EXHAUSTION OF IPRs :

Building Business Strategies

Hemant Singh
 IPR – Legal position in India

IPR

Copyrights Patents Trade Marks

National International Yet to be

Exhaustion Exhaustion decided
 Trade Marks – Infringement

Section 29(1) & 29(6)

“29. Infringement of registered trade marks.-

(1) A registered trade mark is infringed by a person who, not being a registered
proprietor or a person using by way of permitted use, uses in the course of
trade, a mark which is identical with, or deceptively similar to, the trade mark in
relation to goods or services in respect of which the trade mark is registered and
in such manner as to render the use of the mark likely to be taken as being used
as a trade mark.

(6) For the purposes of this section, a person uses a registered mark, if, in
particular, he-

(b) Offers or exposes goods for sale, puts them on the market, or stocks them for
those purposes under the registered trade mark, or offers or supplies services
under the registered trade mark
(c) imports or exports goods under the mark….”
 Trade Marks – Exceptions

Section 30(3) & 30(4):

30. Limits on effect of registered trade mark.-

(3) Where the goods bearing a registered trade mark are lawfully acquired by a person, the sale
of the goods in the market or otherwise dealing in those goods by that person or by a
person claiming under or through him is not infringement of a trade by reason only of-

(a) the registered trade mark having been assigned by the registered proprietor to some other
person, after the acquisition of those goods; or

(b) the goods having been put on the market under the registered trade mark by the proprietor
or with his consent

(4) 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.
 Trade Marks – In India- Outside India

Section 30 (2):
(2) A registered trade mark is not infringed where-
(a) the use in relation to goods or services indicates the kind, quality, quantity,
intended purpose, value, geographical origin, the time of production of
goods or of rendering of services or other characteristics of goods or
services;
(b) a trade mark is registered subject to any conditions or limitations, the use of
the trade mark in any manner in relation to goods to be sold or otherwise
traded in, in any place, or in relation to goods to be exported to any market or
in relation to services for use or available or acceptance in any place or
country outside India or in any other circumstances, to which, having regard
to those conditions or limitations, the registration does not extend;
 Trade Marks – In India- Outside India

Section 56:
56. Use of trade mark for export trade and use when form of trade
connection changes-
(1)The application in India of trade mark to goods to be exported
from India or in relation to services for use outside India and
any other act done in India in relation to goods to be so
exported or services so rendered outside India which, if done in
relation to goods to be so exported or services or rendered
outside India which, if done in relation to goods to be sold or
services provided or otherwise traded in within India would
constitute use of a trade mark therein, shall be deemed to
constitute use of the trade mark in relation to those goods or
services for any purpose for which such use in material under
this Act or any other law.
 Trade Marks – In India- Outside India

Section 42: ……..

Explanation- For the purposes of this Section, an assignment of a
trade mark of the following description shall not be deemed to be
an assignment made otherwise than in connection with the goodwill
of the business in which the mark is used, namely…

(b) an assignment of a trade mark which is used in relation to goods

exported from India or in relation to services for use outside India if
assignment is accompanied by the transfer of the goodwill of the
export business only.
 Trade Marks – In India- Outside India

Section 47:
(1) A registered trade mark may be taken off the register in respect of the
goods or services in respect of which it is registered on application
made in the prescribed manner to the Registrar or the Appellate Board
by any person aggrieved on the ground either….

… (2) Where in relation to any goods or services in respect of which a

trade mark is registered…

(a) the circumstances referred to in clause (b) of sub-section (1) are shown
to exist so far as regards non-use of the trade mark in relation to goods
to be sold, or otherwise traded in a particular place in India (otherwise
than for export from India), or in relation to goods to be exported to a
particular market outside India or in relation to services for use or
available for acceptance in a particular place in India or for use in a
particular market outside India.
 Samsung v. Kapil Wadhwa

Questions before the court:

• Whether importation and further sale of genuine goods into

India amounts to infringement?

• Is said importation covered by the Section 30 (3) exception

to the infringement of trade marks? In other words, does
India adhere to the concept of international exhaustion of
rights?
 Samsung v. Kapil Wadhwa

Single Judge held:

• TM Act recognizes National Exhaustion

• ……..the act of importation without the consent of the

registered proprietor amounts to an infringement

• “the market” in S-29 and 30 should mean one and the same
market i.e. domestic market
• The legislators have specified the international market in
other sections, such as in Section 30(2)(b) and therefore,
the omission of international market is conscious intention
to limit the market to domestic market
 Samsung v. Kapil Wadhwa

DB reversed the order and held:

•TM Act recognizes International Exhaustion, Parallel import is not an infringement

•DB observed:
 Samsung v. Kapil Wadhwa

• Changing/impairing the condition of goods

would deny the exception to infringement

• Legitimate reasons to oppose further dealing

would deny the exemption

• Legitimate reasons e.g. differences in packaging,

quality, language, services and warranty

APPEAL PENDING BEFORE SC

 Plausible interpretation
• Use neither authorized by proprietor nor permitted user is
infringement (whether genuine or falsified product)
• Further dealing in goods authorized by proprietor/ permitted user is
not an infringement

• Goods can be put on the market only by the proprietor or with his
consent.
• “Market” with reference to Section 29 (6) and Section 30 (3) ought
to be the same in terms of geographical coverage.

• Wherever the legislature intended to use or to define territories

outside India, it has said so e.g. Section 30(2)(b), Section 42 and
Section 56
Trade Mark Exhaustion : Global Position

Regional
Exhaustion
National
Exhaustion

International
Exhaustion
 Patent – Legal Provisions
Section 48 - Right to import

Section 107A (b)

“importation of patented products by any person from a person who is
duly authorised under the law to produce and sell or distribute the
product, shall not be considered as a infringement of patent rights.”

Pre- 2005 Amendment Act :

Section 107A (b)
“importation of patented products by any person from a person who is
duly authorised by the patentee to produce and sell or distribute the
product, shall not be considered as a infringement of patent rights.”
 Copyright : Legal Provisions

Section 2(m): (m) “infringing copy” means,"

(i) in relation to a literary, dramatic, musical or artistic work, a reproduction
thereof otherwise than in the form of a cinematographic film;
(ii) in relation to a cinematographic film, a copy of the film made on any medium
by any means;
(iii) in relation to a sound recording, any other recording embodying the same
sound recording, made by any means;
(iv) in relation to a programme or performance in which such a broadcast
reproduction right or a performer’s right subsists under the provisions of this
Act, the sound recording or a cinematographic film of such programme or
performance,
if such reproduction, copy or sound recording is made or imported in
contravention of the provisions of this Act;]
 Section 14-Copyright- Contravention

Section 14- Meaning of copyright – for the purposes of this Act

“copyright” means the exclusive right subject to the provisions of this
Act, to do or authorize the doing of any of the following acts in respect
of a work or any substantial part thereof, namely:-
a- in the case of a literary, dramatic or musical work, not being a computer
programme,-
(ii) - to issue copies of the work to the public not being copies already in
circulation;
c- in case of an artistic work
(iii) – to issue copies of the work to the public not being copies already in
circulation;
-Explanation: For the purposes of this section, a copy which has been sold
once shall be deemed to be a copy already in circulation.
 Copyright : Legal Provisions

Section 51 (b) (iv): When copyright infringed.—Copyright in a work

shall be deemed to be infringed— when any person— imports into
India, any infringing copies of the work
[Provided that nothing in sub-clause (iv) shall apply to the import of one
copy of any work, for the private and domestic use of the importer.]
 Copyright : Legal Provisions

• Proposed Amendment, 2010:

Clause 2(m) “infringing copy”

-Proviso to be added:
“provided that a copy of a work published in any country outside
India with the permission of the author of the work and imported
from that country into India shall not be deemed to be an infringing
copy”.

• Deleted from 2012 Amendment

 India: Copyright
Penguin Books UK v. India Book Distributor

• Penguin UK owned copyright in US publications for

distribution in India
• India Book Distributors imported for sale in India
• Suit for infringement filed

Held:
• Copyright is territorial in nature
• Right of distribution vests with Exclusive Licensee in India
• Import without consent breached right of territorial division
& restriction
• Distribution prejudicial to “exclusive licensee”
 India: Copyright
Warner Brothers v. Santosh V.G.
• DVDs circulated by Warner Brothers in US

• Imported without consent for rental circulation by Santosh

• Suit for Copyright infringement filed

• Defendant pleaded International Exhaustion

• Court issued injunction held – No International Exhaustion

under copyright law
 India: Copyright
John Wiley v. Prabhat Chander

• US Publishers granted distribution right to Indian distributor

for low priced US publications for India Bangladesh etc.
• Books contained territorial restriction (not for re-export)

• Defendant exported to western countries by online sale

• Defendant pleaded “first sale doctrine” - Copies already in

circulation in India

• Injunction issued as export prejudicial to right of distribution

of copyright owner
 BUILDING BUSINESS STRATEGIES

• Is exhaustion subject to territorial restrictions created by

agreements?
– Consent a prerequisite. Therefore territorial limitation could be
imposed by choice

• Endorsement of territorial limitation upon product (Not

for Sale outside India)

• Different packaging standards for different territories

• Localized warranties
QUESTIONS?
Hemant Singh
www.inttladvocare.com
hemant@inttladvocare.com