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Parallel imports : Samsung case

This is a description about the parallel imports case of Samsung.
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Parallel imports : Samsung case

  1. 1. Group No: 15 Rohit Kumar Sumeet Kumar Seth Hiren Gohil Parallel Import (Samsung) SJMSOM, IIT Bombay
  2. 2. Introduction What is Parallel Import ? • A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. • Parallel imports are often referred to as grey product, and are implicated in issues of international trade and intellectual property Classification: • Passive parallel imports: It occurs when patented or marked goods are purchased in a foreign market and resold in the domestic market. • Active parallel imports: It occurs when foreign licensees enter the market in competition with the holder of the patent or of the trade mark.
  3. 3. Regulations There are three kinds of principles that can hypothetically regulate the parallel importations • Principle of national exhaustion: It means that the patent or the trade mark holder can prevent the importation of the product in the market where he is owner of the intellectual property right. • International exhaustion principle: In this theory the intellectual property right is consumed as soon as goods are placed in the market, so that they can freely circulate. • European Union exhaustion principle: Goods patented (or marked) traded for the first time in the European Union or in the European Economic Area can be freely traded inside European Union
  4. 4. Indian patent act and parallel Imports • The Indian Patents law clearly allows parallel imports, even though, understandably, there has been no dispute with respect to parallel import involving patent infringement. • Section 107A (b) of the Patents Act, 1970 provides that importation of patented products by any person from a person who is ‘duly authorized under the law’ to produce and sell or distribute the product shall not be considered as an infringement of patent rights.
  5. 5.  The seller, since the unauthorized trader uses his own distribution network, and the goods are susceptible to damage and impairment during transport, handling and storage;  The consumer, since they are unable to avail themselves of any warranties or after- sales support on such goods; and  The government, which loses taxes and custom collection on account of such goods often being smuggled or under-invoiced at entry ports. Legal Background
  6. 6. Samsung Parallel Import Case Party: Samsung Electronics Company Limited v Kapil Wadhwa Case Background • Samsung (Korea) and its Indian subsidiary Samsung India filed a suit restraining infringement of Trade Mark Samsung against the Defendants who were importing printers from Korea bearing the mark Samsung and selling the same into Indian market. • The printers the Defendant were selling were similar to the printers sold by the Plaintiffs in India. • However, the said models which the Defendants were selling were not being sold by the Plaintiffs in India.
  7. 7. Samsung Parallel Import Case Issue at Stake: • As per the plaintiff the grey market goods were not selling with due adherence. • A further grievance was that the defendant was operating a website whereby the imported Samsung printers were offered at a price much lower than that of the plaintiffs.
  8. 8. Samsung Parallel Import Case Judgment Held High Court of Delhi held that India follows the principle of National Exhaustion and not of International Exhaustion of Rights. Thus, the Defendants were restrained from importing exporting and dealing in printers and their ink cartridges/toners bearing the trademark SAMSUNG. The order of the Learned Single Judge was challenged by the Defendants in appeal before the Division bench of the Hon’ble High Court of Delhi at New Delhi. The Division bench overruled the order of the Learned Single Judge after a careful reading of Section 29 and 30 of the Trade Marks Act, 1999.
  9. 9. Samsung Parallel Import Case Judgment Held • The Rajya Sabha Standing Committee in respect of Copyright Amendment Bill, 2010 held that the term ‘the market’ contemplated by Section 30(3) of the Trade Marks Act, 1999 is the international market. • Thus, legislation in India adopts the Principle of International Exhaustion of Rights. • The Division Bench while setting aside the order of the Learned Single Judge directed the Appellants/Defendants to prominently display in their showrooms that the products sold by them have been imported from abroad. • And that the Respondents/ Plaintiffs do not give any warranty qua the goods nor provide any after service and that the warranty.
  10. 10. The major questioned answered 1. Does sale of imported, genuine products without consent of the right holder in India, constitute infringement under section 29(1) read with 29(6)? 2. Does section 30(3) recognize national exhaustion or international exhaustion? 3. Does Meta tagging and deep hyperlinking of a registered trademark constitute infringement?
  11. 11. The major questioned answered 1. Does sale of imported, genuine products without consent of the right holder in India, constitute infringement under section 29(1) read with 29(6)? • The Court held that any importer who is not a registered proprietor or permissive right holder, even if importing genuine products, is culpable of infringement. • In the absence of any legislative provision or exception for genuine imported goods, such importation is deemed to be an act of infringement.
  12. 12. The major questioned answered 2. Does section 30(3) recognize national exhaustion or international exhaustion? • The Court held that section 30(3) recognizes only national exhaustion in India. • Once goods are acquired by a person from the registered proprietor within the same market, the registered proprietor cannot turn around • Cannot state that there in an infringement of his trademark on the count that there is change of ownership.
  13. 13. The major questioned answered 3. Does Meta tagging and deep hyperlinking of a registered trademark constitute infringement? • The outcome of the order is that only the registered proprietor or persons authorized by it can import goods bearing the registered mark. • This allows companies to follow their time honored practice of “earmarking” goods for markets, at certain prices and features.
  14. 14. LESSON LEARNT & IT’S IMPLICATION FOR COMPANY/TECHNOLOGY The benefit to MNCs in India is obvious It addresses a deep rooted fear of parallel imports amongst subsidiary concerns, which have to deal with the daunting statutory mechanism and consequent costs in India. FMCG goods will probably be the first to jump the bandwagon in embracing the benefits of this order, as amongst others, cosmetic products, liquor and tobacco markets are chronically afflicted by such parallel imports. However, the cooperation of the Customs authorities and their efficacy in these matters will only be tested over time.
  15. 15. Will the outcome have changed, if the registered proprietor was common in the importing territory and India? When goods are ‘lawfully acquired’, by payment of due taxes and so forth, does trademark law still come in the way of the same? Do goods acquired by us in duty free or trips abroad, suffer the implications of this order, as even though we have paid due taxes/duties, it is still ‘import’ as per Trademark law? LESSON LEARNT & IT’S IMPLICATION FOR COMPANY/TECHNOLOGY
  16. 16. LESSON LEARNT & IT’S IMPLICATION FOR COMPANY/TECHNOLOGY Implication: This judgement significantly impacts the law on ‘parallel imports’. The order also touches on the issue of trademark infringement in the case of meta-tagging.
  17. 17. OTHER SIMILAR CASE i. Dell Case  As in the Samsung case, music was also played in a case involving Dell computers.  Three Indian importers (Venktron Digital Systems, Sapphire Micro System and Momentum Technologies) imported around 500 Dell laptops into India from China.  During the process of clearing the consignment at Customs, an alert was registered by Dell India Pvt Ltd for possible trademark infringement of their trademark ‘Dell’.  Result: In favor of the three importers.  Logic: the goods bearing a registered trademark are ‘lawfully acquired’, further sale or other dealing in such goods by the purchaser, or by a person claiming to represent him, is not considered an infringement by reason of the goods having been put on the market under the registered trademark by the proprietor or with his consent.  However, such goods should not have been materially altered or impaired after they were put in the market.
  18. 18. ii. The Polo/Lauren Company LP v Rohit S. Bajaj & Ors :  The plaintiffs pursued an e-commerce website selling counterfeit goods. The defendants were involved in the business of manufacturing, marketing and exporting counterfeit goods, deceitfully and fraudulently, using several domain names such as www.varshaa.com, www.rohitfashions.com and www.stockgarments.com.  Case: As the surreptitious online trade activities of the defendant under the well-known trademarks of the plaintiffs was causing incalculable harm and injury to their business, goodwill and reputation.  In addition, the plaintiffs claimed that these acts were diluting their marks. The courts granted a permanent injunction in both matters.  Decision: Such attempts of counterfeit not only cause loss of profits to the plaintiff but result in inferior products being made available to the public at large, who are deceived by the conduct of the defendants. OTHER SIMILAR CASE