Law in India:

            Since the Agreement on Trade Related Aspects of Intellectual[1] has allowed the participating countries to form their own methods to deal with exhaustion of intellectual property right, India has dealt with it under the Trade Marks Act, 1999.[2]

            Section 30 of the Act places certain limitations on the effect of registered trademark i.e. it specifically excludes certain acts as not constituting infringement. Sub-section 3 of Section 30 establishes that once the a person acquires the goods legitimately, the trademark owner cannot claim infringement for the sale in the market or dealing of those goods by the person by claiming that “the registered trade mark having been assigned by the registered proprietor to some other person, after the acquisition of those goods or the goods having been put on the market under the registered trade mark by the proprietor or with his consent.”

            Sub-section 4 of Section 30 acts as an exception to sub-section 3. It limits the application of Section 30(3) when legitimate reasons to oppose the subsequent sale or dealing with respect to the goods are given by the trademark owner. These reasons includes situations where the trademark owner can prove that “conditions of goods have been changed or impaired” and therefore, allowing dealings in those goods will adversely affect the rights and reputation of the trademark owner.

            The cumulative effect of sub-section 3 and 4 of Section 30 gives legitimacy to subsequent sale or further dealings by a person once the goods have been acquired legitimately from the trademark owner, unless there has been a material change in the goods which may possibly tarnish the reputation of the registered trademark and its owner.

Important Case Law:

            The most important case in India which dealt with the issue of parallel importation and doctrine of exhaustion is the case of Kapil Wadhwa and Ors. v. Samsung Electronics Co. Ltd. and Ors.[3] Here, one Kapil Wadhwa was importing and selling the printers manufactured by Samsung at a lower price than Samsung themselves. The Single Judge decided that the acts of Mr. Wadhwa were illegal and that India followed National Exhaustion. However, the Division bench overturned that decision and held that India follows International Exhaustion. The decision of the Division became the law of the land and International Exhaustion still remains the doctrine followed in India. The owner of the registered trademark cannot, thus, prevent parallel importation and subsequent sale of its products in India if the products were purchased legitimately as long as no material detriment to the value or reputation of the trademark and its owner can be proved.

Conclusion:

Parallel Importation and the Doctrine of Exhaustion adopted by a country has various economic and legal ramifications. While allowing parallel imports and subsequent sales helps in preventing monopolistic tendencies of the trademark owner and allows for making the goods available to the public at reasonable rates, it also makes it increasingly difficult to protect the intellectual property rights of the owners. The position adopted by the Indian legislature as well as the Courts does an excellent job of balancing these diverging interests of consumers and the trademark owners.

BY

TANVEER MALNAS

B.A.L.L.B – 4th Year

ILS LAW COLLEGE, Pune

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[1] The WTO Agreement on Trade-Related Aspects of Intellectual Property, 1994, art. 6.

[2] The Trade Marks Act, 1999 (Act 47 of 1999), sec 30.

[3] MANU/DE/4894/2012