Parallel Imports and Control Mechanisms in India Cont’d

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Editor’s note: Before continuing, please refer to my previous post on parallel imports in India.

The Current Scenario

Samsung Electronics Company Ltd v. Kapil Wadhwa (Samsung) is a pending case before the Supreme Court of India by way of an appeal from the High Court of New Delhi. The High Court held that the Defendant had committed infringement by importing and selling Samsung printers that were not meant to be sold in India, although the printers were not counterfeit. The principle of international exhaustion was qualified by distinguishing that Indian laws recognize domestic exhaustion alone. That is, products purchased from an IP holder from India do not require further permission to be sold in any part of India. However, this is not the same case with international exhaustion of rights where the express permission of IP holders are required in order to import and sell products that were purchased outside India. Citing this decision of the Delhi High Court, Dell India Private Ltd. initiated legal action before the Customs Commissioner against three allegedly infringing parties on parallel import grounds. However, the adjudicating officer refused to accept the Samsung case, stating that it is pending appeal. The adjudicating officer interpreted that the principle of exhaustion under trademark laws of India includes international exhaustion as well.

The International Trademark Association (INTA) major influential trademarks association, petitioned the Supreme Court of India with a request to add INTA as an Amicus Curie party in the Samsung case.  INTA has taken a stand that the principle of exhaustion is to be applied within the geographical boundary of a country alone and not internationally.

Current Status of the Regulations Dealing with Parallel Imports

India’s Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007, has undergone more than a couple of changes since its coming into force. The recent clarification notification by the concerned department in 2012 is considered to have diluted the rights of IP holders to a great extent.  The Erstwhile Rules covered all kinds of infringements that were provided in each of the corresponding IP statutes – Trademarks Act, Patent Act, Geographical Indications Act, Copyright Act and Designs Act.  However, the 2012 notification mentions that parallel imports are prohibited and will be prevented entry into India by the customs authorities only if they are expressly prohibited in their respective IP statutes. Parallel importation is not prohibited under the Patents Act and Geographical Indications Act. As a result of this amendment, the parallel importers of patented products and GI goods are completely exempted from being tried for parallel import offences. The scope of parallel imports under the Trademarks Act is weakened in such a way that parallel imports of goods bearing false trademarks or false trade descriptions can only be prevented entry into the Indian market. It is quite surprising and leaves us to think as to how and why the administration is interfering with the interpretation of laws, which is the duty of the judiciary.

The recent Novartis v. Union of India (Novartis) case is widely considered to be a huge setback to patent rights holders in India. In the Novartis case, the Supreme Court expanded the concept of “Ever greening” of patents and refused to entail the patent applications of Novartis. India being quickly developing country needs to give watertight protection to the IP rights holders in order to encourage them and balance their interests.

Photo Credit: Tsuna 72

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About: Gokul Kamaraj

Gokul was called to the Bar in India and worked with one of the largest IP law firms in India. Currently, he is a graduate student at Osgoode Hall Law School, Toronto, and a NCA candidate. He is keen to qualify as a lawyer in Ontario and enjoys practicing in the areas of contentious and non-contentious Trademark laws.

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