Dell Case on Parallel Import/Trade Mark Exhaustion
Key Words: parallel import, trade mark exhaustion, national exhaustion, international exhaustion
In this case, three Indian importers filed Bills of Entry for import clearance of Dell laptops. These laptops were imported into India from China. On examination of the goods it was found that they were subject matter of an alert which was issued in relation to the registration of trade mark filed by Dell India Pvt. Ltd. under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007. The matter was forwarded to Dell India for getting their ‘No Objection’. The right holder (Dell India) did not grant any authorization in respect of the said consignments and joined the proceedings. The goods were later examined for independent opinion which indicated that all the said laptops bearing the Dell brand were genuine products manufactured by Dell company in China.
- The plaintiff submitted that the said consignments were prohibited goods under Rule 6 of the said Rules read with Section 11 of the Customs Act, 1962.
- The three importers in this case were not permitted I authorized to use the Dell Trademark, hence, import by them was an act of infringement under the law. Any act of importation of the goods bearing the mark of the registered proprietor holder without the importer being a registered proprietor or permissible right holder was statutory infringement under Section 29 of the Trademarks Act, 1999.
- Relied on Single Judge Bench decision in Samsung Electronics Co. Ltd. v. Kapil Wadhwa
- The exception carved out by the said section protected lawful importers who imported branded products which were lawfully acquired even if some other person(s) was the exclusive distributor in respect of those products.
- Notes on clauses for Section 30(3) states that- “sub-clause (3) and (4) recognize the principle of “exhaustion of right” by preventing the trade mark owner from prohibiting on the ground of trade mark right, the marketing of goods in any geographical area, once the goods under the registered trade mark are lawfully acquired by a person.” Thus, as per Section 30(3), the rights of the trademark proprietor in trademarked goods are exhausted when the goods are first put on the market anywhere in the world.
- Section 30 (4) of the Trade mark Act had no application in the present case as there was no change or impairment in the original condition of the goods after the goods was put on the market.
- For the purpose of Trade Mark Act, Section 29(1) & 29(6) of the Trade Marks Act, 1999 should not be referred in isolation but Section 30 (3) should also be taken into account.
- The concept of international exhaustion provided in section 107 A of the Patents Act, 1970 and in section 30(3) of the Trademarks Act, 1999 and in section 2(m) of the Copyright Act were similar and such provision was in tune with the national policy on exhaustion of rights.
- Relied on Division Bench judgment in Kapil Wadhwa v. Samsung Electronics
The Customs Commissioner passed an order in favour of the three importers, based on interpretation of Section 30(3) (b) of Trade Marks Act, 1999, which provided that where 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.
Only those goods in relation to the Trade Marks Act, 1999 are prohibited goods under Section 11 of the Customs Act, where false trade marks of false trade description have been applied. As the imported goods are found to be genuine, the import of the same are not prohibited by the Custom notification [Notification 51/2010-Cus.(N.T.)].
They also noted that the provision of the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 was not discussed in the Single Judge Bench decision in Samsung vs. Kapil Wadhwa.
OUTCOME: Goods imported did not infringe IPR of of the right holder M/s Dell India Pvt. Ltd.
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