Circular entrepreneurship? What should you consider as an entrepreneur?

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Vintage reuse of clothes, restored retro furniture, replacing parts of appliances or reusing items has increased significantly in recent years. Whether from an international, European, national or regional level, it is determined that sustainability and ecology are high on the green agenda. So the question arises: why throw something away when it can be given a second life? The question now is to what extent this may affect the intellectual rights of entrepreneurs and those who innovate.

What is circular economy

Circular economy aims to minimise waste by reusing discarded products. This goes against traditional linear economic models, which is based on reproducing, preferably as cheaply as possible and without regard to a product's life cycle. As a result, used and discarded products quickly end up in landfills, where they are simply replaced by new products for the sake of convenience. The waste pile grows, increasing the risk that harmful products end up in the air, water or soil. This can lead to environmental damage, creating a need to reuse, repair, recycle or even share products. The circular economy model aims precisely to maximise the use of existing resources and assets. It is therefore a challenge for innovative entrepreneurs to meet this need.

What are the potential risks for your business if you want to do circular business?

Reselling a product bearing a trademark or logo of another trademark owner can only be done with the permission of the rightful trademark owner. This is only different when the trademark right is exhausted. Exhaustion of the trademark right means that the trademark holder's trademark right can "extinguish", so to speak. This is the case after products have been put on the market in the European Economic Area (EEA) by the trademark right holder or with its consent. In other words, the trademark owner is no longer the only one allowed to sell this trademarked product. And so it is permitted to resell used trademark products. The trademark owner can no longer oppose this.

Suppose you want to use refurbished screens for smartphones to put discarded devices back on the market. In that case you have to keep in mind that that using an initial owner's trademark or logo may lead to different interests of the seller, the buyer, and the manufacturer. If the trademark owner considers that the condition of the original product has deteriorated after it was put into circulation, he can oppose it. In that case, therefore, the trademark right remains intact and there is no “extinction”. In summary, the trademark owner will be able to oppose when the reputation of his trademark is affected. Yet another example of the reputation being affected is, for example, when it is not clear that the resale consists of second hand products.

A second possible conflict situation arises when a product is restored (= a repair) or when parts of devices are replaced. In certain cases, a repair may lead to the use of necessary parts belonging to a protected device. This may be the case with design protection or patent protection. For spare parts, the EU has decided under the sustainability agenda that spare parts for complex products are excluded from design protection if they are used to restore a product to its original form. However, this only applies to repairs and if the replacement part looks exactly like the original part (for example, when replacing a damaged door or a broken rear light of a car).

In short, be mindful of the intellectual property rights of others and try to check whether these rights have been exhausted. Moreover, make sure that the reputation of the rightful owner is not damaged.