Shades of Grey

7 September 2013
  • Dr. Mohan Dewan

 INTA recently filed an ‘amicus curie’ brief in an appeal pending before the Supreme Court of India, expressing its view on the question of Parallel Imports and Exhaustion of rights. Though not a party to the suit, INTA has filed this brief as a ‘friend of the Court’ in order to influence the decision by providing a global perspective to the question of parallel imports. The case in relation to which this brief has been filed is discussed in brief hereunder -

In the year 2011, Samsung instituted a suit before a Single Judge of the Delhi High Court against Kapil Wadhwa claiming trademark infringement in the light of Mr. Wadhwa importing and selling certain Samsung printers in India. The Hon’ble Single Judge inter alia held "The act of importation without the consent of the registered proprietor amounts to an infringement." This decision was appealed against before a Division Bench of the Delhi High Court. The Hon’ble Division Bench observed that the printers being imported were not being sold by Samsung to its Indian customers. The Division Bench recognized the applicability of the principle of International Exhaustion of trademark rights. In its decision the Hon’ble Division Bench set aside the injunction passed by the Single Judge, as regards importation and sale of Samsung printers with the condition that the Respondents shall prominently display in their showrooms that the product sold by them were imported from abroad and that the Respondents will not give any warranty qua the goods nor provide any after sales service and that the warranty and after sales service will be provided by the Appellants personally. Samsung has appealed against this order before the Supreme Court which is pending. It is in this appeal before the Supreme Court of India that INTA has seen fit to file an amicus curie brief.

In its brief, INTA has submitted, inter alia, that it supports the view that a trademark owner cannot and should not be deprived of its right of territorial commercialization of its trademarks unless it is proven that it has expressly consented to such sale in a particular country. INTA also submitted that “It is unreasonable to the trademark owner to hold that the goodwill is exhausted in all countries by use of the mark in just one country.” It is INTA’s belief that parallel importers generally acquire genuine goods in one jurisdiction at a lower rate and then import them into another jurisdiction often undercutting the trademark owner or its authorized distributor in the price of the goods.

Many commentators have not appreciated the ‘why’ of parallel importation from an Indian perspective. In India, whether mistakenly or otherwise, consumers believe that goods that are imported are of a superior quality to those goods sold locally. In India, owning a product which is imported is a matter of prestige. The consumer may not necessarily be looking for or get a product from the grey market at a cheaper rate but the fact that the product is imported has the effect of assuring the customer of its quality. In a lot of cases, Indian consumers are willing to pay premium prices for obtaining imported goods especially if such goods, of the same model number/ type of goods are not available in the Indian market regardless of whether the Manufacturer sells a similar product in India directly. For example food products such as Cadbury chocolates, Nestle Products, Coca Cola are imported by merchant importers though the same products are available locally, and customers buy these imported products at prices 2-3 times higher than the locally available product. There may be little difference, if at all in the quality of the imported products as opposed to the locally available product.

There may be issues regarding enforceability of warranty with regard to grey market products, but most Indian customers are aware of this fact and are willing to take the risk. This in no way acts as a detriment to the goodwill of the proprietor of the trademark in India. It is admitted that a clear indication, by the importer, as to the enforceability of warranty and the fact of importation will lead to clarity in the mind of the consumers in India.

The Indian notion of imported goods being better stems from the facts that goods sold in other jurisdictions may have to pass through more stringent safety and quality control regulations when compared to similar products sold in India. Such notions may be outdated with respect to some goods but still hold true when it comes to others.

Overall, what must be kept in mind is that India is unlike other jurisdictions where the question of parallel importation has cropped up in the past, and the question of legality of parallel importation in India is still not black or white but coloured in shades of grey.


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