Import of branded goods acquired lawfully from foreign territory is widely acknowledged as parallel imports and every such import is subject to the IPR (Imported Goods) Enforcement rules, 2007, rules specify that any such import is subject to the consent of right holder i.e. the proprietor of brand, however, section 30(3) states that any goods which are lawfully acquired doesn’t require consent or authorization from proprietor or owner, though in Samsung Electronics Co Limited vs Kapil Wadhwa & Others, single bench stated that section 30(3) of trademark act states that “goods acquired lawfully” means the domestic exhaustion i.e. goods acquired within the territory of India, however, said decision was over ruled by honourable Double Bench of High Court in the judgement discussed below.
(FAO (OS) 93/2012) KAPIL WADHWA & ORS. VS. SAMSUNG ELECTRONICS CO. LTD. & ANR The grievance of the respondents is that the appellants are purchasing, from the foreign market, printers manufactured and sold by respondent under the Trade Mark SAMSUNG/Samsung’ and after importing the same into India are selling the product in the Indian market under the Trade Mark SAMSUNG/Samsung’ and are thereby infringing the registered Trade Mark of the respondents in India. Respondents allege that the appellants operate their website by meta-tagging the same to the website of the respondents. Respondents allege that not only this constitutes an infringement of their registered Trade Mark in India, but also allege injury caused to the consumer in India who may be paying less for the printers in question, but are misled to believe that they are purchasing an authorized Samsung product in India sold with the permission of the respondents, in ignorance of the fact that the printers imported and sold by the respondents are materially different to the ones which are sold in the Indian market by the respondents. The rival version pleaded by the appellants is that the act of importation and sale of printers in India is authorized and the sale in the Indian market is legal and valid inasmuch as the appellants sell the product as it is. The respondents highlight that their act of import and sale is beneficial to the Indian public evidenced by the fact that the respondents are able to sell the product at prices less than 30% to 50% of the compatible product sold by the appellants in India. The appellants bring home the point that the respondents do not manufacture the printers in India. Even they import the printers from abroad. To illustrate, a compatible product SCX4623F/XSA, after importing in India is sold by the appellants for `9,500/- and the printer SCX-3201FN/XIP is sold by the respondents after importing the same into India for `18,999/-. To which stand of the appellants, the respondents plead that there is a difference in the features of the compatible Products and highlight that the injury caused to the Indian consumer, who may pay less for a compatible product, is that the consumer buys the product of the appellant thinking that it is having the same features as that of the product sold by the respondents.
Whether the Trade Marks Act 1999 embodies the International Exhaustion Principle or the National Exhaustion Principle when the registered proprietor of a Trade Mark places the goods in the market under the registered trade mark?
Though Single Judge held that The Trade Marks Act 1999 embodies the National Exhaustion Principle.
Double Bench stated that there is no law which stipulates that goods sold under a trade mark can be lawfully acquired only in the country where the trade mark is registered. In fact, the legal position is to the contrary. Lawful acquisition of goods would mean the lawful acquisition thereof as per the laws of that country pertaining to sale and purchase of goods. Trade Mark Law is not to regulate the sale and purchase of goods. It is to control the use of registered trademarks. Say for example, there is food scarcity in a country and the sale of wheat is banned except through a canalizing agency. Lawful acquisition of wheat in that country can only be through the canalizing agency.
Honourable Court held that that ‘the market’ contemplated by Section 30(3) of the Trade Marks Act 1999 is the international market i.e. that the legislation in India adopts the Principle of International Exhaustion of Rights. It is pleaded that the respondents have no control pertaining to the sale, distribution and after sales services of its goods which are imported by the appellants and sold in India. Now, the Principle of International Exhaustion of Rights itself takes away the right of the respondents to control the further sale and further distribution of the goods.
With respect to after sales services, since the respondents do not warranty anything regarding their goods sold abroad, but imported into India and further sold, they not being responsible for the warranty of those goods, nothing turns thereon, as regards said plea. There may be some merit that the ordinary consumer, who is provided with warranties and after sales by the appellants, on not receiving satisfactory after sales service, may form a bad impression of the product of the respondents and thus to said extent one may recognize a possible damage to the reputation of the respondents pertaining to Samsung/SAMSUNG printers and Samsung/SAMSUNG products sold in India after importation. But, this can be taken care of by passing suitable directions requiring the appellants to prominently display in their shop that the Samsung/SAMSUNG printers sold by them are imported by the appellants and that after sales services and warranties are not guaranteed nor are they provided under the authority and control of the respondents and that the appellants do so at their own end and with their own efforts. This would obviate any consumer dissatisfaction adversely affecting the reputation of the respondents, and thus if this is done, the respondents can claim no legitimate reasons to oppose further dealing in Samsung/SAMSUNG products in India
AUTHOR: DIXIT MEHTA, DUCTUS LEGAL
DUCTUS EDGE 