A European consumer goods brand discovers that its products – sold legitimately in Turkey – are now appearing on Georgian retail shelves at prices well below the authorised distributor's range. The brand holds a registered trademark in Georgia. Its exclusive distributor demands action. Yet when counsel examines the position under Georgian intellectual property legislation, the answer is far from simple. The exhaustion doctrine, the scope of the mark's protection, and the limited volume of published court decisions each pull in different directions.
Georgia applies an international exhaustion principle under its intellectual property legislation. This means that a trademark or related IP right is generally exhausted once goods are placed on the market anywhere in the world by or with the rights holder's consent. An IP registration in Georgia does not, by itself, block the resale of genuine goods that were lawfully marketed abroad. The practical scope of this rule – including its limits where goods are altered, repackaged, or where consent is contested – continues to be shaped by Georgian court practice.
This analysis examines the doctrinal basis of exhaustion in Georgia, competing interpretations that arise in practice. The gap between the written rules and what courts actually decide, cross-border implications for CIS-region clients. Additionally, the strategic recommendations that follow.
Doctrinal foundations: what exhaustion means in Georgian IP law
The concept of rights exhaustion determines the moment at which an IP holder loses the ability to control further distribution of a product. Two principal models exist worldwide. Under national exhaustion, rights are spent only when goods enter the domestic market with the holder's consent. Under international exhaustion, rights are spent wherever in the world the first authorised sale occurs.
Georgian intellectual property legislation adopts the international exhaustion model for trademarks. This choice reflects Georgia's position as an open trade economy with deep integration into regional transit corridors. It also aligns Georgia with a number of CIS jurisdictions that moved toward international exhaustion as a deliberate trade policy tool.
In practical terms, the international model means the following. Where a rights holder – or a licensee, authorised distributor. Alternatively, other party acting with the holder's consent – first sells goods in. Say, Germany or the UAE, a third party may import those same goods into Georgia without the trademark owner's further permission. The IP registration in Georgia grants the holder rights over the mark. It does not grant an additional right to segment markets by geography.
This distinction carries significant commercial weight. Exclusive distributors in Georgia frequently build their business models on the assumption that their territory is protected. When parallel imports undercut that assumption, the dispute is not primarily a legal one – it is a commercial one that the law will not always resolve in the distributor's favour.
Georgian civil and commercial legislation also recognises the principle that consent given in one transaction cannot be unilaterally retracted in a subsequent one involving the same goods. This underpins the exhaustion doctrine at a foundational level. Courts have applied this reasoning to reject claims by rights holders who attempted to characterise ordinary resale as infringement.
One important qualification: exhaustion under Georgian law attaches to the specific goods placed on the market, not to the mark in the abstract. If a parallel importer sells goods that were never authorised for sale by the rights holder at any stage in the supply chain, exhaustion does not apply. Counterfeit goods fall entirely outside the exhaustion analysis. The practical challenge is demonstrating where in a complex supply chain consent was or was not given – a factual question that can be genuinely difficult to resolve.
Competing interpretations and the gap between statute and practice
Georgian IP legislation is relatively concise on the exhaustion question. The statute establishes the international rule but leaves several contested situations unaddressed. This creates space for divergent court interpretations, particularly in three recurring scenarios.
First: goods that have been repackaged or relabelled. Courts in Georgia have encountered situations where a parallel importer repackages goods – removing original-language labelling or adding new text – before selling in the domestic market. Rights holders argue that repackaging breaks the chain of consent and constitutes independent use of the mark. Parallel importers counter that the mark itself is untouched and the goods remain genuine. Georgian courts have generally scrutinised whether the repackaging materially affects the product or the mark's reputation. Where repackaging is purely cosmetic and does not alter the product itself, exhaustion arguments have tended to prevail. Where the packaging change creates a risk of confusion about origin or quality, courts have shown more willingness to consider infringement claims.
Second: quality differentiation between markets. Some rights holders distribute different product variants under the same trademark in different markets – for example, formulations adapted to local regulatory requirements. If a parallel importer brings the "other market" variant into Georgia, the rights holder may argue that consent to sell in that market did not extend to the Georgian variant. Georgian courts have not yet produced a settled line of authority on this point. Practitioners in Georgia note that this argument requires careful evidentiary preparation: the rights holder must demonstrate that the products are genuinely distinct and that the distinction is material, not merely cosmetic.
Third: conditional consent and distribution agreement restrictions. Rights holders sometimes argue that consent to a first sale was conditioned – for example, a distribution agreement required the goods to remain in a specific territory. Georgian law distinguishes between the contractual obligation binding the authorised party and the IP right itself. A breach of a distribution agreement by the authorised seller may give the rights holder a contractual remedy against that seller. It does not automatically restore the IP right against a third-party parallel importer who acquires the goods without knowledge of the restriction. This gap between contractual and IP protection is one of the most commercially significant in Georgian practice.
For businesses evaluating their position in the Georgian market, this gap is a concrete risk. A company that relies solely on its distribution agreement to prevent parallel imports – without also deploying trademark application strategies, customs recordal, or other IP registration tools – is operating with incomplete protection. The lost opportunity is the failure to build a layered enforcement position before parallel trade begins.
Detailed guidance on structuring IP portfolios and trademark protection strategies in Georgia is available for clients building or reviewing their regional registrations.
The role of trademark registration and procedural tools
A registered trademark in Georgia provides the holder with a defined set of rights against unauthorised use. The registration does not override the exhaustion principle, but it does enable several procedural tools that an unregistered rights holder cannot access.
Customs recordal is among the most practically valuable. Georgian customs legislation permits rights holders to record their IP rights with the customs authority. Recorded rights allow customs officers to detain shipments of suspected infringing goods at the border while the rights holder investigates. For parallel imports, this mechanism is more limited – customs recordal is most effective against counterfeit goods. Genuine goods being imported in parallel are not counterfeit, and a rights holder who uses the customs process to block genuinely authorised goods faces potential liability for wrongful detention.
Nevertheless, customs recordal creates a checkpoint. Where supply chains are opaque and the rights holder cannot immediately verify whether goods are genuine or counterfeit, border detention allows time for investigation. This is a legitimate use of the mechanism, provided the holder acts in good faith and does not pursue detention as a de facto trade restriction.
Opposition proceedings before Sakpatenti (the National Intellectual Property Center of Georgia) are relevant at an earlier stage. Where a parallel importer or a local trader attempts to register a mark that conflicts with an existing registration, the rights holder may oppose. Opposition proceedings in Georgia follow a structured administrative process. The holder must demonstrate prior rights and likelihood of confusion. Where a trader attempts to register a variant of the original mark specifically to facilitate parallel trade. for instance. Registering a transliteration to sell imported goods under a locally adapted name. opposition is a viable blocking mechanism.
The Nice classification system applies to trademark applications in Georgia. Rights holders should ensure that their IP registration covers all relevant classes under the Nice classification for the goods at issue. A registration covering one class but not another – for example, covering the product itself but not related accessories or services – leaves gaps that can be exploited. Practitioners recommend periodic audits of the classification scope to ensure that the registration matches the actual commercial footprint of the brand.
Infringement claims in Georgian courts remain available where the exhaustion defence does not apply. An infringement claim is viable where the parallel importer uses the trademark in advertising in ways that go beyond mere resale – for example, creating the false impression of an authorised dealership or service network. Georgian courts have held that exhaustion permits resale but does not permit the parallel importer to present itself as an authorised agent of the rights holder.
Courts in Georgia have also addressed situations where parallel importers sell goods whose quality has deteriorated in transit or storage. Where the goods no longer conform to the quality standards associated with the mark. because of improper storage or handling by the parallel importer. the rights holder may be able to establish an infringement claim based on reputational damage. This is a narrow but real avenue, and it requires the rights holder to gather technical evidence about product condition.
To receive an expert assessment of your IP enforcement options in Georgia, including trademark application, opposition proceedings, and infringement claim strategies, contact us at info@ferrazwhitmore.com.
Cross-border implications for CIS-region clients
Georgia occupies a distinctive position in the CIS region. It is not a member of the Eurasian Economic Union (EAEU), which operates a regional exhaustion regime among its member states. Georgia's international exhaustion approach therefore differs fundamentally from the rules that apply in Russia, Kazakhstan, Armenia, Belarus, and Kyrgyzstan.
This difference creates structured arbitrage opportunities – and corresponding risks. A product lawfully sold in a EAEU member state is subject to EAEU-wide exhaustion within the union. The same product, once it crosses into Georgia, is subject to Georgian international exhaustion rules. This means that Georgian law does not recognise the EAEU regional exhaustion structure; it treats first sales in EAEU countries the same as first sales anywhere else in the world.
For a brand with authorised distributors in both Georgia and, for example, Kazakhstan, this creates a significant exposure. Goods placed on the Kazakh market may flow into Georgia through transit corridors without the brand having any additional IP-based tool to stop them. The brand's Kazakh distribution agreement – even if it includes a no-export clause – does not bind a Georgian third party who acquires the goods downstream.
A comparative analysis of parallel import rules in a neighbouring CIS jurisdiction is available in our deep analysis of parallel import and IP rights exhaustion in Russia. This examines the EAEU framework in detail and its practical divergence from Georgian rules.
The strategic implication for CIS-region brand owners is clear. A single-jurisdiction IP protection strategy is insufficient. Rights holders who operate across the CIS region need to map the exhaustion rules of each market separately and calibrate their distribution agreements, pricing structures, and registration portfolios accordingly. Georgia's open exhaustion approach means that price differentials between Georgia and neighbouring markets will tend to generate parallel trade if not structurally managed.
There are also technology-sector dimensions to parallel import in Georgia. Digital goods, software licences, and AI-enabled products raise distinct questions under Georgian IP legislation. The question of whether digital exhaustion applies – and whether a rights holder can restrict resale of a software licence originally sold in another jurisdiction – is genuinely unsettled. Practitioners advise caution when structuring digital product distribution into Georgia without dedicated licence terms. Our analysis of AI and technology law considerations in Georgia addresses related issues for technology businesses entering the market.
One further cross-border dimension deserves attention: enforcement of judgments. If a Georgian court rules in favour of a rights holder on an infringement claim arising from parallel import. The enforcement of that judgment against a foreign parallel importer may require separate proceedings in the importer's home jurisdiction. Georgia has bilateral enforcement arrangements with a number of states, but coverage is not universal. Rights holders should assess enforceability before initiating litigation, rather than discovering the limitation after a favourable judgment.
For a tailored strategy on parallel import management and cross-border IP enforcement in Georgia and across the CIS region, reach out to info@ferrazwhitmore.com.
Strategic recommendations and outlook
The legislative regime in Georgia is unlikely to shift away from international exhaustion in the near term. Georgia's EU Association Agreement and its commitment to open trade principles create strong policy incentives to maintain the current approach. Rights holders should therefore plan around the existing rules rather than wait for legislative change.
Several strategies have proven effective in the Georgian market.
Layered IP registration is the starting point. A rights holder should ensure that trademark applications cover all relevant product classes under the Nice classification, including any associated packaging, advertising materials, or accessory goods. Where digital or software products are involved, registration of relevant marks in the technology services class should be confirmed. Gaps in IP registration are routinely exploited by parallel importers and local traders who register similar marks to facilitate their activities.
Contractual architecture at the distribution level cannot substitute for IP protection, but it provides complementary leverage. Distribution agreements should include provisions that enable the rights holder to monitor supply chain flows, require notification of unusual volumes, and permit audit rights. These provisions do not bind third-party parallel importers, but they create accountability within the authorised network and allow the rights holder to identify the source of leakage.
Customs recordal and border monitoring should be maintained even where parallel imports of genuine goods are the primary concern. The intelligence gathered through customs monitoring – about volumes, entry points, and supply chain patterns – is valuable for both enforcement decisions and commercial strategy.
Pricing and market positioning are ultimately the most durable tools. Parallel trade is driven by price arbitrage. Where the authorised Georgian price is significantly higher than prices in neighbouring markets, parallel trade will emerge regardless of the legal position. Rights holders who price competitively, offer meaningful after-sales service differentiation, or build brand loyalty through authorised channels reduce the commercial attraction of parallel imports.
Litigation as a last resort, not a first step. Georgian court proceedings in IP matters can take between one and three years to reach a final decision. The costs – in legal fees, management time, and reputational exposure – are significant. Rights holders should reserve litigation for cases where the parallel importer crosses clear lines: use of the mark in misleading advertising, sale of deteriorated goods, or registration of conflicting marks. For straightforward parallel import of genuine goods, a commercial response is generally more efficient than a legal one.
The outlook for Georgian IP law is one of gradual doctrinal development. The Sakpatenti (National Intellectual Property Center of Georgia) has been progressively strengthening its administrative procedures, and Georgian courts are developing more consistent approaches to IP disputes. As Georgia deepens its alignment with EU standards under its Association Agreement. There is a reasonable expectation that the treatment of contested exhaustion scenarios. particularly around repackaging and quality differentiation. will converge toward EU practice over time. Rights holders who build their strategies around EU-standard doctrines today are likely to find themselves well-positioned as Georgian case law matures.
Frequently asked questions
Q: Does Georgia apply national or international exhaustion of IP rights?
A: Georgia's intellectual property legislation adopts an international exhaustion principle for trademarks. This means that once a rights holder or an authorised party places goods bearing a registered mark on the market anywhere in the world. The holder cannot generally use trademark rights to block their resale in Georgia. In practice, the boundaries of this principle are still being tested in Georgian courts, particularly where quality control or authorisation arguments are raised.
Q: Can a trademark owner stop parallel imports into Georgia through an infringement claim?
A: A straightforward infringement claim based solely on the fact of importation is unlikely to succeed where the goods are genuine and were first placed on the market by or with the rights holder's consent. However, an infringement claim may still be viable if the goods have been materially altered, repackaged without authorisation, or if the parallel importer uses the trademark in advertising in ways that damage the mark's reputation. Rights holders should also consider whether opposition proceedings or customs recordal offer earlier-stage leverage.
Q: How long does trademark registration in Georgia take, and what Nice classification applies?
A: Trademark registration with the National Intellectual Property Center of Georgia (Sakpatenti) typically takes between four and eight months from filing to grant, assuming no objections are raised. Georgia uses the Nice classification system, so applicants must identify the relevant class or classes covering their goods and services. If an opposition is filed during the publication period, proceedings can extend the timeline significantly – sometimes by a further six to twelve months.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our IP practice covers trademark application, IP registration, opposition proceedings, and infringement claim strategy across CIS, European, and Asia-Pacific markets. As an international law firm in Georgia and the wider CIS region, we combine civil law tradition with common law analytical rigour to deliver commercially grounded advice. Our attorneys have handled parallel import disputes and IP enforcement matters across both common law and civil law systems, including before administrative bodies such as Sakpatenti. Engaging a lawyer in Georgia with cross-border experience in IP and technology matters is essential where parallel trade intersects with complex supply chains. The firm's Lisbon base provides direct access to EU regulatory developments that increasingly influence Georgian IP practice. To discuss how Georgia's exhaustion rules affect your IP strategy, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.