PARALLEL IMPORTATION

Dhanya N. Menon

Altacit Global

DEFINITION

NON COUNTERFEIT PRODUCT

IMPORTED FROM ANOTHER COUNTRY

WITHOUT THE PERMISSION OF THE INTELLECTUAL PROPERTY OWNER/ORIGINAL OWNER

IN OTHER WORDS

PARALLEL IMPORTS ARE LEGITIMATE PRODUCTS, BUT PACKAGED DIFFERENTLY AND MAY NOT CARRYING THE ORIGINAL OWNER’S WARRANTY

GREY PRODUCT/ GREY MARKETTRADE OF A COMMODITY

THOUGH LEGAL

ARE UNOFFICIAL OR

UNAUTHORIZED OR

UNINTEDED; BY THE ORIGINAL MANUFACTURER

BLACK MARKET

TRADE IN GOODS / SERVICES WHICH ARE ILLEGAL IN THEMSELVES

DISTRIBUTED THROUGH ILLEGAL CHANNELS

WHY IT HAPPENS?DIFFERENT PRICING STRATEGIES BY

THE MANUFACTURER

DIFFERENT PRODUCTION COST

THE INTERNATIONAL PRICE DIFFERENCE EXCEEDS THE COSTS OF TRANSPORTING AND SELLING GOODS ACROSS BORDERS

DIFFERENCE IN QUALITY

DIFFERENT LEVELS OF ADVERTISING

DOCTRINE OF EXHAUSTION LIMITATION ON INTELLECTUAL PROPERTY

RIGHTS

FIRST UNRESTRICTED SALE OF A PRODUCT PROTECTED BY IP, EXHAUST THE IP OWNERS CONTROL OVER THE PARTICULAR ITEM

AN INTELLECTUAL PROPERTY OWNER WILL LOSE OR "EXHAUST" CERTAIN RIGHTS AFTER THE FIRST USE OF THE SUBJECT MATTER OF INTELLECTUAL PROPERTY RIGHTS.

IF A RIGHT BECOMES "EXHAUSTED" IN ONE AREA OR JURISDICTION, AN INTELLECTUAL PROPERTY OWNER MAY NOT BE ABLE TO ENFORCE ITS RIGHTS IN ANOTHER AREA OR JURISDICTION

THE ABILITY OF THE ORIGINAL OWNER TO PREVENT PARALLEL IMPORT LEGALLY DEPENDS UPON THE IMPORTING COUNTRIES TREATMENT TOWARDS THE EXHAUSTION PRINCIPLE.

AS PER THE TRIPS AGREEMENT, EACH COUNTRY IS PERMITTED TO ADOPT THEIR OWN STANDARDS FOR PROTECTING IPR.

ACCORDINGLY THEY CAN ADOPT THEIR OWN CONCEPT FOR EXHAUSTION PRINCIPLE

NATIONAL EXHAUSTION

IP RIGHT ENDS UP UPON FIRST SALE OF THE PRODUCT INSIDE THE COUNTRY

THE IP OWNER CAN PREVENT PARALLEL IMPORT FROM OTHER COUNTRIES.

INTERNATIONAL EXHAUSTION

IP RIGHTS ENDS UP UPON THE FIRST SALE ANYWHERE

PARALLEL IMPORT CANNOT BE EXCLUDED

REGIONAL EXHAUSTION

THE IP RIGHTS ENDS UPON FIRST SALE WITHIN A GROUP OF COUNTRIES

ALLOWS PARALLEL TRADE AMONG THE GROUP COUNTRIES.

THE RIGHTS ARE NOT EXHAUSTED BY THE FIRST SALE OUTSIDE THE REGION.

COUNTRY TRADE MARK

PATENT COPYRIGHT

EUROPEAN UNION

REGIONAL EXHAUSTION

REGIONAL EXHAUSTION

REGIONAL EXHAUSTION

USA NATIONAL EXHAUSTION LIMITED BY COMMON CONTROL

NATIONAL EXHAUSTION

NATIONAL EXHAUSTION

JAPAN INTERNATIONAL EXHAUSTION UNLESS BARRED BY CONTRACT

INTERNATIONAL EXHAUSTION UNLESS BARRED BY CONTRACT

INTERNATIONAL EXHAUSTION EXCEPT FOR MOTION PICTURES

AUSTRALIA INTERNATIONAL EXHAUSTION

FULLY PROTECTED

PARTIAL DEREGULATION

INDIAN POSITION

PATENTS

TRADEMARKS

COPYRIGHT

PATENTSDOCTRINE OF IMPLIED LICENSE

PATENT RIGHTS ARE EXHAUSTED WHEN PATENTED PRODUCT FIRST PUT IN TO MARKET OUTSIDE INDIA WITH THE CONSENT OF THE PATENT OWNER

NO EXPRESS PROVISION BEFORE 2002 AMENDMENT

INCLUDED AFTER DOHA DECLARATION ON TRIPS AND PUBLIC HEALTH Contd…

SECTION 48: A PATENT GRANTED CONFER UPON THE PATENTEE THE EXCLUSIVE RIGHT TO PREVENT THIRD PARTIES, WHO DO NOT HAVE HIS CONSENT, FROM THE ACT OF MAKING, USING, OFFERING FOR SALE, SELLING OR IMPORTING FOR THOSE PURPOSES THAT PRODUCT IN INDIA

SUBJECT TO SECTION 107A OF THE ACT

SECTION 107 A: IMPORTATION OF PATENTED PRODUCTS BY ANY PERSON FROM A PERSON WHO IS DULY AUTHORIZED BY THE PATENTEE TO SELL OR DISTRIBUTE THE PRODUCT SHALL NOT BE CONSIDERED AS AN INFRINGEMENT OF A PATENT

A PATENTEE CANNOT PREVENT THIRD PARTY FROM IMPORTING, IF SUCH PRODUCT WAS SOLD OR DISTRIBUTED OVERSEAS BY OR WITH HIS CONSENT

CAN PREVENT BY PLACING CONTRACTUAL RESTRICTION

RULE IN BETTS v. WILLMOT PATENTEE SELLS ANY OF HIS

PATENTED PRODUCTS IN ONE TERRITORY

WITH OUT ANY RESTRICTIONS

THE PURCHASER GETS ABSOLUTE TITLE

FREE TO USE OR DISPOSE OF THE PRODUCT AS IT DESIRES

CONTRACTUAL RESTRICTIONS ARE ENFORCEABLE ONLY IF THEY ARE CLEAR AND EXPLICIT

BROUGHT TO THE NOTICE OF THE PARTY WHO IMPORTS

TRADE MARKS

GENERAL RULE: ONCE THE TRADE MARKED GOODS ARE RELEASED ANYWHERE IN THE WORLD BY OR WITH THE CONSENT OF THE PROPRIETOR, HE CANNOT ASSERT HIS TRADE MARK RIGHT TO PREVENT THE IMPORT OF SUCH GOODS INTO INDIA.

CONDITION: GOODS HAVE NOT BEEN MATERIALLY ALTERED AFTER THEY HAVE BEEN PUT ON THE MARKET

SECTION 30 OF THE TRADE MARKS ACT, 1999 PROVIDES PARALLEL IMPORT Contd…

SECTION 30: IF THE GOODS BEARING A REGISTERED TRADE MARK

ARE LAWFULLY ACQUIRED

THE FURTHER SALE OR OTHER DEALINGS OF SUCH GOODS BY THE PURCHASER OR BY A PERSON REPRESENTING HIM

IS NOT CONSIDERED AS INFRINGEMENT

IF THE GOODS ARE PLACED ON THE MARKET WITH THE CONSENT OF THE PROPRIETOR.

COPYRIGHT MORE COMPLICATED WHEN APPLIED TO

COPYRIGHT

THE RIGHT CONFERRED BY COPYRIGHT ITSELF IS COMPLICATE

CONFERS A BUNDLE OF DIFFERENT RIGHTS

THE GENERAL RULE: A PERSON HAS TO OBTAIN A LICENSE FROM THE COPYRIGHT OWNER FOR IMPORTING THE WORK AND THE CONSENT MAY BE AN EXPRESS ONE

NO LICENSE TO IMPORT MAY BE IMPLIED

Contd…

IMPORT LICENSE REQUIREMENT APPLIES TO ALL COPYRIGHTED WORK MADE OUTSIDE INDIA BY FOREIGN LICENSEES.

NOT TO WORKS MADE IN INDIA AND EXPORTED TO FOREIGN COUNTRY THEN RE-IMPORTED TO INDIA- RIGHT EXHAUSTS

SECTION 51(b)(iv) EXPRESSLY PROHIBITS PARALLEL IMPORTS ON COPYRIGHTED WORKS

SECTION 2 (M): INFRINGING COPY

SECTION 51: SPEAKS ABOUT INFRINGEMENT

SECTION 51(b)(iv): COPYRIGHT IN A WORK SHALL BE DEEMED TO BE INFRINGED WHEN ANY PERSON IMPORTS INTO INDIA ANY INFRINGING COPIES OF THE WORK.

SECTION 2 (M): INFRINGING COPY

INCLUDES ANY COPY IMPORTED INTO INDIA IN CONTRAVENTION OF THE COPYRIGHT ACT

CUSTOMS ACT

PERMIT PARALLEL IMPORT IN GENUINE GOODS WITH IDENTICAL TRADEMARK

NOTIFICATION DATED 18TH JANUARY 1964

GOVERNMENT OF INDIA CAN PERMIT PARALLEL IMPORT OF GOODS BEARING AN IDENTICAL TRADE MARK IF THE GOODS CARRY THE NAME OF THE COUNTRY WHERE THEY ARE PRODUCED

EFFECT OF PARALLEL IMPORT IT TAKE A FREE RIDE ON THE MARKETING

AND SERVICE SUPPORT PROVIDED BY THE AUTHORISED DISTRIBUTOR

IS A THREAT TO THE ORIGINAL MANUFACTURER SINCE IT WILL AFFECT THEIR PROFIT AND THEY CANT TAKE THE HELP OF ANY LAW TO PREVENT

IT ALSO AFFECT HIS ABILITY TO ESTABLISH A SEPARATE INTERNATIONAL MARKET.

PARALLEL IMPORTING NEVER ENCOURAGES CONSUMER DECEPTION AND TRADE IN COUNTERFEIT GOODS AND PIRATED GOODS.

BANE OR BOON? TWO DIFFERENT OPINIONS

- Supporting:

BENEFIT CONSUMERS BY LOWEREING THE PRICES

WIDENING THE SELCETION OF GOODS WIDENING THE CONSUMPTION OF

GOODS

- Not Supporting:

DISCOURAGES INTELLECTUAL PROPERTY OWNERS FROM INVESTING IN NEW AND INNOVATIVE PRODUCTIONS