In another twist to the 'parallel imports' saga, the
Central Board of Excise and Customs (CBEC) has issued a
circular dated May 8 2012 that aimed to dispel the uncertainty
resulting from the conflicting views that emerged from the Samsung and Dell cases in relation to the import of genuine goods
procured without the consent of the registered trademark owner.
The circular clears the decks for the free movement of
parallel-imported goods in India, stating that they are genuine
goods that are allowed under the
Trademarks Act 1999. The Customs Department, which comes under
the Ministry of Finance, sought clarification from the Department
of Industrial Policy and Promotion (DIPP), which comes under the
Ministry of Commerce (the entity responsible for operational and
policy matters in relation to the Trademark and Patent Office), and
the latter seems to have interpreted the relevant section of the
Trademark Act as meaning that parallel imports are allowed, in
sharp contradiction to the ruling in Samsung.
The main points that emerge from the circular are as
When deciding whether a particular consignment of imported
goods infringes the rights of an IP rights owner, the Trademarks
Act 1999, the Designs Act 2000, the Patents Act 1970, the
Geographical Indication of Goods Act 1999 and the Copyright Act
1957 are to be taken into consideration.
These acts are broad and do not exclusively deal with imported
goods. Therefore, only those provisions which have been expressly
mentioned in the
Intellectual Property (Imported Goods) Enforcement Rules 2007
and subsequent notifications are to be taken into consideration. In
this regard, the provisions of the Trademarks Act that are
mentioned in the 2007 Rules are Sections 102 (goods bearing a false
trademark) and 2(i) (goods bearing a false trade description).
Therefore, consignments can be seized only if the conditions under
either of these two provisions are satisfied.
In its comments on the issue of parallel importation, the DIPP
- the nodal authority with regard to all matters pertaining to the
Trademarks Act, the Designs Act and the Patent Act - has held that
Section 107A(b) of the Patent Act allows parallel imports in
relation to patents. In addition, Section 30(3) of the Trademarks
Act provides for the principle of international exhaustion of
rights, and suggests that parallel imports are allowed as long as
the goods are genuine and have not been materially altered or
impaired. In relation to designs, parallel imports are expressly
prohibited under Section 22 (1)(b) of the Design Act.
Field officers should follow the above principles when deciding
whether a particular consignment is to be stopped or released.
The circular brings clarity as to Customs' position on
parallel imports, highlighting that the authorities will no longer
stop such consignments. However, this does not augur well for brand
owners, who might argue that parallel imports render
locally-produced goods less attractive from a price point of view.
Encouraging parallel imports seems counterproductive, as local
manufacturing generates employment and taxes. In addition, imported
products do not take into account local preferences and demand, and
do not carry warranty.
In terms of enforcing IP rights, the circular should thus make
the situation more difficult for brand owners: they will need to
monitor parallel imports and gather intelligence at the market
level to seek redress from the courts on the basis of the
Originally published in World Trademark
Review May 24 2012
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