Understanding parallel imports to India

Sarthak Sharma | Orissa National Law University.

With the growth of trade and commerce around the world, countries are increasingly looking to a trade-free world, where imports and exports can help every potential nation grow in revenue and resources. Analyzing the current problem, Adam Smith, the father of modern economics, emphasized the importance of free trade and said that if countries removed trade barriers and allowed free flow of goods from one country to another then countries would invite and fulfill greater prosperity. The interests of its citizens.[1]

However, the free flow of goods can violate the rights of the owner of an original product somewhere, because counterfeiting and forgery of goods is an unwanted evil that afflicts the notion of free trade and commerce. Thus, the rights of the owner of a product need to be protected so that the products are not counterfeit and as a result are not sold, the owner’s rights and revenue are lost and new and noble ideas are threatened.

The process of selling goods across the border through registered or unregistered trade channels, but also known as parallel imports without the consent of the product owner. For example, a book will sell for Rs. 500 in India alone according to the wishes and fancy of the owner of the book. However, the author wants the same book to be sold in Bangladesh at a relatively low price. 250.

Now, the book sold in Bangladesh can be easily bought and imported by traders in India and as a result is sold at a relatively low price of Rs.500. Thus, the following may infringe the author’s rights, although the books were the same, but they were meant to be sold in two different jurisdictions. But, due to the parallel import of goods, traders can create a gray market which leads to violations. Intellectual property rights Extensive revenue denting from the owners and them.

But, the owner cannot enjoy absolute autonomy over his rights as it would again be detrimental to business and business. For example, a car manufacturer loses its rights to its products as soon as it sells the car from the factory. Subsequently, it cannot claim rights and revenue after every car sale in the market. Thus, after being sold from the factory, the car can be sold to the retailer, then to the customer, through whom it can be used for several years and then sold to another person, but the company cannot claim infringement after each sale. , Since the rights expire after the first sale.

Following the above, there are mainly three types of rights termination, namely regional fatigue where the following system restricts the movement of a product in a particular region or area. If the owner restricts the circulation and sale of his goods within the territory of a particular country, restricts the import and export of goods, then the following measures are known as national fatigue. After all, in international fatigue the owner cannot limit the trade and sale of his product once it is promoted or launched anywhere in the world.

The regional fatigue system follows the most restrictive system, whereas the international fatigue system follows the least restrictive system. Different countries around the world follow different patterns when dealing with the current problem. Several African countries, such as Ghana, Liberia and Tunisia, follow the national execution system of the Philippine rights in Asia. It is only the European Union that follows the cessation of territorial rights while countries like China, India and Malaysia follow a system of international fatigue.[2]

In India, Article 29 (1) of the Trademark states that “a registered trademark is infringed by a person who is not a registered owner or is using it in an authorized manner, Uses During a trade, a mark that is identical or deceptively identical to a trademark related to the product or service, about which the trademark is registered and may be used as a trademark to render the use of the mark. ” Uses If a registered sign: –

  1. Import Or Export Product under mark;

Thus, the import and export of a trademark is considered as the use of a mark. Now, this use is made by any person, whether authorized or unauthorized, i.e. if a person imports or exports a trademark-like product without the prior consent of the owner, it will be considered a trademark infringement in accordance with section 29 (1). Section 29 (6) (c). In Bangladesh, for example, A sells printers for Rs. 2,000 B, a businessman in India, buys the printer and sells it in India. 5,000 There is no trademark infringement in the current situation, but, if the printer is for sale in Bangladesh only, it is a trademark infringement.[3]

Article 30 (3), on the other hand, refers to exceptions to trademark infringement. It states that “where goods bearing a registered trademark are legally acquired by an individual, selling the goods in the market or otherwise transacting those goods by or under the person or under the person claimed by him is not a trade violation. –

  1. The goods have been put on Market Trademarks registered by the owner or with his consent. “

Thus, there will be no trademark infringement if the products are marketed with the prior consent of the owner and then the products are sold to another person. For example, a company certifies A as a product owner in the market. Now, A sells it to a retailer who sells the product to the customer through it. Now, Company B cannot be sued for trademark infringement because Company A has lost its rights at the moment it sells its products.[4]

The current situation in India has been simplified through lawsuits like Kapil Wadhwa v. Samsung Electronics.[5], And Western Digital Technologies v. Ashish Kumar, where the court said that after analyzing India’s communications in the WTO Uruguay Round in 1985 and the report of the Standing Committee on Copyright (Amendment) Bill, 2010, it is clear that India follows the international fatigue concept. Further, the court said that it cannot ban parallel imports in the country, as it follows the provisions of termination of international rights and secondly, parallel imports will help create a competitive market that will ultimately benefit consumers.

However, in doing so, the merchant should provide a message when selling the product that the owner of the product will not be liable for any inconsistencies in the product. For example, if Samsung printers are sold through parallel imports, the seller will provide a message at the time of sale of the printer that if there is any discrepancy in the product, Samsung will not be responsible for the defective product. This will preserve the reputation of the product owner, and will relieve them of any liability arising at the time of sale through parallel imports.

Although the position of the judiciary is clear in the current situation, the government should introduce more rules and policies that can prevent the import of counterfeit goods into the market. Custom security and tracking of counterfeit products should be strengthened to protect the rights of innocent and hardworking companies.

[1] Adam Smith, “The Wealth of Nations”, Oxford, England, 2002.

[2] Christopher Heath, “Parallel Imports and International Trade”, WIPO Journal,

[3] Shyamlima Sengupta and NV Saisunder, “The Concept of Parallel Imports and Territorial Execution of Rights under the Indian Trademarks Act, 1999”, Lexology, March 30, 2020.

[4] “Legalization of parallel imports as opposed to trademark law”, August 21, 2018.

[5] 2013 (53) PTC 112 (Del) (DB).

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