Parallel Imports and Control Mechanisms in India ⎜IPEye
Hello IP rights holders, this one’s for you!
Parallel imports involve the importation of goods in two simultaneous tracks within the geographical boundaries of a sovereign state. The difference between these imports is that one is imported with the authorization of the IP rights holder or his/her representative, while the other is done so without his/her permission.
So What’s the Big Deal?
Well, parallel imports dilute the control of the IP rights holder over his/her own products. But of course, the concept of international exhaustion of IP rights is getting fast recognition in many jurisdictions, including India. International exhaustion of IP rights means that once the goods bearing a trademark or any IP is sold for a consideration, the IP owner’s rights over those products are exhausted. The purchaser is free to do anything that he/she likes with such products. However, the caveat is that the purchaser cannot substantially alter the packaging of the products bearing the trademarks, as it may amount to the infringement of the owner’s IP rights.
What May Compel the Importer to Alter the Packaging?
Parallel imported goods may not be consistent with the local standards of labels and measurements laws. Once the importer attempts to alter the packaging to conform with the local labeling laws, it may amount to alteration of packaging of a registered trademark, which in turn amounts to infringement.
Border Control Mechanism in India to Curb Parallel Importation
Pursuant to articles 51-60 of the WTO’s convention of the Trade Related aspects of Intellectual Property Rights (TRIPS), the Indian government’s customs authorities devised a stringent working structure to curb parallel importation. Automated Recordation and Targeting System (ARTS) is used as a database in which IP holders have their registered IPs listed in the system by paying governmental fees to the customs department. Once the registered IPs are listed in the ARTS database, the customs authorities watch for susceptible parallel importation and alert the concerned IP rights owner. ARTS is being used at all the major ports in India, with protection coverage being offered at all ports and registration at any one of the ports. However, separate registration with the customs authorities is mandatory for each different type of IP protected work, such as a trademark or patent, etc.
Stay tuned for next week, where I will be discussing the current atmosphere of parallel imports in India.
Photo Credit: Bas De Reuver