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India’s take on Parallel Imports and International Exhaustion

After years of debate, finally the question on validity of “Parallel Imports” has been answered in a recent judgment delivered by Division Bench of the Hon’ble Delhi High Court. The court, in the case of Samsung Electronics Company Ltd. v. Kapil Wadhwa & Ors., while recognizing the principle of international exhaustion under the Trade Marks Act, 1999, held that the expression “in any geographical area”, in the Act clearly envisages that the legislative intent was to recognize the principle of international exhaustion of rights to control further sale of goods once they were put on the market by the registered proprietor of the trade mark.

In 2011, Samsung Electronics and its Indian subsidiary Samsung India filed a suit under which it was claimed that Champion Computers (run by co-Founder Kapil Wadhwa) was selling unauthorized Samsung printers imported directly from foreign markets. To this, the Single Judge held that Champion Computers was guilty of trademark violation.

Meanwhile, Dell also had filed suits against three Indian importers by relying on the above decision. But, the Customs Commissioner passed an order in favour of the three importers, based on clear understanding of Section 30(3) (b) of Trade Marks Act, 1999. This section provides that where the goods bearing a registered trademark are ‘lawfully acquired’, further sale or other dealing in such goods by the purchaser, or by a person claiming to represent him, is not considered an infringement by reason of the goods having been put in the market under the registered trademark by the proprietor or with his consent. However, such goods should not have been materially altered or impaired after they were put in the market.

Another point deliberated on was that on a conjoint reading of Section 29(1) and Section 29(6) of the Act suggested that the sale of imported products constitutes ‘use of the mark’ within the meaning of the Act. However, this would not prohibit the sale of imported products without the consent of the registered proprietor.

Therefore, in the Samsung case, the appeal against the Single Bench decision was partly allowed and the appellants were not restrained from importing and selling products bearing the mark SAMSUNG in India. However, they were injuncted from meta-tagging their website to that of Samsung.

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