or services affected by the declaration:
Please, check only one of the following options and list, where applicable, the goods
and/or services concerned:
This declaration affects:
all the goods and/or services of the international registration that were the subject
of the change in ownership
only the goods and/or services of the international registration that were the
subject of the change in ownership and that are listed below:
VII. Information concerning a possible review or appeal:

Please select only one of the following options:
This declaration is final and no longer subject to review or appeal
This declaration is still subject to review or appeal
Please, provide the following information:
(iii) Whether the request for review or appeal has to be filed in a specific
language and/or through the intermediary of a representative whose
address is within the territory of the Contracting Party:
VIII. Signature or official seal of the Office making the declaration:
IX. Date of communication to the International Bureau:
(Rule 27(4)(e) of the Common Regulations) [Note for filing]
has previously made a declaration under Rule 27(4) using Model Form 11, now wishes
to communicate a final decision relating to that declaration.
The goods and/or services to be indicated under item IV are those goods and/or services
in the international registration concerned that were the subject of the change in
ownership and that are still affected by the declaration. Where all the goods or services
included in a given class are affected, the indication should read “all goods (or all
services) in class X”.

IV. Information concerning the goods and/or services:

Please indicate the scope of the declaration by choosing only one of the following options
and, where applicable, listing the goods and/or services:
The final decision confirms the previous declaration
The final decision reverses the previous declaration, meaning that the change in
ownership has effect in the Contracting Party
The final decision partially reverses the previous declaration, meaning that the
declaration still affects the goods and/or services listed below:
V. Signature or official seal of the Office making the declaration:
VI. Date of communication to the International Bureau:
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the
Common Regulations) [Note for filing]
has been notified by the International Bureau of a limitation of the list of goods and
services under Rule 25, declares that this limitation has no effect in its territory.
Any such declaration must be sent to the International Bureau before the expiry of
18 months from the date on which the International Bureau sent the notification of the
limitation to the Office.
The goods and/or services to be indicated under item VI are those goods and/or services
for which the international registration concerned continues to have effect in the
Contracting Party. Where the international registration is limited to the goods or services
included in a given class or classes only, the indication should read “limited to class X
only; other classes deleted” or “limited to classes X, Y, Z only; other classes deleted”.
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the
Common Regulations)

IV. Reasons for which the limitation has no effect:
V. Corresponding essential provisions of the applicable law:
VI. Goods and/or services affected by the declaration:

Please, check only one of the following options and list, where applicable, the goods
and/or services concerned:
This declaration affects:
all the goods and/or services of the international registration that were the subject
of the limitation
only the goods and/or services of the international registration that were the
subject of the limitation and that are listed below:
VII. Information concerning a possible review or appeal:

Please select only one of the following options:
This declaration is final and no longer subject to review or appeal
This declaration is still subject to review or appeal
Please, provide the following information:
(iii) Whether the request for review or appeal has to be filed in a specific
language and/or through the intermediary of a representative whose
address is within the territory of the Contracting Party:
VIII. Signature or official seal of the Office making the declaration:
IX. Date of communication to the International Bureau:
Model Form 14: Final Decision Stating That a Limitation Has No Effect (Rule
27(5)(e) of the Common Regulations) [Note for filing]

has previously made a declaration under Rule 27(5) using Model Form 13, now wishes
to communicate a final decision relating to that declaration.
The goods and/or services to be indicated under item IV are those goods and/or services
for which the international registration concerned continues to have effect in the
Contracting Party. Where the international registration is limited to the goods or services
included in a given class or classes only, the indication should read “limited to class X
only; other classes deleted” or “limited to classes X, Y, Z only; other classes deleted”.
Model Form 14: Final Decision Stating That a Limitation Has No Effect
IV. Information concerning the goods and/or services:

Please indicate the scope of the declaration by choosing only one of the following
options and, where applicable, listing the goods and/or services:
The final decision confirms the previous declaration
The final decision reverses the previous declaration, meaning that the limitation
has effect in the Contracting Party
The final decision partially reverses the previous declaration, meaning that the
limitation is limited to the goods and/or services listed below:
V. Signature or official seal of the Office making the declaration:
VI. Date of communication to the International Bureau:
[End of Model Form 14, Annex

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THE EUROPEAN UNION’S FRAMEWORK CONTRACT:

FWC SIEA 2018: LOT 2: Infrastructure, sustainable growth and jobs

Study to assess the socio-economic

Specific contract 2018/398478/1

Specific contract 2018/398478/1

GFA Consulting Group GmbH

Phone: +49 (40) 6 03 06 – 703

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

Interim Report (final), September 2019

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

Similarly, estimating the impact on domestic producers is also an approximation, the

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS or

1 See Samuelson, Paul A., Economics, an Introductory Analysis, McGraw-Hill

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

The purpose of intellectual property is to generate sufficient incentives to promote

In accordance to Mauritius Trade Easy, a website supported by the Ministry of Foreign

5 Comisión Económica para América Latina y el Caribe (CEPAL), op.cit.

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

As can be seen in Table 1, the trade deficit is permanent.

STUDY TO ASSESS THE SOCIO-ECONOMIC IMPACT OF THE

3. The exhaustion of trade mark rights

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In accordance to the exhaustion doctrine, an intellectual property owner loses some of

To find a balance in the application of the exhaustion doctrine it is mandatory to carefully

13 Ghosh, Shubha/Calboli, Irene, op. cit., p. 66.

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Therefore, it is important to distinguish whether parallel imports correspond to products

4.1 Causes of parallel trade

4.1.1 Price differences between import and export

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4.1.2 Transaction costs, market entry barriers

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4.2 Extent and importance of parallel trade

24 OECD (eds.), Synthesis Report on Parallel Imports, 2002, p. 232.

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4.3 Interest of the TM titleholders and the

4.4 Interest of the parallel importer

26 According to Frontier, Economics/Plaut, Erschöpfung von Eigentumsrechten: Auswirkungen eines Systemwechsels

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4.5 Consumer interest

However, in the discussion on the authorization of parallel imports into developing

In addition, consumers may to be indirectly disadvantaged as a developing country with

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• Parallel imports interfere with exclusive distribution contracts (those agreements

• By acquiring an imported product in parallel, the consumer could be purchasing

The principal opponents to international exhaustion are the titleholders of trademark

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• International exhaustion reduces the commercial incentive to invest in innovation,

• In the long term, therefore, international exhaustion could discourage investment

• In the long run, a regime of international exhaustion could limit instead of

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• Parallel imports prevent multinational corporations from exercising their

• Parallel imports also help to avoid price agreements in oligopolistic markets,

• If the exclusive distribution contracts do not allow parallel imports, monopolies

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Source: Own elaboration

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Global offer without

Source: Own elaboration