International Trademark International Trademark rights and Parallel rights and Parallel

ImportsImports

SANJEEVSANJEEV KUMAR KUMAR CHASWALCHASWALADVOCATE AND IPR ATTORNEYADVOCATE AND IPR ATTORNEY

LL.M (IPR,ARB&ADR)LL.M (IPR,ARB&ADR)M.S (CYBER LAW AND CYBER SECURITY)M.S (CYBER LAW AND CYBER SECURITY)

Intellectual Property RightsIntellectual Property Rights-- A IntroA Intro

• Intellectual Property Rights are the rightsgiven to persons over the creation of theirminds. They usually give the creator anexclusive right over the use of his or hercreation for a certain period of time .creation for a certain period of time .

• Like any other property, ownership ofintellectual property can be transferred.

• Once a product protected by an IPR is soldthe IPRight is “exhausted ”.

Purpose of Trademark Law Purpose of Trademark Law • The trademark rights exist in each country with basic purpose

of a trademark is to ensure according to that country’sstatutory provisions to ensure:

• A trademark indicates source of origin of goods.• Minimal consumer confusion by clearly relating to trademark.• Indentifying the territorial character from a particular

manufacturer.manufacturer.• Consumer satisfaction through quality control that the

foundational intellectual property conventions.• Thus, for example, the mark Dairy of national treatment. As

Milk on chocolate bars indicates that those particular differentrules of trademark law possess a territorial bars have beenmanufactured by Cadbury and the character for differentreasons: customers can expect such bars to be of quality thatthe public has come to associate with Cadbury’s

Trademark is Territorial lawTrademark is Territorial law• Trademark rights are territorial as the products identify the a

source of origin.• Trademark laws are territorial as they are promulgated

primarily by national law making , whether judiciary or legislature.

• A trademark is acquired through national statutory provisionsThus, a manufacturer has to obtain separate registrations inThus, a manufacturer has to obtain separate registrations indifferent countries for entitled to protection.

• Trademark rights are enforced on the basis of respective national statutory provisions.

• This means that, irrespective of the trademark owner holding rights in different countries, an action for infringement will lie so far as it involves the vindication of the rights available in such country .

•

Doctrine of Exhaustion of IP RightsDoctrine of Exhaustion of IP Rights

• It is a concept in Intellectual property law whereby anintellectual property owner will “lose” or "exhaust" certainrights following the sale of that IP.

• Exhaustion occurs at the moment when the intellectualproperty rights (IPR) holder’s control over the use anddisposition of goods and services embodying IPR ceasesin order to permit the free transfer of goods and servicesin order to permit the free transfer of goods and serviceswithin and across national borders. This generally occurswhen goods and services are first sold or placed on themarket.

• For example, the ability of a trademark owner to controlfurther sales of a product bearing its mark is generally"exhausted".

• The rights of commercial exploitation for a given productend with the product’s first sale.

• Exhaustion of Intellectual Property Rights, also known as "TheFirst Sale Doctrine" -

• Basically the doctrine says whenever a good protected bypatents, copyrights, or trademarks is sold, then the owner of thegoods has realized the benefits of the protection. Those rightsare "exhausted" at the point of first sale.

• That "first purchaser" of the good is free to resell the goodwherever he wishes, even if he is competing against the originalproducer.

• The exhaustion doctrine has received the blessing of the• The exhaustion doctrine has received the blessing of theEuropean Court of Justice (Merck v. Stephar, 1981) and theSupreme Court of Japan.

• The WTO rules, specifically the TRIPS accords, Article 6, permitthe "exhaustion doctrine." Countries make their own laws onwhether to permit parallel imports--if they do, they have ruled infavor of "Exhaustion" or "First Sale" doctrine. Pharmaceuticalfirms object to the Exhaustion Doctrine (and Parallel Imports),and lobby vigorously against both.

Intellectual property Legal principle that, in general, thefirst sale of a copyrighted, patented, or trademarked goodexhausts the Copyright patent Trademarkowners intellectual property right (IPR) in that he or shecannot control the distribution or resale of the good.Therefore if 'A' (the IPR owner) sells to 'B,' then 'B' canTherefore if 'A' (the IPR owner) sells to 'B,' then 'B' cansell to 'C' without the approval of 'A.' Also called doctrineof first sale.

•

PATENTS EXHAUSTIONPATENTS EXHAUSTION

• For a patent, the Doctrine of Exhaustion means once apatent owner makes a first sale of an item covered by apatent, the patent owner is not entitled to any additionalroyalty or compensation for subsequent sales of the sameitem.

• The subsequent purchasers have an “implied license” to usethe invention. However, like any rule there are exceptions.the invention. However, like any rule there are exceptions.What if the sale of the patented item was made “out theback door” by a licensee? If such a sale was not anauthorized sale and the patent owner did not receivecompensation for the sale, the patent owner could sue apurchaser for infringement. Another exception is if apatented item is merely being leased or licensed, then asubsequent sale of that item would not exhaust the owner’spatent rights.

EXHAUSTION UNDER PATENT ACTEXHAUSTION UNDER PATENT ACT

SECTION 107 B EXHAUSTION OF RIGHTS1. For the purposes of this Act, the rights of a patentee oranyone claiming through such patentee shall beexhausted after a patented article has been sold onceanywhere in the world (including within India), by or withthe authorization of such patentee.the authorization of such patentee.2. The provisions of section 107B(1) shall apply in caseof sale of any patented article, notwithstanding:any contractual stipulationany notice in relation to the article placed by the patenteeor her authorized representatives or any other partyselling the patented article; unless such notice isessential to ensure public health or safety.

TRADEMARKS EXHAUSTIONTRADEMARKS EXHAUSTION

• In trademark law, a trademark owner cannotcontrol further sales of a product bearing itstrademark after the first sale. Thus, a buyer canresell a product bearing the trademark.

• Of course, the first sale must be an authorized or• Of course, the first sale must be an authorized orunrestricted sale. If the first sale were to someoneoutside an authorized territory, such as in thecase of “gray market” goods, then the trademarkrights would not be exhausted.

EXHAUSTIONS UNDER T M ACTEXHAUSTIONS UNDER T M ACT• Section 30(3) of the Indian Trademarks Act, 1999 which

provides that: Where the goods bearing a registered trademark are lawfully acquired by a person, the sale of the goodsin the market or otherwise dealing in those goods by thatperson or by a person claiming under or through him is notinfringement of a trade by reason only of a)……………………

• b) the goods having been put on the market under theregistered trade mark by the proprietor or with his consent.registered trade mark by the proprietor or with his consent.

• The wording of Section 30 is wide enough to subsume bothnational and international exhaustion principles. Section 30(3) provides that the general legal proposition that oncecertain goods bearing a registered trademark are lawfullyacquired by a person, the subsequent sale of the goods inthe market or otherwise dealing in those goods is not aninfringement.

COPYRIGHTS EXHAUSTIONCOPYRIGHTS EXHAUSTION• The first-sale doctrine plays an important role

in copyright by limiting certain rights of a copyright owner.The doctrine enables the distribution chain of copyrightedproducts, library lending, gifting, video rentals andsecondary markets for copyrighted works (for example,enabling individuals to sell their legally purchased booksor CDs to others). The doctrine is also referred to as the"right of first sale," "first sale rule," or "exhaustion rule.""right of first sale," "first sale rule," or "exhaustion rule."example, the distribution right could be infringed when aretailer acquires and sells to public unlawfully made audioor video CD’s or tapes.

• The first-sale doctrine creates a basic exception to thecopyright holder's distribution right. Once the work islawfully sold or even transferred gratuitously, the copyrightowner's interest in the material object in which thecopyrighted work is embodied is exhausted.

EXHAUSTION UNDER COPY RIGHT ACT

• The first sale doctrine with respect to literary works isprimarily derived from Section 14 of the Act. Section14(a)(ii) authorizes copyright owners “to issue copies of thework [they own] to the public not being copies already incirculation”

• Explanation clarifies that “a copy which has been sold onceshall be deemed to be a copy already in circulation”.

• By the “first sale” of a copy, the copyright owner exhaustshis right to control further sale or distribution of that

particular copy.

The precise scope of exhaustion, however, hinges on thequestion of the applicable territory:Is a legal copy, which has been lawfully sold once in aparticular territory, deemed to be “already in circulation”1. only within the particular territory/ country of sale, or2. worldwide, or3. in the territory designated by the copyright owner for itssale?sale?In the first case, a copy once sold in India would beconsidered to be “already in circulation” only within India,and the first sale would result in “national exhaustion”. Byanalogy, in the second and third cases, the first sale wouldresult in the “international exhaustion” and, possibly, the“regional exhaustion” of rights, respectively.

Case Law in Copyright ExhaustionCase Law in Copyright Exhaustion• Justice Bhat in Warner Bros. vs V.G Santosh Cs(OS)

1682/2009 explicitly recognised that, in the context ofcopyright law, while the principle of internationalexhaustion may apply to literary, musical, dramatic orartistic works; it does not apply to cinematographic film[and to sound recordings as well]. This case involved theimport from US into India of legally purchased DVDs offilms produced by Warner Bros. which were not yetfilms produced by Warner Bros. which were not yetreleased for public viewing in India. He based his decisionon the difference between the wordings of Sec. 14(1)(d)[and (e)] and 14(1)(a)/(b)/(c). While under the former, thecopyright owner continues to exercise his right to sell orgive on hire a particular copy “regardless of whether suchcopy has been sold or given on hire on earlier occasions”;under the latter, he ceases to exercise these rights overcopies which are “already in circulation.”

CASE LAW Contd….

In John Wiley & Sons Inc. v. Prabhat Chander KumarJain IA No. 11331 of 2008 in CS (OS) No. 1960 of 2008order dated 17?5?2010 (Del)., the Delhi High Court statedthat “as the express provision for International Exhaustion isabsent in our Indian law, it would be appropriate to confinethe applicability of the same to regional exhaustion”.

In this case, LPEs intended for sale in the Indiansubcontinent were being sold online by the defendants afterpurchasing them in the territory designated by the publisher.The sale, and offer for sale, of such LPEs, meant forexclusive use in India, by the defendant, who is clearlytargeting overseas buyers, to whom such products cannot besold at Indian prices, constitutes acts of infringement underSection 51 of the Copyright Act.

PROPOSED AMENDMENT TOCOPYRIGHT LAW

• The Copyright (Amendment) Bill, 2010 (the Bill) proposes torecognize the principle of international exhaustion for allclasses of works by amending Section 2(m) of the Act (whichdefines infringing copies).

• The Bill proposes to add a proviso to Section 2(m) of the Actstating:

“Provided that a copy of a work published in any countryoutside India with the permission of the author of the work andimported from that country into India shall not be deemed tobe an infringing copy;”

• If this proposed amendment were to become law, it wouldbecome abundantly clear that India follows a principle ofinternational exhaustion.

TYPES OF EXHAUSTION OF RIGHTSTYPES OF EXHAUSTION OF RIGHTS• There are three kinds of exhaustion of rights:• a) National exhaustion of rights : National exhaustion of

rights refers to one of the limits of intellectual propertyrights. Once a product protected by an IP right has beenmarketed either by manufacturer or by others with hisconsent, the IP rights of commercial exploitation over thisgiven product can no longer be exercised by manufacturegiven product can no longer be exercised by manufactureas they are exhausted. Any proper use of the goods afterthe first sale of the product would not amount toinfringement. The concept of national exhaustion does notallow the IP owner to control the commercial exploitation ofgoods put on the domestic market by the IP owner or withhis consent. However, the IP owner (or his authorizedlicensee) could still oppose the importation of originalgoods marketed abroad based on the right of importation.

• Regional exhaustion of rights :Regional exhaustion of rights refers to the first sale of theIP protected product by the IP owner or with his consentexhausts any IP rights over these given products not onlydomestically, but within, the whole region and parallelimports within the region can no longer be opposed basedon the IP right.

• International exhaustion of rights :Once a product is exported in a market outside India andthe further sale of the same product there, would comeunder the purview of International exhaustion of rights butat the same time if the goods are purchased from theinternational market and sent back to India for the purposeof selling them here would not be allowed as per principle

of parallel imports.

EXCEPTIONS PRINCIPLE OF EXHAUSTIONEXCEPTIONS PRINCIPLE OF EXHAUSTION

• A parallel import is a practice whereby an unauthorizedthird party exploits the doctrine of exhaustion and importsgoods which are less expensive in one country to be soldparallel with more expensive goods which are either nonimported or imported from a source controlled by thetrademark owner.

• Parallel importation refers to the import of goods outside• Parallel importation refers to the import of goods outsidethe distribution channels contractually negotiated by themanufacturer. Because the manufacturer / IP owner has nocontractual connection with a parallel importer, thedistribution channels are not controlled by themanufacturer/IP owner and hence he opposes suchimportation in order to separate his market

NO WORLD CONSENSUS ON

EXHAUSTION OF RIGHTS

• There is currently no international treaty in the field oftrademarks dictating a standard of national or internationalexhaustion. The Paris Convention does not address theissue. The Agreement on Trade Related Aspects ofIntellectual Property (TRIPs) is deliberately neutral on theIntellectual Property (TRIPs) is deliberately neutral on thesubject. Article 6 of TRIPs states:For the purposes of dispute settlement under thisAgreement...nothing in this Agreement shall be used toaddress the issue of the exhaustion of intellectual propertyrights.

• In general, it was found that most countries favor someconcept of national exhaustion.

EXHAUSTION AND PARALLEL IMPORTS

• A standard of national exhaustion appropriately takesinto account many brand protection concerns that arenot addressed under a standard of internationalexhaustion.

• The prices at which products are sold can vary fromcountry to country for a great variety of legitimatecountry to country for a great variety of legitimatereasons, among them differences in regulatoryrequirements, environmental standards, labor andmaterial costs, and government subsidies and taxes.

• Parallel importers exploit these conditions by buyingproducts in a market where they are relatively cheapand selling them where the price is higher.

Parallel importsParallel imports• Parallel import means that patented or marked goods are

purchased in a foreign market and resold in the domesticmarket. These are known as passive parallel imports.

• Parallel imports involve cross-border trade in a productwithout the permission of the manufacturer or right holder inthe importing country.

• This type of trade generally occurs where there is asignificant difference in price, quality, or availability of thesignificant difference in price, quality, or availability of thesubject product in the second country.

• The Parallel import products are different from counterfeit orpirate goods, since they are legally manufactured and soldin the first country by the right holder, and in some countriestheir importation is legal.

• Parallel imports are often referred to as grey product, andare implicated in issues of international trade and IPR

APPROACH FOLLOWED BY DIFFERENT

COUNTRIES• All countries allow parallel imports. However, little

uniformity exists in the overall approach.• Article 6 of the General Agreement on Tariffs and

Trade/the Agreement on Trade-Related Aspects ofIntellectual Property Rights (TRIPS), of the World TradeOrganization (WTO) Agreement, provides that appropriateOrganization (WTO) Agreement, provides that appropriatelaws regarding parallel imports should be drafted in such away that they do not violate the non-discrimination rules ofthe most-favoured national and international treatments.

• ‘Nothing in this Agreement shall be used to address theissue of the exhaustion of intellectual property rights.’

• It is therefore clear that the treatment of parallel imports issubject to the national laws of different countries

• There are two prevailing theories regarding exhaustion,namely, that once goods bearing a trademark have beenplaced into commerce by, or with the consent of, thetrademark owner either

• (a) the owner cannot use his trademark rights to preventthe further distribution of such goods anywhere, the so-called international exhaustion rule; or

• (b) he cannot use his trademark rights to prevent furtherdistribution of such goods in the same country, but maydistribution of such goods in the same country, but mayprevent such distribution in other countries, the so-callednational exhaustion rule.

THE UNITED STATES APPROACHTHE UNITED STATES APPROACH• The US adopted the universal rule (international

exhaustion through s526 of Tariff Act 1930 and s42 ofLanham (Trademark) Act 1946, with respect to parallelimports). Under these provisions, once a genuine trademarked product is placed in the global market by, or withthe consent of, the trade mark owner, no infringement ofthe rights of the trade mark owner occurs.the rights of the trade mark owner occurs.

• Although there are a number of laws in the United Statesthat address the issue of parallel imports of trademarkedproducts, the treatment of parallel imports is fairly uniform.In an early decision permitting the unauthorized importationand sale of genuine bottled water from Europe, it was heldthat once a trademarked product is placed on the market,trade mark rights may not be used to control the product'sfurther destination Apollinaris Co. Ltd v. Scherer , 27 Fed18 (SDNY 1886).

• Although decided under common law principles of trademarklaw, this early decision was subsequently applied to thecodified trademark law and has remained the law to this dayunder the infringement provisions of the present day LanhamAct.

• The U.S. Supreme Court has recently decided a caseinvolving parallel imports in the copyright context, althoughthe imports involved would not normally be thought of aswarranting copyright protection. The goods were hair careproducts that contained a label bearing copyrightable subjectmatter.

• The Copyright Law provides the right to exclude others fromusing any one of a bundle of exclusive rights. The primaryrights provided by Section 106 of the Copyright Act are theright to exclude others from (1) reproducing the copyrightedwork, (2) preparing derivative works, (3) distributing copiesof a work, (4) performing a work publicly and (5) publiclydisplaying a copyrighted work

The European Union approachThe European Union approach

• The European Union has adopted a regional exhaustionrule that originally developed through decisional law on thetheory that the ability to prevent further distribution ofgenuine goods would distort trade among the memberstates.

• Thus the principle of exhaustion of rights was adopted withrespect to trademarks, although this has been adopted onlyrespect to trademarks, although this has been adopted onlyon a regional level; namely, only with respect to goods firstplaced on the market within the Community, or previouslyimported into the Community through a member state.

• This regional exhaustion rule has been codified in theharmonization directive [8] ("Directive"), in accordance withwhich the member states were required to conform theirnational trademark laws.

• Article 7 of the Directive provides that "the trade mark shallnot entitle the proprietor to prohibit its use in relation togoods which have been put on the market in theCommunity under that trademark by the proprietor or withhis consent" except under the provisions of Article 7(2),which exempts altered or damaged goods. In addition, as aresult of the Agreement on the European Economic Area(EEA) between the EU and the European Free TradeAssociation countries of Iceland and Norway.Association countries of Iceland and Norway.

• However, the regional exhaustion rule does not implyinternational exhaustion, where, for example, parallelimports are in transit from one non-EEA member state,through an EEA member state, to another non-EEAmember state, and are seized in the EEA member state asparallel imports voilative of the trademark owner’strademark rights in the member state.

• The regional exhaustion rule does not imply internationalexhaustion, as held by the European Court of Justiceand Silhouette International v. Hartlauer (Case C-355/96)[1998] ETMR 539, holding that Trademark Directivefunctioned as a complete harmonization of the rules and,therefore, did not permit the member states to adopt aninternational theory of exhaustion, which would conflict withthe EU’s regional theory of exhaustion and cause barriersto the free movement of goods and provision of services.to the free movement of goods and provision of services.

• It is interesting to note that the European Commissionmade overtures in 2000 to introduce an internationalexhaustion theory into Community law, by publishing aworking paper on the issue. However, after the workingpaper was laid open for debate and consideration, theCommission withdrew from the debate by deciding in June2001 not to propose changes to the law

Commonwealth Commonwealth approachapproach• The United Kingdom applies the European Union law on

exhaustion with respect to goods first placed on the marketin an EEA country. Article 12 of the new United KingdomTrade Marks Act of 1994 has enlisted the language of theDirective. However, a separate body of Englishjurisprudence, developed under the former Trade MarksAct 1938 adopted an international exhaustion principle,uninfluenced by the European Union law, and this body ofuninfluenced by the European Union law, and this body oflaw, although arguably no longer applicable under the newUnited Kingdom Trade Marks Act, serves as the model forother British law countries in the Commonwealth.

• As a result, the court decided that proprietorship of aregistered trade mark does not entitle the proprietor tocontrol the distribution of his branded goods after theyhave left his hands.

• Thus, the Commonwealth position considers that atrademark serves as an indication of the origin or source ofthe goods, not as a "badge of control" which would allowthe trademark owner to control the trademarked goodsthroughout their passage in commerce.

• Other British law countries have interpreted thesepassages to provide no cause of action to trademarkowners against sellers of genuine goods on which atrademark has been placed by the trademark owner orregistered user.

• As Atari Inc. & Futuretronics Australia Pty. Ltd. v. FairstarElectronics Pty. Ltd. , (1984) 50 ALR 274 (action to stopimport of genuine goods for sale in Australia where firstplaintiff owned trademark and second plaintiff was soleAustralian distributor) adopted the Champagne theory ofexhaustion, denying interlocutory relief.

• See also R.A. & A. Bailey & Co Ltd v. Boccaccio PtyLtd. (1986) 6 I.P.R. 279 (S.C. of N.S.W.)(parallel importof genuine BAILEY'S Irish Creme did not infringetrademark since there was no deception as to the originof the goods.

• Smithers, J. articulated in the Atari /Fair star case, thetrade mark owner who releases goods "on the billowingocean of trade" will not be able to use the trademark toocean of trade" will not be able to use the trademark tocontrol the ultimate destination of those goods.

Approach of AustraliaApproach of Australia

• Both Australia's Trade Mark and Copyright Acts had beenamended to provide for a specific exemption to infringementin this case in that the Act provided, for example: "Thecopyright in a work a copy of which is, or is on, or embodiedin, a non-infringing accessory to an article is not infringed byimporting the accessory with the article". The judge foundimporting the accessory with the article". The judge foundthat Ziliani's conduct came directly under this provision andan exemption applied.

• The judgment is one of the first cases to deal with 1998legislative amendments which were designed to free up theability of independent third parties to "parallel import"products into Australia..

• The judge appears to have effectively given teeth to theamendments. In the recent decision of Polo/LaurenCompany LP v Ziliani Holdings Pty Ltd[2008] FCA 49, theFederal Court has closed off the capability of trade markowners to shut down parallel importation of a genuineproduct using our Copyright Act.

• Ziliani purchased genuine out-of-season clothing bearingPolo/Ralph Lauren's polo player logo at heavilyPolo/Ralph Lauren's polo player logo at heavilydiscounted prices in the US and imported the clothinginto Australia for retail sale. Polo/Ralph Lauren attemptedto shut down Ziliani's actions by arguing that theimportation amounted to an infringement of theircopyright in the polo player logo.

New Zealand ApproachNew Zealand Approach

• In New Zealand, the exhaustion of rights defence is morebroadly worded. In New Zealand, the exhaustion of rightsdefence applies where the goods have been put on themarket elsewhere under the trade mark:

• by the owner• with the owner’s express or implied consent, or• by an associated person of the owner.• by an associated person of the owner.• The Act also broadly defines “associated person” to

include:• same group companies• body corporate consisting of substantially the same

members or directly or indirectly under the control of thesame person, where the person has effective control of theother’s use of the trade mark, and

JAPAN AND KOREAJAPAN AND KOREA• Although many countries allow the war against parallel

imports to be fought by private parties in the courts orbefore administrative tribunals, certain countries, such asJapan and Korea, not only expressly permit parallelimports, but also take affirmative steps to protect parallelimporters.

• However, under the current practice, if such acts fall under"parallel import of genuine goods," they do not constitute"parallel import of genuine goods," they do not constitutetrademark infringement, even if no trademark license hasbeen obtained from the trademark owner. As an example,the general requirements of "parallel import of genuinegoods," as presented by the Supreme Court in itsFebruary 27, 2003

• The Fair Trade Commission Guidelines ConcerningDistribution Systems and Business Practices enacted inJapan in 1991 under the Anti-Monopoly Act also prohibitacts that serve to inhibit parallel imports, such aspreventing an overseas supplier, except a direct supplier toan exclusive distributor, from supplying products to theparallel importer; alleging, without sufficient basis, that theparallel importer is handling counterfeit products;purchasing all of the parallel imports from the distributor; orpurchasing all of the parallel imports from the distributor; orunjustly interfering with advertising of parallel imports.

• Trademark owners, their licensees and authorizeddistributors must always be cautious when contemplatingpreventive or curative action against parallel imports sincesuch action, in many countries, may be considered toconflict with local antitrust and free competition laws.

•

RUSSIA• On September 10th 2008, the Moscow Arbitrazh Court

rejected the claim of a customs authority which initiated anadministrative proceeding against a Russian importer. Thiscompany imported automotive parts labeled with HondaMotors Co. and Nissan Motor Co. trademarks without beingan official distributor for these companies or having anyagreements with them.

• The customs authority accused the Russian firm ofimporting counterfeit goods and of infringing the trade-markrights of the Japanese companies. The Court decided thatthe importer had not breached any trade-mark rightsbecause the imported automotive parts were an originalproduction of Honda Motors Co. and Nissan Motor Co. andtherefore they were not deemed to be counterfeit byRussian IP legislation.

INDIAN APPROACHINDIAN APPROACH• India has adopted the national exhaustion principle to

regulate parallel imports, the same being enshrined ins30 of the Trade Marks Act 1999 (the 1999 Act). Asper this principle, if the goods are sold for the first timein a domestic market or within the territory of thecountry in which the trade mark is registered, theowner of that particular trade mark loses their rightsowner of that particular trade mark loses their rightsover the goods and cannot prevent any subsequentsale of the same in the domestic market of thatcountry. Section 107 of the 1999 Act authorisesrepresentation of a trade mark registered abroad tooperate in India as long as the same is sufficientlyindicated in English.

• Subsection (1) of Section 29 of the Act prescribes that aninfringement action can be initiated against a person who,not being a registered proprietor or a permitted user, usesthe registered trade mark or an identical or deceptivelysimilar mark in the course of trade. Moreover, clause (c) ofsubsection (6) of Section 29 prescribes that import andexport of goods under the mark shall be treated as use ofthe mark for the purposes of Section 29.

• Thus, when subsection (1) of Section 29 and clause (c)subsection (6) of Section 29 are read together it becomesclear that if anybody imports the goods who is not aregistered proprietor and acts without the proprietor'spermission, then this action of import would fall under "use"of the mark in the course of trade and hence would lead toinfringement of the right of the trade mark proprietor.

• From the provisions contained in the statute, it is clear thatthe main objective behind Section 30(2) (c)(i) is to preventthe owner of a trade mark from claiming infringement inrespect of a product against its use by another party towhom the owner has expressly or implicitly grantedconsent.

• A bare reading of Section 30(3)(b) reveals that wheregoods bearing a registered trade mark are lawfullyacquired, the further sale or other dealings in such goodsby the purchaser or by a person claiming to represent thepurchaser is not considered an infringement, if the goodshave been put onthe market under the mark by theproprietor or with the proprietor's consent. Here the words"by the proprietor or with his consent" are to be stressed;the proprietor is the trade mark owner in India.

• Hence this clause further reiterates that the consent of theproprietor of trade mark in India is a must. Otherwise its use(here, import for trade) would lead to infringement of thetrade mark. It may be pointed out that there can be noinfringement action if the goods are imported by theimporter for the importer's own use. In other words, thestatutory provisions contained in Sections 29 and 30 ofTrade Marks Act 1999 are applicable only in if the goodsare imported for trading purposeare imported for trading purpose

• In the landmark case of Samsung Electronics Company &Anr v G Choudhary & Anr the Delhi High Court held thatunder Section 30 of the Trade Marks Act 1999 import ofeven genuine goods must be made by or with the consentof the registered proprietor of the trade mark in India.

• In Samsung Electronics Company Ltd & anor v GChoudhary & anor [2001], the plaintiff prayed for aninterlocutory injunction that, in essence, sought to combatand eradicate the parallel importation (by third parties intoIndia) of products manufactured by the plaintiff itself. TheDelhi High Court observed that Indian law was quite liberalin permitting parallel imports of genuine goods bearingregistered trade marks, provided that such goods had notbeen materially altered after they entered the market. Thebeen materially altered after they entered the market. TheCourt held that the trade mark proprietor could, however,impose contractual restrictions on a third party, such as aforeign licensee, against importing genuine goods intoIndia, provided that such restrictions pass muster underthe 1999 Act and the Monopolies and Restrictive TradePractices Act 1969, which was – at the time – India’scompetition statute (substituted with the Competition Act2002).

• The Delhi High Court has cleared the confusion around parallelimports. In a landmark judgment, a Division Bench of the Delhi HighCourt has ruled that parallel import is authorized under Indiantrademark laws and does not infringe the trademark of the rights-holder.

• In a lawsuit between Samsung Electronics and Champion Computers,Delhi-based IT hardware and peripherals distribution house, the benchof Justices Pradeep Nandrajog and Siddharth Mridul overruled thefindings of a single judge who had in February 2012 held thattrademarked goods should be imported to India only throughauthorized distributors of the trademark-holder or with his permission.authorized distributors of the trademark-holder or with his permission.

• The Division Bench observed that the learned single judge hadfollowed an erroneous approach to conclude that import of goods intoIndia needed the consent of the registered trade mark owner.

• The court recognized the principle of international exhaustion under theTrade Marks Act, 1999, and held that the expression in anygeographical area, in the Act “clearly envisages that the legislativeintent was to recognize the principle of international exhaustion ofrights to control further sale of goods once they were put on the marketby the registered proprietor of the trade mark.”

•

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