The registration of a trademark in India bestows the registered proprietor with civil as well as criminal remedies to enforce her rights on the mark upon its infringement against the infringer. The trademark owner has the negative right to exclude others from using the trademark, and using the same without the consent of the trademark owner amounts to infringement or passing off accordingly. Section 29 of the Trade Marks Act, 1999 (hereinafter referred to as “The Act”) lays down all the acts which amount to infringement in India, against which the action of infringement can be brought by the trademark owner before the Courts.

One of the limitations to the rights of the trademark owner is the principle of exhaustion, which states that once the goods bearing the mark are legally sold with the consent of the trademark owner, the trademark owner loses the control over the goods in the market. India follows the principle of international exhaustion, which means that once the owner of a trademark legally sells her goods, she loses the right over those goods throughout the world, due to which the ‘market’ in India means the international market. Which means that the trademark owner can not file the suit of infringement against the subsequent sale, rent or lease of the good bearing her trademark. Therefore, the moot question which lies here is, does the registered proprietor exhaust all her rights in the trademark after the first sale of the good, or does there exist some rights which can be considered as the moral rights of the brand owner which are retained even after the sale of the goods.

Under the Copyright law, the author of a work under Section 57 of the Copyright Act, 1957, still retains the moral rights in the work after its sale. Section 57 of the Copyright Act was scrutinized extensively in India in the case of Amarnath Sehgal v. Union of India¹ , wherein it was held by the court that the author retains the paternity right viz. the right to be recognised as the author of the work, and the right to integrity viz. the right to refrain others from any distortion, mutilation, modification or any other untoward act done to her work, and claim damages if done. Even though there isn’t a similar provision under the Act which exclusively lays down the moral rights to the trademark owner, but Section 30(4) can mean to include the same.

Section 30 (4) of the Act states that “Sub-Section (3) shall not apply where there exists legitimate reasons for the proprietor to oppose further dealings in the goods in particular, where the condition of the goods, has been changed or impaired after they have been put on the market.”

The Section was first scrutinized by the Court in the case of Kapil Wadhwa v. Samsung Electronics ², wherein the term “changed or impaired” was interpreted to include re-packaging, re-labelling, removal of barcodes, or any other instance which tampers with the integrity of the good. It was held in the case that a legally protectable interest is still retained by the registered trademark owner even after the goods have been legally sold in the market, due to which a suit under Section 30 (4) can be filed purely on the grounds of dilution of goodwill and reputation the trademark owner, if the good has been changed or impaired after its first sale. Section 30 (4) was scrutinized again by the Delhi High Court in the case of Amway India Enterprises Pvt. Ltd. vs 1Mg Technologies Pvt. Ltd. & Anr.³ , wherein the direct selling entities such as Amway, Oriflame and Modicare had filed for an injunction against E- Commerce intermediaries such as Amazon and Flipkart for selling their products at a low cost, with tampered bar codes etc., outside the DSE’s distribution channel. The single judge of the Delhi High Court had granted the injunction in favour of the Direct Selling Entities, however, the same was later over ruled by the Division Bench, for the reason of insufficiency of the report submitted by the Court appointed commissioner.

However, with the ongoing scenario, it is unclear if Section 30 (4) could be considered as a moral right of the registered trademark owners, given that the burden of proof lies entirely on the registered trademark owner to prove that the goods being sold have been tampered with to such an extent that it directly impacts her goodwill and reputation to a very large extent. It is clear that Section 30 (4), might not guarantee a moral right to the trademark owner as is the case for an author of a work under Section 57 of the Copyright Act. However, in the words of Justice Pradeep Nandrajog, Section 30 (4) of the Trade Marks Act still acts as a lighthouse to the voyage of a desolated registered trademark owner to file a case on the grounds of dilution of its goodwill and reputation.

¹117 (2005) DLT 717, 2005 (30) PTC 253 Del

²2013 (53) PTC 112 (Del.) (DB)

³ CS (OS) 410/2018