Delhi High Court
Samsung Electronics Company ... vs Kapil Wadhwa & Ors. on 17 February, 2012
Author: Manmohan Singh
.* HIGH COURT OF DELHI : NEW DELHI
+ IA No.7774/2011 & IA No.10124/2011 in C.S. (OS). No.1155/2011
% Judgment decided on : 17.02.2012
Samsung Electronics Company Limited & Anr. ...Plaintiffs
Through: Mr. Pravin Anand with Mr. Dhruv
Anand and Mr. Nischal Anand, Advs.
Versus
Kapil Wadhwa & Ors. .....Defendants
Through: Mr. Neeraj Kishan Kaul, Sr. Adv.
with Mr. Saikrishna Rajagopal,
Ms. Shwetasree Majumdar,
Mr. Eashan Ghosh and Mr. Shobhit
Aggarwal, Advs.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. By this order, I propose to dispose of IA No.7774/2011
filed by plaintiff under Order XXXIX Rules 1 and 2 Code of Civil
Procedure,1908 and IA No.10124/2011 filed under order XXXIX Rule
4 CPC seeking vacation of interim order passed on 03.06.2011.
2. The brief factual matrix of the matter can be enunciated as
under:
a) The Plaintiff no 1 is stated to be a company incorporated under
the laws of Korea. The plaintiff No. 2 is stated to be company
incorporated under the Indian Companies Act. Both the plaintiffs
collectively stated to be a part of Samsung Group of Companies
having 14 listed companies and 285 worldwide operations.
b) It is stated that the plaintiffs are engaged in the business of
manufacturing and trading in electronic goods such colour
televisions of all types, home appliances, washing machines,
microwaves, air conditions, computers, printers and cartridges
etc.
c) The plaintiffs have stated to earn revenues for the year 2009
around US$ 172.5 Billion and the net income was around US$
13.8 Billion. The asset of the plaintiffs were valued as USD
294.5 Billion for the year 2004-2005.
d) The plaintiffs inform that it is one of leading companies in the
electronic goods segment across the globe and its products are of
world class quality goods. The plaintiffs have also informed
about their business in India which was initiated since 1995
when the plaintiff No. 2 was formed. The plaintiff No. 2 enjoys
a turnover of US 1 Billion in just over a decade of operations in
India. All this has been done under the brand name and corporate
of the plaintiffs namely SAMSUNG.
e) The plaintiffs have also informed about the extensive promotions
carried out in promoting and popularizing the brand name
SAMSUNG by them and due to the same and their worldwide
nature of operation, the trade mark SAMSUNG as per the
plaintiffs is the well known or famous trade mark.
f) The plaintiffs have registered the following the trade marks in
India under the mark SAMSUNG:
Sl TRADEMARK CLASS REGISTRATION
No. NO.
1 Samsung 7 591127
2 SAMSUNG 7 1055554
3 Samsung 9 591128
4 SAMSUNG 9 1055555
5 Samsung 11 591126
6 SAMSUNG 11 1055556
7 SAMSUNG 7,9,11 1240403
The Plaintiff No. 1 has licensed the use of Samsung
trademark in India to Plaintiff No.2 vide a trademark agreement
dated 8th July 2003. The said agreement has also been filed with
the Trade Mark‟s Registry for registration.
g) The grievance of the plaintiffs in the present case relates to the
important business of manufacturing, selling and distribution of
wide range of printers under the mark SAMSUNG by them and
rampant problem of parallel importation especially carried out by
the defendant No. 1 and 2 whereby the plaintiffs are deprived to
carry out their legitimate business under the mark SAMSUNG.
h) The plaintiff explains the said business of printers which includes
wide range of varieties of printers costing from Rs.5299/- to
Rs.1,39,999/-. All these printers cater to diversified needs of the
consumers across the India. The plaintiffs have stated that the
printers sold in India by them are sold through the authorized
channel of resellers and partners of the plaintiff No.2. Any third
party who is not authorized by the plaintiff cannot legitimately
sell, advertise the Samsung products in India.
i) The plaintiffs have also mentioned in the plaint that the plaintiffs
are selling and advertising their products through website namely
Samsung.com/in through which they intend to educate the
customers of their varied range of products etc.
j) The defendant No. 2 is stated to be a company engaged in
distributing, retailing and selling various types of computer
hardware as well as periphericals. The defendant No. 3 appears
to be retail outlet of the defendant No. 2. The defendant No. 1 is
added as the managing director for the defendant No. 2
k) The grievance as stated in the plaint is that in the month of
March 2011, the plaintiffs received an information from market
sources that the defendants were distributing, retailing and
selling grey market printers of the plaintiffs in the market and not
the ones supplied by the plaintiff No. 2. As per the said
information gathered from the market sources, the plaintiff
learned that the said printers as being sold by the defendants
were without the proper Maximum Retail Price stickers and were
not earmarked to be sold in the Indian market.
l) It is averred that the defendants are neither the authorized sellers
of the Samsung products nor they have the permission or the
authorization from the plaintiff to sell their products in India.
m) The plaintiffs have averred in the plaint that on 18th March 2011,
the advertisement was published in the weekly The DQ week by
the defendant No. 2 offering SAMSUNG printers for sale. The
plaintiff also complained that the said advertisement used the
SAMSUNG mark along with slanted device. The said
advertisement quoted the price much below than the price of the
printers ordinarily sold in the market as per the plaintiff.
n) The Defendant also operates a website whereby the defendant
offers for sale a varied range of the printers under the mark
SAMSUNG at the prices much lower than offered by the
plaintiff. The defendants use the technique of deep hyperlinking
whereby the defendant is also able establish a connect between
his website with that of the plaintiff when it comes to displaying
the product to the consumer. All this is done to confuse the
consumer so as to believe that the products are emanated from
the plaintiffs authorized representatives when the defendants are
not so.
o) The plaintiffs have also informed that the defendants‟ premises
were also inspected by the plaintiffs through their investigator
whereby the following models of the printers were discovered
when the plaintiffs asked to purchase the printers:
1. ML-160 which should be rather ML-1666 for India.
2. SCX- 3200 instead of SCX 3201 and
3. SCX - 4623F instead of SCX - 4623 FN
The defendant representative assured the plaintiffs
representative that these printers have exactly the same features
which they are looking for in the printers asked for. The prices
were also quoted as :
1. ML-1666 - Rs. 3300
2. SCX - 3200 - Rs 6500
3. SCX- 4623 F - Rs. 9500
It is mentioned that the plaintiffs‟ representative has thus
purchased the said products from the defendant‟s representative
and along with the same was given the card and the invoice
issued by the defendant. All this has been averred in the plaint to
show the cause of action wherein the products which as per the
plaintiffs are meant for Indian markets are sold by the defendants
at the price lower than the MRP of the said products sold by the
plaintiffs.
p) The plaintiffs have further stated that the said printers purchased
by the plaintiffs from the defendants were then examined by the
plaintiffs and it was discovered the said printers from materially
different from that of the products sold by the plaintiffs in Indian
market. The said differences have been highlighted by the
plaintiffs product model wise as under:
A- ML-1660/ XSG (Impugned product No. 1)
S. No Point of Impugned product Product sold in
difference India
1. MRP Label Incorrect with Correct with
missing details complete details
2. Model number ML-1660/ XSG ML-1666/ XIP
3. MRP Rs. 3300 Rs. 6299
4. Size of the Smaller. Not A little larger
Box conforming with confirming the
the packaging laws laws of India
of India
5. Warranty a. Warranty a. Warranty
applicable applicable
only in Gulf only in India
Region (will b. Offers an
not be extended
honored in warranty 1 +
India) 2 years
b. No extended c. Offers on
warranty site warranty
c. Does not
offer on site
warranty
6. Colour Has dual tone - Has a monotone -
Black and white only black, Dual
tone printers are
not sold in India
7. Model No. of 1042 1043
toner
8. Capacity 700 prints 1500 Prints
9. USB Cable Not provided Provided
10. Plug 2 Pin (without 3 Pin (with
earthing) earthing)
Likewise for respective models SCX- 3200 XSG and SCX-
4623/ XSA, the differences on similar lines have been
highlighted in para 32 of the plaint.
q) Additionally, it is stated that the packaging of the said printers is
violative of the provisions of The Standards of Weights and
Measurement Act, 1976 and the rules made therein. Thus, the
said act of the parallel importation by the defendants is also
violative of other laws for the time being in force.
3. The plaintiffs by showing the above acts of the defendants
allege that the defendants are guilty of the following infringement:
By way of parallel imports, the defendants are infringing
the trade mark SAMSUNG of the plaintiffs in as much as
the importation has been caused without the consent or
permission of the registered proprietor and thus the
defendants acts are infringement in view of Section 29 of
the Trade Marks Act.
By way of doing meta tagging and deep hyperlinking, the
defendants are guilty of the infringement of trade mark
SAMSUNG as the defendants are using the mark in
relation to the advertisement and the use of the same is
treated to be use for the purposes of infringement and thus
the defendants are violating Section 29(1) read with
Section 29 (6) of the Act.
The defendants are passing off the goods which are not
meant for Indian market giving the impression that the
same are emanating from the plaintiffs when the plaintiffs
have not given any such authorization or permission to the
defendants to undertake such activities. All this is being
done to the detriment of the plaintiffs is clear act of
misrepresentation as well as deceit to the general public.
The defendants are also tarnishing the reputation of the
plaintiffs well known trade mark SAMSUNG by providing
the goods which are actually not intended to be served to
the Indian public. Any element of dissatisfaction would
then clearly attack or reflect on the reputation of the
plaintiffs mark SAMSUNG.
4. For all these reason, the plaintiffs have raised the complaint
before this court by preferring a suit for infringement of the trade mark
and passing off. Along with the same, the plaintiffs have preferred an
IA No.7774/2011 under Order XXXIX Rule 1 and 2 CPC which came
up for hearing on admission on 11.05.2011 and then on 03.06.2011
when this court has passed the order to the following effect:
"The Defendants, their partners, directors, principal officers,
servants, agents and all others acting for and on their behalf are
restrained from importing, exporting distributing, selling, offering
for sale, advertising, directly or indirectly dealing in the grey
market ink cartridges/toners, or any other products of the
plaintiffs under the mark SAMSUNG or any mark as may be
deceptively similar to the plaintiffs trade marks amounting to
infringement of the plaintiffs registered trade marks."
5. The defendants were served in the suit and in the
application and pursuant to the same, the defendants have filed written
statement and an application which is IA No.10124/2011 under Order
XXXIX Rule 4 read with Section 151 CPC seeking vacation of interim
order passed on June 3, 2011. The following are the main contentions
and defences raised in the application and written statement:
a) The plaintiffs are guilty of concealment of material facts and
have not come before this court with clean hands. The
defendants have been portrayed as infringers in the plaint
however, the plaintiffs have not disclosed the following facts:
The plaintiffs have suppressed a material fact that the
applicants/ defendants are importing and selling the
genuine, original unaltered SAMSUNG printers which
have been purchased and imported through the legitimate
channels. These printers have been sold in the market by
the plaintiff No. 1 and the same are being imported into
India and sold in the same condition as they were first
sold by the plaintiff. All the relevant import documents for
each of the printers listed in the suit are being filed with
these present proceedings along with the import licence
issued to the defendant No.2 and their central sales tax
registration.
Plaintiffs have falsely claimed that they have received
information that the defendants were distributing, retailing
and selling grey market printers of the plaintiffs in the
market in the month of the March 2011. The plaintiffs
have deliberately chosen to suppress the fact that the
defendant No. 3 has been erstwhile brand shop which is
authorized retail outlet of the plaintiff No. 2 from the year
2000 to 2004, the only IT brand ship of the plaintiff No. 2
in India at the time. Documents demonstrating the
commercial relationship between the plaintiff No. 2 and
defendants No. 1 and 3 are filed with the court.
It is submitted that even when the defendant No. 3 was
the plaintiffs authorized outlet, it was importing and
selling openly on its premises, parallel imported products
that were not purchased from plaintiffs No. 2 or Indian
distributors and the same were stocked with the defendant
No. 3‟s premises and the consumers had the option of
buying either of them. The only difference was price
differentiation and warranty which is emanated from
Indian entity of the plaintiffs.
The business model of the defendants of selling parallel
imported product existed from as far back as 1998 and
was well known to the plaintiff No. 2 even at the time
when the agreement was entered into between the
plaintiffs and the defendants and no objection was raised
during the currency of the relationship between the
parties.
The plaintiffs have not disclosed that the plaintiff No. 2
itself imports products from other territories and sells
them in India in the exact same manner as the defendants
and their averment in the plaint that there are separate
earmarked products for India is untrue.
The plaintiffs have suppressed the relationship between
the plaintiffs and the defendants and there are some
commercial relationships between the plaintiffs and the
defendants whereby the plaintiffs have failed to pay the
rent to the defendants and the present suit is a counter
blast to the said grievance which is also pending before
this court in form of CS(OS) 357 of 2007 Dimension
Next Infocom vs. Samsung India Electronics Ltd.
The defendants have again attempted to falsify the
statements in the plaint by urging the model numbers of
the printers stated in the plaint are not relating to the ones
which are earmarked for India and the said statement is
untrue. It is stated that the products are actually available
in various countries including India and thus the said
stand of the plaintiff in the plaint is incorrect.
The defendants have again stated that the investigator
story mentioned in the plaint is not properly worded and
the defendants never stated that the printers which were
asked for are out of stock etc, the said story is
misrepresented before this court.
Plaintiffs are themselves guilty of defrauding the
exchequer by selling the printers after importation at the
higher prices. The plaintiffs have also not shown to the
court as to how and why their own products are imported
at the lower prices are shown to be at the higher prices on
paper.
b) The allegations in the plaint relating to warranty are also
incorrect as the defendants are themselves offering carrying in
warranty to their customers and in the cases of the faulty
products, replacing the parts with the original ones. It is
submitted that there is recognition in the law of about the
different kinds of warranties. The uniform commercial code in
USA recognizes the seller‟s warranty obligations. The
defendants are thus well within their right to provide warranty to
their own customers independent to that of the plaintiffs.
c) It is a settled law that the import, sale and/ or resale of the
genuine printers by the defendants does not amount and indeed
cannot amount to infringement, dilution and passing off. The
plaintiffs cannot impose restriction on sale or resale of genuine
products originating from the plaintiffs. The present suit is an
attempt to thwart competition from original goods which are
available in the market at substantially lesser price. The present
acts of the defendants are permissible under Section 30 of the
Act of 1999.
d) The plaintiffs have admitted in the para 37 of the plaint that the
goods appear to be genuine ones. Thus, the said sale of the
products by the plaintiffs done internationally, the plaintiffs are
estopped from challenging the subsequent sales by way clear
application of exhaustion rule envisaged under Section 30 of the
Act.
e) Article 6 of TRIPS convention gives the option to the member
state including India to opt for the exhaustion principle and
pursuant to the same, India has followed the principle of
international exhaustion of rights by introducing Section 30
under the Act of 1999. This fact has been reflected under the
notes on clauses which are filed with the proceedings
f) The trade marks act does not provide recognize or provide any
protection to market segmentation or division on the basis of the
territories in order to enable the trade mark proprietor to engage
in price differentiation on the basis of the territories. The mere
act of loss of sales or erosion of the market of the plaintiffs
cannot be categorized as infringement when there are only
genuine products which are available in the market.
g) The plaintiffs‟ permission or consent for further sale of the
products which have already sold by the plaintiffs in the
international market is not required. The contention of the
contravention of the other laws by the defendants is also
incorrect.
h) The plaintiffs have wrongly stated that there are alterations in
order to invoke the exception under Section 30 (4) when actually
there are no alteration or changes of the products after
importation.
By averring the above mentioned defences in the
application, the defendants pressed for the vacation of the
injunction. Both the applications came up for hearing before this
court.
6. Hearing the parties on 8.7.2011, this court was pleased to
pass an order partially modifying the order dated 3.6.2011 passed in the
local commissioner application and the goods were released to the
defendants with few directions. The defendants also filed an affidavit in
Undertaking along with the photographs on 25.7.2011. A demand draft
for a value of 3% of the sale price of the printer was also filed.
The said order was modified by order dated 17.11.2011 in
view of the statement made by the counsel for the plaintiff that the
present case is of infringement of trade mark SAMSUNG only in
relation to printers and its cartridges/toners and is not in respect of any
other products.
7. The plaintiffs and the defendants on the other hand pressed
their respective IAs which have been eventually heard by this court.
This court has heard the submissions of Mr. Parveen Anand, learned
counsel for the plaintiff and Mr. Neeraj Kishan Kaul senior advocate
along with Mr. Saikrishna Rajagopal appearing on behalf of the
defendants.
8. Mr. Parveen Anand, learned counsel appearing on behalf of
the plaintiffs has made his submissions which can be crystallized to the
following terms:
a) Firstly, Mr. Anand, learned counsel submitted that the
defendants acts of importing the printers bearing the trade mark
Samsung without the permission of the plaintiffs to India
amounts to infringement of the trade mark within the meaning of
Section 29 of the Trade Marks Act, 1999.
In this context, Mr. Anand has read and relied on Section 29
of the Trade Marks Act, 1999 and argued that the acts of the
defendants are without the permission of the registered
proprietor and also the defendants are not the registered
proprietor of the trade mark. Further Section 29 (6) provides for
the definition of use wherein the import of the goods as well as
selling the goods amounts to use of the trade mark. Thus, as per
the learned counsel of the plaintiff, the collective reading of
Section 29 (1) read with Section 29 (6) of the Act would
squarely cover the defendant‟s acts whereby the defendants
import the goods under the identical mark and sell the same
within the market without the permission of the owner of the
registered trade mark.
b) Secondly, Mr. Anand has also explained the case of the plaintiffs
for additional infringements carried out by the defendants by
adding and using the name Samsung on their website by way of
meta tagging and deep hyperlinking. By doing all this, the
defendants are projecting themselves to be associated with the
plaintiff by offering for sale the products of the plaintiff in the
advertisements online for sale of the said products. This as per
the plaintiff‟s counsel is an infringement within the meaning of
Section 29 (8) as contemplated under the Act.
c) Thirdly, Mr. Anand has vociferously argued in refutation to the
defendant‟s contentions on the principle of international
exhaustion that Trade Mark Act, 1999 recognizes the principle
of national exhaustion unlike international exhaustion. Learned
counsel relied on Section 30 (3) of the Act in this context and
also drawn the aid from European Union Trade marks Directives
and provisions of the UK Act 1994 as existing in UK wherein
the principles of national exhaustion are followed. It is argued
that the provisions as existing in UK and in Indian Act are more
or less similarly worded and rather pari materia and therefore,
the departure from the views expressed by the UK courts under
similar provisions would not be the correct construction of
Section 30(3) of the Trade Mark Act and rather this court should
adopt the views expressed by UK courts and follow the
principles of national exhaustion.
d) Fourthly, learned counsel for the plaintiffs has also commented
on the admission made by the plaintiffs in the replication that
India follows international exhaustion rule. He says that it was
made due to oversight while drafting of replication by junior
counsel. Learned counsel urged before this court that admission
of the legal principle by the plaintiff or parties to the proceeding
will not confer any duty on the court to interpret of the provision
of Act on the basis of the said admission and neither this court
will not render the same interpretation on the basis of the
admission if the same can be interpreted otherwise. Thus, it is
the court to decide what is purely a legal issue and the consent or
dissent of the parties is immaterial.
e) Fifthly, learned counsel has argued that even otherwise still the
right of the proprietor to oppose further dealings remains under
Section 30 (4) and the plaintiffs case thus falls within the ambit
of Section 30 (4).
This has been explained by Mr. Anand by reading Section
30 (4) of the Act. By placing reliance on Section 30 (4) of the
Act, Mr. Anand correlated the applicability of the section with
the present case by pointing out the following differences or
changes in the products of the plaintiff vis a vis that of the
defendants which according to plaintiffs‟ counsel are material
changes or impairments enabling the plaintiffs to oppose the
further dealings in the market. The said differences are outlined
in the following manner:
1. Incorrect or missing MRP labels mandatory under the
legal Metrology Act, 2009
2. Model numbers
3. Price
4. Size of the box.
5. The warranty is not applicable in India, but only in the
country where the goods have been imported from.
6. Colour
7. Model number of the toner, which is not interchangeable.
8. Capacity of the toner
9. There is no USB cable provided in the printers sold by the
defendants
10. Different plugs
11. Different language
In view of the above as per Mr. Anand, learned counsel for
the plaintiffs, the case of the plaintiffs is not governed by any
principle of exhaustion be it national or international provided
under Section 30 (3) and rather it falls within purview of Section
30 (4) which is an exception to Section 30 (3) and the defendants
are selling the products which are not meant for Indian markets
with the marked changes or impairments without the consent of
the proprietor which leads to doing something which falls within
the domain of the proprietor to decide whether he actually
intends to market such products in the country specific which in
the instant case is India. Therefore, the plaintiff being the
proprietor can very well object against the further dealings or
selling of those goods in India.
f) Sixthly, learned counsel for the plaintiffs has argued that the
provisions of Section 30 (4) is also applicable where there are
legitimate reasons for the proprietor to oppose the further
dealings of the products or the goods. The said legitimate
reasons as per Mr. Anand in the instance case are manifold and
the same can be highlighted in the following manner:
Material Differences/ Impairment of the goods.
Likelihood of consumer confusion
Dilution of the trade mark
Dissatisfied consumers leading to loss of goodwill and
reputation
Disruption of Authorized distribution channels
Possible liability under the Legal Metrology Act
Possible Liability under the Consumer Protection Act
Misrepresentation through the advertisements, deep hyper
linking and metatagging.
9. All these as per the learned counsel for the plaintiffs are the
legitimate reasons entitling the proprietor to oppose the further dealings
of the goods imported by the defendant in addition to the fact that the
conditions of the goods are changed and impaired. Therefore, the
concerns or legitimate reasons of the plaintiff allows the opposition of
dealings in the goods under Section 30 (4) of the Act.
10. This has been further explained by Mr. Anand by urging
that the section uses the expression "legitimate reasons" which may or
may not include the change and impairment of the goods and thus the
said legitimate reasons can be any reason which is legally permissible
to the proprietor to oppose the dealings in the goods. Mr. Anand has
argued that the courts in European countries have interpreted the term
legitimate reasons to subsume the following reasons:
a) When the use of the identical trade mark seriously damages the
reputation of that mark.
b) When use is carried out in such a way as to give an impression
that there is commercial link between the trade mark proprietor
and third party.
c) When the use is carried out in such a way so as to the give the
impression to the third party is affiliated to the proprietor‟s
distribution network or that there is a special relationship
between the two persons.
11. All these reasons have been included by the courts by
interpreting the term legitimate reasons. It has been urged that the said
reasons are satisfied in the present case too in as much as the
defendants are selling the products which are material changed or
impaired and thus causing the damage to the reputation of the plaintiffs‟
mark. Furthermore, the defendants are purporting to establish the
commercial link by using the identical brand name of internet or by
hyper linking, by advertising in newspapers etc. Therefore, the present
legitimate reasons must be accepted by this court entitling the plaintiffs
to prohibit the dealings in the goods.
12. Mr. Anand also relied upon the following judgments to
support his submissions:
SKF USA v. International Trade Commission, 423F, 3d, 1037
wherein the court has held that material difference doctrine will
include physical as well as non physical differences.
PepsiCo v. Martin Ryes, 70 F.Supp, 2d 1057(1999), wherein the
court has considered non compliance of labeling requirement as
material differences and also considered the aspect marketing
techniques adopted by the importer which is different from that
of the plaintiff.
Societie Des Product Nestle v. Casa Helvetia, 982 F. 2d 633
(1992) wherein the court has held that the difference in the
proprietors goods and grey market good is sufficient to cause
confusion and the court answered the question in affirmative.
The court has also considered lack of warranty and after sale
service as a factor which may also cause consumer confusion.
Gamut Trading co v. International Trade Commission, 200 F.3d
(Fed Cir) 1999 wherein the court has held that the rule of
international exhaustion is not applied incase there are material
difference between the foreign grey goods and the authorized
domestic goods.
Osawa & Co v. B& H Photo 589 F, Supp 1163 (1984) where the
guarantee and post sale service was held to be material
difference entitling the proprietor to oppose such sales.
Ferrero USA Inc v. Ozak Trading Inc, 753 F. Supp 1240 (1991)
wherein the court has stated that non compliance of the statutory
requirement amounts to difference or changes which may entitle
the proprietor to oppose such imports or dealings.
Original Appalachian Artword Inc. Granada Electronics Inc, 816
F.2d 68 76 (1987) wherein the court has held about the material
differences.
General Electric Company v. Mr. Altamas Khan, an order passed
in CS(OS) No. 1283 of 2006 which is an interim order passed
exparte.
Bose Corporation v. Mr. S Mehta & Anr, an exparte order
passed in CS(OS) No. 337 of 2006.
Samsung Electronics Company Ltd & Anr v. Mr. Adwani &
Anr, an exparte order passed in CS(OS) No. 1583 of 2006.
Samsung Electronics Company Ltd & Anr v. Mr. M. Borana &
Anr, an exparte order passed in CS(OS) No. 1582 of 2006.
Zino Davidoff v. A & G Imports Ltd, (2002) RPC 20 wherein
the European court has evolved the tests relating to consent of
the proprietor and how the same has to be proved. Further it was
held that the lack of knowledge of the importer as to the
objection to resale is immaterial as regards the exhaustion. It is
also immaterial if the authorized retailers failed to impose a
contractual reservation on subsequent purchasers.
13. In view of the aforementioned submissions and case laws
relied upon, Mr. Anand concluded his arguments by stating that the
present case thus warrants the grant of interim injunction as the
plaintiffs have the prima facie case of established infringement, the
balance of the convenience also lies in favour of the plaintiffs as the
plaintiffs would be inconvenienced if the defendants are allowed to
tarnish the reputation and goodwill of the plaintiff. The irreparable
injury shall also result to the plaintiffs if the parallel markets are
allowed to be made by the defendants without the consent of the
plaintiffs. Therefore, the interim injunction as per the plaintiffs‟ counsel
must follow in the present case.
14. Per contra Mr. Neeraj Kishan Kaul, learned Senior counsel
and Mr. Saikrishna Rajagopal and Ms. Shwetasree Majumdar, learned
counsel appearing on behalf of the defendants have made their
submissions which can be outlined in the following terms:
a) Firstly Mr. Kaul attempted to explain the case of the defendants
by stating that the defendants are importing and selling the
genuine, original and unaltered SAMSUNG printers which have
been purchased and imported through the legitimate channels.
The printers have been sold in the world market by the plaintiff
No. 1 and the same are being imported and sold in India in the
same condition as they were first sold much in the same way as
the plaintiff No. 2 itself imports products from other territories
and sells them in India. Thus, as per learned senior counsel, the
defendants acts of importation of the printers amounts to
"acquisition from the lawful channels" and also the concept of
"world market" must be brought into picture wherein there is a
free world market operating without any barriers. It is thus the
submission of the defendant‟s counsel that there is no prohibition
thereafter and nor the proprietor is entitled to control the dealings
in the goods once the goods are lawfully acquired from the world
market.
Mr. Kaul has explained and it has been urged by him that it
is nobody‟s case that the defendants are importing the printers
from the countries which are so alien to the conditions in India so
as to categorize Indian market as superior market and imported
products are inferior. Rather, the imports of the printers made by
the defendants are emerging from Gulf territories and china
which are more or less the same territories from where the
plaintiff No. 2 is also importing the printers. Therefore the
complaint of the plaintiff is frivolous and meritless.
b) Secondly, Mr. Kaul, learned Senior counsel for the defendants
has argued that the defendants cannot be held guilty of parallel
importation in view of the applicability of principle of
international exhaustion envisaged under Section 30 (3) of the
Act. Mr. Kaul has specifically urged that India has followed the
principle of international exhaustion of the goods in respect of
Trade mark law whereby if the goods are sold once by the
proprietor under the trade mark worldwide, the proprietor is
estopped from further questioning or challenging the further
dealings of the products unless the strong case of Section 30(4)
of the Act is made out by the plaintiff with evidence.
This has been explained by Mr. Kaul by citing the Article 6
of TRIPS convention wherein Members states are given liberty
to choose the manner of exhaustion principle which they intend
to adopt. By placing reliance on the said article 6, it has been
contended by Mr. Kaul that India followed the principle of
international exhaustion of trade marks by exercising its
discretion in view of the said Article 6. This has been engrafted
in the form of Section 30 (3) of the Act as per Mr. Kaul which
speaks for itself that it is case of the international exhaustion.
Mr. Kaul, learned Senior counsel for the defendant in order to
amplify his argument on India‟s take on international exhaustion
has also relied upon the statement of objects and reasons of
Clause 30 of the Trade Marks Bill, 1999 which reads as under:
"Sub clause (3) and (4) recognize the principle of
"exhaustion of rights" by preventing the trade mark owner
from prohibiting on ground of trade mark rights, the
marketing of goods in any geographical area, once the
goods under the registered trade mark are lawfully
acquired by a person. However, when the conditions of
goods are changed or impaired after they have been put on
the market, the provision will not apply"
Mr. Kaul also relied upon 227th Report on Copyright
Amendment Bill, 2010 which reads as under:
"Indian law is quite liberal in permitting Parallel Imports
of genuine goods bearing the registered trade marks
provided such goods have not been materially altered after
they have been put in the market.... The general rule is
that once trademarked goods are released anywhere in the
market by or with the consent of trade mark proprietor, the
proprietor cannot assert its trademarks rights to prevent
imports of such goods into India, provided that such goods
are not materially altered"
Mr. Kaul relied upon the case of Xerox Corporation v.
Puneet Suri which is case wherein while passing an interim
arrangement by the learned single judge, there are some
observation to the effect of the rights of proprietor to oppose the
dealings in relation to second hand goods.
Mr. Kaul relied upon some write up on Standards and
Principles Concerning the Availability, scope and use of Trade
related Intellectual Property Rights- Communication from India,
10th July, 1989 wherein similar observation of international
exhaustion are made.
Mr. Kaul further placed reliance upon some write up or
Map demonstrating regimes followed by various countries issued
by International Trade Mark Association which again pinpoints
the adoption of international exhaustion.
As per Mr. Kaul, learned Senior counsel for the defendants,
the aforementioned statement of objects, reports, write ups,
views and judgment passed by a single Judge are nothing but a
strong indicators to the effect that the prevalent position
governing in India in law of trademarks when it comes to
importation of genuine goods is international exhaustion and not
regional exhaustion. Thus, this court should vacate the interim
order passed on 03.06.2011 with immediate effect as the case of
defendants is squarely governed by the provisions of Section 30
(3) of the Act of 1999.
c) Thirdly, Mr. Kaul, learned Senior counsel also argued that the
plaintiff also admits that India follows the regime of international
exhaustion in the Replication filed by the plaintiff wherein there
is categorical admission made by the plaintiff. Therefore, it is all
the more clear that Section 30 (3) shall be applicable on
international exhaustion basis.
d) Fourthly, Mr. Kaul, learned Senior counsel for the defendant has
submitted that Section 30 (4) on which the plaintiff is placing its
reliance is an exception to the rule of international exhaustion
and therefore the said exception must be narrowly construed. It
is argued that the term "legitimate reasons" cannot be given a
wider import so as to include any legal reason which may make
the provisions of Section 30 (3) as dead letters. Both Section 30
(3) and 30 (4) are to be interpreted together holistically so as to
make them workable together and not one overpowering the
other.
Mr. Kaul propounded that the Section 30 (4) acts as a
proviso to Section 30 (3) and has placed reliance upon the
treatise on Interpretation of Statutes by Justice Guru Prasanna
Singh (G.P. Singh) to urge that the provisos are construed
narrowly.
e) Mr. Kaul has argued that even otherwise the case of the plaintiffs
does not fall under Section 30 (4) as the material alterations
pointed out by the plaintiffs are merely artificial in nature and the
plaintiffs have not been able to point out any significant changes
or impairments entitling them to oppose such dealings. It is
argued that the changes like plug difference is not merely
artificial but actually there is no such change exists, further,
model numbers changes are also artificial, guarantee change does
not make any difference as it is not only the prerogative of the
proprietor to give such warrantee or guarantee. Therefore, all the
changes as alleged and responded and other changes whatsoever
pointed by the plaintiffs are nothing but an artificial changes
which cannot be accepted as material alterations or impairment
so that the plaintiff can restrain the defendants from dealing with
the genuine products of the plaintiff itself.
f) Mr. Kaul has further argued that the provisions of Section 30 (4)
are not in pari materia with EU directives are there are
differences in the wordings and therefore the judgments rendered
in the relation to "legitimate reasons" cannot be pressed into
service while dealing with Section 30 (4).
Mr. Kaul has read both the provisions and for the sake of
brevity only article 7 of the EU Directive is reproduced:
Article 7 : Exhaustion of the Rights conferred by a trade mark
(1) The trade mark shall not entitle the proprietor to prohibit
its use in relation to goods which have been put on the
market in the community under that trade mark by the
proprietor or with his consent.
(2) Paragraph 1 shall not apply where there exist legitimate
reasons for the proprietor to oppose further
commercialization of the goods, especially where the
condition of the goods is changed or impaired after they
have been put on the market"
By reading the above provisions, Mr. Kaul has pointed out
the following differences in the language:
a) Article 7(2) uses the term "further commercialization" as
against Indian provision which uses the term "further
dealings"
b) Article 7 (2) uses the term "goods especially where...."
Whereas section 30 (4) uses the term "goods in particular,
where.." ( The comma occurs after "in particular" in
Indian section before "especially" in EU Directive)
The aforementioned two point difference as per Mr. Kaul
makes the section distinct from Indian provision and therefore
the section and the directive cannot be said to be pari materia to
each other. Resultantly, the judgments cannot be relied upon
relating to legitimate reasons.
g) Mr. Kaul submitted that even otherwise the term "legitimate
reasons" is connected with the guarantee of identity of origin of
the goods and therefore there should be some identity crises from
where the goods are emanated and not otherwise wherein such
legitimate reasons can be pressed into service. Accordingly, the
reasons which are enlisted by the plaintiffs relating to
disturbance in the distribution channels, etc are artificial and
cannot be counted as legitimate reasons for opposing the further
dealings.
The reliance is placed on the judgment of The Wellcome
Foundation v. Paranova Pharmazeutika Handels, (2008) ECR
I-10479 where in the court has said " the right to oppose the use
of the trade mark once the goods have been put on the market
only arises where such use is liable to impair the guarantee of
identity of origin of the goods."
Mr. Kaul, additionally has taken the objection that the
plaintiff has not taken the recourse of Section 30 (4) in the
pleadings and it is only in the reply to the Order XXXIX Rule 4
application such stand has been taken which also debars the
plaintiff to take such stand of exception.
h) It is the contention of Mr. Kaul, learned Senior counsel for the
defendants that the concept of material alteration is distinct from
the concept of material differences as enunciated by the US
courts. It is submitted that the plaintiffs have only pointed out the
material differences and at no point of time have pointed out any
material alterative which is statutorily entitles the plaintiffs to
take such recourse to the exception. The Defendants have relied
upon the following case laws of US courts wherein the US courts
despite being lower test of material differences have negated the
claim of infringements as against the material alteration which is
stringent test to pass. The case laws relied upon are as follows:
1. Matrix Essentials Inc v. Emporium Drug Mart Inc of
Lafayette decided US Court of Appeals (fifth Circuit) no-
91-4457 which holds that the importation of identical genuine
products does not per se deceive consumers and thus no
infringement of trade mark liability can be found.
2. American Circuit Breaker Corporation v. Oregon Breakers
Inc, (406 F.3d 577) (9th circuit), where the court holds that
the differences between the products proved so minimal that
the consumers who purchase the alleged infringer‟s goods get
precise what they believed that they were purchasing. .....
Territorial protection kicks in under the Lanham Act where
two merchants sell physically different products in the same
market and the same name....
3. Zip International Group LLC v. Trilini Imports Inc decided
by New York Eastern District Court on May 24, 2011
wherein the court holds : Trademark Law does not reach the
sale of genuine goods bearing a true mark even though the
sale is not authorized by the mark owner for there is no
possibility of confusion.
By placing reliance on the aforementioned provisions, Mr.
Kaul contended that the goods which are not physically different
cannot be opposed by the proprietor while enforcing the right
under Section 30 (4) of the Act.
i) Mr. Kaul has argued that the plaintiff No. 2 is not the only entity
authorized to import Samsung printers and periphericals in India
and not even the plaintiffs admit so. It is argued that even the
plaintiffs admit that the arrangement between the plaintiff No. 1
and the plaintiff No. 2 is commercial in nature and the same
cannot come in the way of prohibiting imports by any third party.
Mr. Kaul further argued that by private arrangement
between the parties, the same cannot contract out the law of the
land if it is otherwise permissible in law. It is argued by the
private covenant wherein the defendants are not privy to the
same cannot be used to the detriment of the defendants if the law
permits them to import such goods under Section 30 (3).
The judgment passed in the case of Universal
Petrochemicals Ltd Vs. RSEB; AIR 2001 Cal 110 is relied
upon to contend that a private commercial arrangement cannot
override a statutory provision.
Mr. Kaul argued further to support his principal submission
that the market segmentation by way private arrangement cannot
defeat the legal provision by urging that the law when it enacts
the exhaustion principle is actually acting against such market
segmentation principle. For the purposes of the said proposition
Judgment passed in Matrix Essentials Inc v. Emporium Drug
Mart Inc. of US court of Appeals is relied upon wherein the
court has said "Thus Matrix use of professional hair care salons
as its exclusive trade distribution channel seems more marketing
related than quality related".
Similarly in NEC Electronics v. Cal Circuit Abco, (810
F.2d 1506) (9th Circuit) has been relied upon to urge that if the
plaintiff chooses to sell abroad at the lower prices than those it
could obtain for identical products here that is its business. In
doing so, it cannot look into US Trade Marks law to insulate
American Market or to violate the effects of international trade.
In Zip International Group LLC v. Trilini Imports Inc again
US court holds the similar proposition by holding against
consumer confusion on the same lines.
Mr. Kaul propounded that the purpose of such importation
is immaterial so long as the right to importation exists under
Section 30 (3). The alleged motive of the importer is of no
consequence whatsoever. If India followed a principle of
national exhaustion as incorrectly advocated by the plaintiffs
then the mere act of importing the products would render them
infringing. It would not be open to the plaintiff to justify some
imports and arbitrarily deem others infringing the same. Thus, as
per Mr. Kaul importation is no prohibition under the trade mark
law as also contended in point 3 sub point (viii) in the written
submissions as well.
j) Mr. Kaul has painstakingly pointed out some admissions which
as per the learned counsel for the defendants, the plaintiffs have
made. The said admissions are enlisted as under:
Admission in Paragraph 37 of the plaint wherein the
plaintiff avers "Although the printers as being sold by the
defendants appear to be genuine products of the plaintiffs,
the same are illegally imported into India by the
defendants and are part of "grey market" goods".
It is argued that it is thus admitted case that the
defendants imported goods are genuine ones and by the
plain reading of Section 30 (3), the said goods cannot be
categorized as infringing goods. As per the learned
counsel for the defendants, the law precludes the
proprietor of a trade mark from preventing the sale or
resale of the goods which have been lawfully acquired by
a person unless they fall within the exception provided
under Section 30 (4).
Para 2- 8 at page 11 of the replication which according the
defendants, the plaintiff has conceded that it is well laid
down principle that material change and/ or impairment of
goods is an exception to the doctrine of international
exhaustion".
As the defendants counsel, the whole argument
of the plaintiffs relating to national exhaustion and
physical differences becomes redundant and thus the
plaintiffs are estopped by urging what has been admitted
case of the plaintiff.
Admission by the plaintiffs in paragraph 17 of the
replication that India follows the principle of international
exhaustion of rights under Section 30 (3) of the Trade
Marks Act, 1999.
Admission by the plaintiff in paragraph 11 of the
replication that the models of the plaintiff No. SCX 4623
F and the imported one by the defendant bearing No.
SCX- 4623 FN are materially different although they are
close equivalents. This as per the defendants counsel is
again an admission which binds the plaintiff from urging
that there is material difference between the competing
models.
k) Mr. Kaul, learned Senior counsel has argued that the plaintiffs
have made misrepresentation in the plaint as to the status and the
extent of operation of the defendants. It is argued that the
plaintiffs have averred that they have received the information
that the defendants are selling, distributing the gray market
printers of the plaintiffs in the month of March 2011, on the
contrary, as per the defendants, they have been an erstwhile
brand shop/ authorized retail outlet of plaintiff No. 2 from the
year 2000- 2004, the only IT brand shop of the plaintiff No. 2 in
India.
It is argued that even when defendant No. 3 was the plaintiff
No. 2‟s authorized outlet, it was importing and selling openly on
its premises, parallel imported products that were not purchased
from the plaintiff No. 2 or its distribution channels. Thus, it is not
newly that the defendants have started this business but it was
within the knowledge of the plaintiffs at the earlier occasions
too. Thus, the plaintiffs are guilty of mispresentation and thus the
interim order ought to vacated on account of misrepresentations.
l) Mr. Kaul, learned Senior counsel for the defendants have also
refuted the contentions of the plaintiff relating to meta tagging by
submitted that the defendants are selling the products which are
genuine products of the plaintiffs, thus they are entitle to promote
themselves as the ones selling the plaintiffs products and the way
that can be described is a fair use defence and cannot be
categorized as infringement under Section 29 of the Act.
15. This has been explained by placing reliance on the following
judgments:
a) Playboy Enterprises Inc v. Welles, 279 F.3d 796 (9th Circuit)
wherein the court said that with regard to headlines and banner
advertisements has no practical way of describing herself without
using the trademarked terms....... Forcing (Welles) to use
absurd turns of phrase in their metatags such as those necessary
to identify (Welles) would be particularly damaging in the
internet search context. Searchers would have a much more
difficult time locating the relevant websites if they could do so
only by correctly guessing the long phrases necessary to
substitute for trademarks".
b) New Kids on Block v. News America Publishing Inc, 971 F.2d
302 (9th Circuit) wherein the court has held that such a
normative use of a mark- where the only word reasonably
available to describe a particular thing is pressed into service-
lies outside the strictures.
16. Mr. Kaul thus contended that the defendants cannot be held
guilty of meta tagging as the plaintiff products under the mark
SAMSUNG can be described in the manner done by the defendants.
17. By making the aforesaid submission, Mr. Kaul concluded
his arguments by submitting that the interim order passed on
03.06.2011 is liable to be vacated as there is no prima facie case in
view of the clear legal position relating to exhaustion of rights, and
balance of convenience is also in favour of the defendants as the
defendant should be permitted what is legally permissible and the
irreparable damage will result to the defendants for the very same
reason.
18. I have gone through the plaint, written statement, replication
and documents filed by the parties and have also given careful
consideration to the submissions made at the bar as enlisted above.
Before dealing with the submissions of the parties, I deem it
appropriate to first discuss the law on the subject.
IMPORTATION OF GOODS UNDER THE MARK AS AN
INFRINGEMENT OF THE TRADE MARK
The first question which according to me falls for
consideration is as to whether the provisions of Trade Mark Act, 1999
provides for the import of goods as an infringement and if so whether it
can be said to include genuine products emanating from the proprietor
from international market although it may not be with the consent of the
proprietor. Therefore, I shall first examine the aspect of infringement.
For the sake of convenience, the provisions of the trade
marks act are reproduced hereinafter:
Section 29 (1) of the Trade Marks Act, 1999 provides for
registered trademark, which reads as under:-
Section 29(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."
............
Section 29(6) of the Trade Marks Act, 1999 reads as under:-
"for the purposes of this section, a person uses a registered mark,
if, in particular, he -
(a) affixes it to goods or the packaging thereof;
(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; or
(d) uses the registered trade mark on business papers or in
advertising."
19. On conjoint reading of Section 29(1) along with Section
29(6), it becomes amply clear that for the purposes of Section 29, a
person uses a registered trade mark if in particular, he imports or
exports the goods under the mark which means that the act of
importing or exporting goods under the mark is treated to be as use of a
registered trademark for the purposes of Section 29, and therefore,
importation is in clear and explicit terms of Section 29(6)(c) read with
Section 29(1) of the Trade Marks Act, 1999, is an infringement of the
trademark.
20. Furthermore, Section 29(1) has following essential
ingredients:-
a) a registered trademark is infringed by a person;
b) who not being a registered proprietor;
c) or, a person by way of permitted use;
d) Uses in the course of a trade;
e) A mark which is identical or deceptively similar to;
f) A trademark in relation to goods or services in respect of which
the trademark is registered;
g) In such a manner to render use of trademark likely to be used as
a trademark.
21. These are some essential ingredients for attracting
infringement u/s 29(1). In this perspective, one can easily gauge the
legal position which is that if a person who neither being a registered
proprietor nor a person using by way of permitted use, uses in the
course of trade a mark which is identical to the trademark in relation to
the goods in respect of which the mark is registered in such a manner
so as to render, but use of the mark likely to be taken being use of a
trademark, then the said act is an infringement u/s 29(1).
22. Applying the act of importation as use as mentioned in
Section 29(6) to Section 29(1), it can be discerned that any importer
who is not a registered proprietor or permissive right holder, if imports
the goods under the mark which is identical or similar to a trademark in
relation to the goods in respect of which the trademark is registered so
as to render the use of the mark likely to be taken as a trademark, then
the said act of importation amounts to infringement.
23. A logical corollary which follows from the plain wordings
of Section 29 (1) and Section 29 (6) is that either the importer must be
permitted or permissive right holder from the proprietor or must be a
registered proprietor so as not fall within the purview of Section 29 as
otherwise the rigors of Section 29(1) shall apply strictly.
24. It is well settled law that when the plain reading of section
itself is clear, then no departure is permissible from the plain rule of
construction.( Kindly see judgment passed in This has been followed in
Association for Development vs. Union of India & Others, 2010
(115) DRJ 277 wherein this court approved the literal rule and
observed that ―it is not the duty of the court to enlarge the scope of
the legislation when the language of the provision is plain and
unambiguous).
25. In the present case, once Section 29(1) and Section 29(6)
are read conjointly, it becomes unambiguous in view of explicit terms
of 29(6) (which clearly equates the export or import with the use for the
purposes of entire Section 29), that the act of importation amounts to
the infringement, if the said importer is not registered proprietor or
permissive right holder.
26. Thus, in law it cannot be said that there is an unfettered
right of importation of goods under the mark. On the other hand, in the
normal course, the act of importation without the consent of the
registered proprietor amounts to an infringement. This also negates the
concept of free flow of goods in the world market as the Section 29
clearly put barriers on importation and had there been such a legislative
intent to remove barriers on imports or exports and to promote free
commerce under the goods of identical trade marks, Section 29 (6)
ought not to have provided for the acts of importation or exportation as
a use of the mark for the purposes of Section 29.
27. Plainly and clearly, there is no such unfettered right of
importing and there are restrictions imposed on the rights of
importation by specifically prescribing it as an infringement and also
other incidental remedies under the trade marks Act and Custom laws.
28. It is however still to be looked into as to whether the said
fettered right of importation can subsume to the genuine goods as it can
be argued that it is doubtful as to how the importation of genuine goods
can be termed as infringement of the owners registered trademark.
This can be seen again if one reads Section 29(1) plainly, it does not
distinguish between a person either importing a genuine goods or non
genuine goods for the purposes of attracting the provisions of
infringement which is a statutory indicator to the effect that there is no
such distinction.
Furthermore, there is no legislative provision which carves
out any such exception u/s 29 for the purposes of genuine or non
genuine goods.
29. There is no proviso to Section 29 (6) (c) which excludes the
genuine products from the acts of import or exports nor there is any
explanation appended to Section 29 (6) (c) clarifying the aspect of
importing or exporting .This at least holds good plainly by reading of
Section 29.
30. In the absence of the any such legislative provision or
exception under the principle provision of infringement under Section
29, it cannot be assumed on a priori basis that there is any such
exception exists under the law exempting importation of genuine goods
from rigors of infringement when the said act amounts to use of
identical mark on the identical goods and when the importer is not
registered proprietor or permissive user uses the same in the course of
the trade clearly falls within Section 29 (1). (On a separate note I shall
examine Section 30 separately under the next head which according to
me operates differently as the discussion at present is confined to
Section 29 only.)
This view also gains strength in view of the well settled
principles of law that the courts are not add words or delete words from
the statute so as to enlarge or limit the scope of the sections. The courts
are rather to interpret the law as it exists in the statute book on the plain
reading and not to put to qualifications which are not legislatively
engrafted.
31. The only line of demarcation which seems to be logical in
the absence of legislative exception is that if the said importer is either
a registered proprietor and in that case he will be protected by
applicability of Section 28(3) or 30(2)(e) wherein the suit for
infringement against the registered proprietor is not maintainable or if
he is permissive right holder which will attract the proprietor‟s consent
in the form of permissive right to the said importation, the said importer
can escape the liability of infringement and not otherwise.
32. Further, the permissive right is a right which must emanate
from the registered proprietor by way of permitted use in the manner
prescribed under the Act and cannot be said to be an implied one on the
basis of proprietor‟s throwing the goods in the market. This kind of
assumption is only feasible if there is a legislative provision to this
effect speaking clearly about the same but I find in the later part of the
discussion that the import of Section 30 (3) on the plain reading as well
as contextual reading does not inform the same. Thus, in the absence of
any deeming fiction or presumption, the permissive right mentioned
under Section 29 cannot be equated with the implied consent of the
proprietor by way of registered proprietor‟s putting the goods in any
market.
33. In view of the above discussion, it can be said that in the
absence of any other line of demarcation or difference between genuine
or non genuine goods for all practical purposes, the rigors of law u/s 29
(1) of the Trade Marks Act, 1999 for the purposes of infringement will
be applicable to the fullest extent except what has been provided as an
exceptions within the section itself which is use either being a
registered proprietor or a permissive right holder. Therefore, a fortiori
it follows that act of importation of the goods bearing the mark of the
registered proprietor without the importer being a registered proprietor
or permissive right holder is statutorily engrafted infringement u/s 29 of
the Trade Marks Act, 1999.
34. Thus, It cannot be contended that there is a free market
economy worldwide which permits any such inflow of goods by way of
importation without any barriers and there is no infringement if the
goods bearing the mark are imported in the country especially in India
when the said Section 29(1) read with Section 29(6) (c) explicitly and
in clear terms provide so.
35. Thus, the fettered right of imports or exports amounting to
infringement further gets restricted in the sense that in whatever manner
the said imports under the mark (be the genuine or counterfeit) are
carried out, the said acts if not done by the registered proprietor or the
permissive right holder straightaway amounts to infringement.
36. The controversy as to whether import of genuine products
an infringement or not, is sought to be resolved by answering the same
in affirmative by the authority on trademark law, namely, Modern Law
on Trade Marks, 3rd Edition (2008) by Morcom, Roughton & Malynicz
- LexisNexis, wherein the learned author very minutely observed and
finds that even the imports of genuine product is an infringement in
context of UK law.
"16.3 - The legal analysis arises as follows. Trade Marks are
territorial. A United Kingdom trade mark covers the United
Kingdom. A Community trade mark covers the Community.
Both the Trade Marks Directive and Community Trade Mark
Regulation (CTMR) cite the act of importation as an example of
an infringing act. Because a parallel import of a genuine
product amounts to the use of an identical mark on identical
goods, the importation of such goods is treated in some
senses as a very straightforward
infringement....."[Emphasis Supplied]
37. I fully endorse the view expressed by the learned author and
this observation of the learned author is only by reading that it amounts
to use of the identical mark on identical goods. There is no reason why
the above analysis cannot hold good in the Indian context when Section
29 (1) provides for the said infringement and Section 29 (6) further
makes the same position again clear in unequivocal terms.
38. Therefore, the import of genuine goods is an equal
infringement as that of the counterfeit goods in the absence of the any
legislative measure distinguishing the two and also by virtue of plain
reading of Section 29 and more so when the authorities on trade mark
law also provides for the same view. This answers the residual
proposition framed above which is that the import of even genuine
products can attract the infringement under Section 29.
At this stage, I would like to also clarify that for all practical
reasons the provision of Section 29 (1) as well as the discussion done
above cannot be misconstrued to mean that there are barriers to imports
of the goods under the trade mark by anyone for any purpose. It is only
the cases which shall strictly fall within the provisions of Section 29
wherein there is an import of goods under the mark by the person
which has been further put to use "in the course of trade" as mentioned
under Section 29 shall be called as an infringement and not all other
cases.
39. After analyzing the import of Section 29 which provides for
infringement of trade marks, it is for me to now discuss the nature and
the scope of Section 30 of the Trade Marks Act more particularly
Section 30 (3).
NATURE AND SCOPE OF SECTION 30(3) OF THE
TRADEMARKS ACT, 1999: IT ACTS AS A MATTER OF
DEFENCE OR EXCEPTION
40. Section 30(3) of the Trade Marks Act, 1999 acts as an
exception to the infringement of registered trade marks as the head note
of Section 30 itself speaks for itself which says limits on the effects of
registered trademark and the wordings of Section 30 (3) in particular
also states that the selling of goods in the market or otherwise
dealing in those goods is not an infringement of trademark.
41. All these wordings mentioned in the Section 30 (3) coupled
with its head note make it clear that the present section acts as an
exception to the rule of infringement which presupposes that absenting
the said provision which is Section 30, the acts mentioned therein shall
be an infringement.
42. For the purpose of convenience, the Section concerning the
present case is reproduced herein :
Section 30 (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.
43. The said Section 30 (3) is thus an exception to the rule of
infringement as provided Section 29. The said exception operates in the
nature of defence to an infringement wherein the person using the mark
in a particular form or dealing otherwise in the goods under the mark
can plead that the said goods are lawfully acquired from the market
wherein the proprietor has also put the goods in the market or the
proprietor has given consent to the effect of such dealings or usage. It
is however another thing which I shall examine later that in what field
Section 30 (3) operates and whether it can be said to include within its
purview the imports.
44. At this stage, for understanding sake about the nature and
scope of the provision, it is proper to state that is one of the exceptions
to the infringements envisaged under Section 30 and more particularly
Section 30 (3) operates as an defence to an infringement. This
discussion becomes necessary in order to understand the real scope of
the provisions as number of submissions have been made at the bar that
Section 30 (3) provides some right to import genuine goods to the
person acquiring the goods. Thus, it became incumbent and inevitable
to examine whether the said Section 30 (3) is a right conferring section
or merely acts a defence to the infringement. In this backdrop, I find
that the rights of the proprietor of the registered trade mark are
provided under Section 29 and other section relating to other remedies.
Section 30 or for that matter Section 30 (3) just operates an exception
by putting limits to the rights conferred upon the registered proprietor
and cannot be equated the one giving some additional right to some
other person to import the genuine goods from the international market.
Of course, this cannot be intent and purpose of legislating any such
limitation to the general rule of infringement of trade marks. The
purpose is rather different which is to exclude the person from the
purview of infringement if the conditions for applicability of Section 30
(3) are satisfied. The limitation or exception will thus operate to that
extent only for which it is enacted carving out an exception to the
infringement and not beyond the same by giving any additional right to
any such person incidentally.
45. The consent of the proprietor operates as a defense to the
infringement of the trademark is also observed in the authority namely
Modern Law on Trade Marks, 3rd Edition (2008) by Morcom,
Roughton & Malynicz - LexisNexis, wherein it is said as under:
"16.4 - It is a complete defense in respect of any infringing
act, including importation, to show that it has been done with
the consent of the proprietor. This has led parallel importers
to argue in the „international exhaustion‟ cases that the mere fact
that goods have been put on the market somewhere in the world
by the proprietor, or with his consent, can be taken to indicate
that he has implicitly consented to their importation into the area
of protection of the relevant national or Community trade mark.
As we shall see below, this argument has essentially been
rejected at the highest level, thus forcing parallel importers to try
different arguments, mainly concerning the question of consent,
some of which have been more successful than others."
(Emphasis Supplied)
46. From the above, it is clear that the provision relating to
exhaustion or proprietor‟s consent is a complete defense to an
infringement act. However, the same can be seen depending upon the
language of the legal provision in the form in which it is couched in
order to discern whether it is national exhaustion or international
exhaustion and the argument of parallel importers can be accepted or
rejected depending upon the scheme of the Act and circumstances
arising in view of the legal provisions existing under the law. At this
stage, it is only necessary to examine the nature and scope of the
provision which is the proprietor‟s consent is the defence to an
infringement.
47. After this discussion, it can be safely said that the nature
and the scope of Section 30 (3) is that it operates as a defence to the
infringing act and cannot be said to giving any additional right beyond
the same.
PLAIN AND CONTEXTUAL INTERPRETATION OF
SECTION 30 (3) AND 30 (4) OF TRADE MARKS ACT 1999
48. Now, let me evaluate what is the possible interpretation of
Section 30 (3) and Section 30 (4) of the Act on the basis of the plain
reading of the enactment.
Section 30 (3) reads as : 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."
49. From the bare reading of aforesaid section, it becomes clear
that Section 30 (3) has following essential ingredients:
a) Where the goods bearing registered trademark are lawfully
acquired by a person.
b) The sale of goods in the market or otherwise dealing in those
goods by a person is not an infringement by only reason of.
c) registered trademark having been assigned by the registered
proprietor to some other person, after the acquisition of those
goods or
d) goods having put on the market under the registered
trademark by the proprietor or with his consent.
50. These are essential ingredients for attracting Section 30(3)
of the Act, which acts as complete defense to infringement of
trademark. The opening words of the said section are important, need
examination and deserve to be noticed, which say " where goods
bearing a registered trade mark are lawfully acquired by a person ..."
51. From the reading of these words in the statute book, it is not
reflected as to from what source, the said goods bearing registered
trademark are lawfully acquired by a person which enables the
importers to argue that the goods purchased from foreign country
although bears mark identical to registered trademark owned by a
proprietor in India are lawfully acquired by them and therefore the said
circulation of goods by those importers in the market should not be
treated as infringement.
52. The use of the words "where the goods bearing a registered
trade mark are lawfully acquired by a person" and the possible
interpretation of Section 30 (3) so as to include import by reading
Section 30 (3) in isolation with sub clause (b) ignoring clause (a) will
result in anomalous results or what can be termed as absurd results
under the principles of interpretation.
53. It is well settled canon of interpretation that the courts must
do their endeavors to read the provisions plainly so as to give harmony
between the two provisions and interpretation which renders any
provision otiose or redundant must be eschewed.
54. In High Court of Gujarat and Anr. v. Gujarat Kishan
Mazdoor Panchayat and Ors., [2003] 2 SCR 799 , the Supreme Court
held as under:
"35. The Court while interpreting the provision of a statute,
although, is not entitled to rewrite the statute itself, is not
debarred from "ironing out the creases". The court should
always make an attempt to uphold the rules and interpret
the same in such a manner which would make it workable.
36. It is also a well-settled principle of law that an attempt
should be made to give effect to each and every word
employed in a statute and such interpretation which would
render a particular provision redundant or otiose should be
avoided"
55. This can be seen if one reads the opening words of the
section " where the goods bearing registered trade mark are lawfully
acquired by a person" with the sub clause (a) which is that the
proprietor cannot oppose the further dealings of the said goods only by
reason of the registered trade mark having been assigned by the
registered proprietor to some other person, after the acquisition of those
goods.
56. The wordings in sub clause (a) "the registered trademark
has been assigned by the registered proprietor to another person after
acquisition of the said goods" controls the language of the opening
words " where the goods under the registered trade mark are lawfully
acquired by the person". Reading of same along with the opening
words makes it clear said lawful acquisition presupposes the existence
of three persons, a person acquiring the goods, a person selling the
goods which is the registered proprietor and third person to which the
trademark has been assigned at the same place.
57. Thus, the said acquisition for the purposes of the sub clause
(a) must arise within the same market wherein there are three persons
present, person acquiring the goods, registered proprietor and the
assignee of the trade mark. This the reason why the said section 30(3)
(a) also says that the registered trademark having been assigned after
the acquisition of those goods which means that the acquisition must
emanate from the registered proprietor where the registered proprietor
has the knowledge about the said acquisition and he assigns the
trademark after the said acquisition.
A clear and workable example of the said proposition
mentioned in clause (a) would be that proprietor after selling the goods
to the market or to the distribution channels, cannot turn around either
by himself or his assignee in title of the trade mark within the same
market to say that now the dealings in goods which he has parted with
to the person or to the distribution channel, cannot be allowed because
the trademark has been assigned by him to some other person which is
a simple and precise meaning of the clause (a).
58. But, this may not hold good if one adopts the interpretation
of opening words to subsume imports in an international perspective.
The said interpretation of the opening words " where the goods under
the registered trade mark....." if given wider interpretation to include
imports will lead to absurd results and will render clause (a) otiose.
59. This can be seen by looking at the instance by applying
opening words to include imports. For instance, if the SAMSUNG
good is taken from Hong Kong market and brought into the Indian
market by way of import and however in the meanwhile during the
course of acquisition from Hong Kong Market, the Indian entity of
SAMSUNG sells the brand name SONY or to some other company for
Indian Territory. Now, for applicability of clause (a), the registered
proprietor must assign the mark to some other person after the
acquisition of the goods and the said criterion is not met at all. This is
due to the reason as to how the registered proprietor will come to know
as to where and which part of the world such acquisition of the goods
has taken place and if he incidentally assigns the mark to some third
party, how the assignee will enforce his rights and how the person
acquiring the good can be given liberty to invoke the defence at the
places where not even registered proprietor nor assignee is aware of
such transaction of acquisition at all. Further, the registered proprietor
shall always remain in dark as to where can he or his assignee can
oppose the market dealings of which products in case the said provision
is allowed to be given such a wider import.
60. This anomalous situation will create worldwide havoc as the
proprietor cannot be said to be aware about whatever acquisition of his
goods occurred worldwide in any market and the proprietor on that
count cannot control the market at all and even if he assigns the
trademark for one particular country, the assignee cannot control the
inflow of goods even when both are not privy to such acquisition
anywhere from the world. In short, this interpretation of opening words
leads to absurd results and makes sub clause (a) redundant or
unworkable.
61. This cannot be the import of the section and it cannot be
that Indian Section 30 (3) (a) is so widely couched that it can give a
licence for worldwide selling of the goods on both the grounds
mentioned in Section 30(3) of the Act. Therefore, if one applies the
interpretation where the goods are lawfully acquired by a person in a
broader perspective then the clause (a) would become redundant or
otiose. Further, the wider import of the opening words further leads to
anomalous results in its applicability and the working and operation of
clause (a) becomes questionable.
62. However, if one reads Section 30 (3) plainly and
contextually, then it is possible to give the correct and precise meaning
to the section and also it does not lead to any absurd results or renders
any provision otiose. Rather, the contextual reading of the section in the
present case makes the provisions workable in their respective fields
and sets harmony between the provisions.
63. It is well settled principle of law of contextual interpretation
that a general words may sometime receive a limited interpretation by
reason of its context in respect of which it is used. The terms used in
section may have a general meaning in a general sense, but can be
controlled by the company they keep with the later part of the words in
the section, and therefore, it becomes relevant to analyze in the context
in which the said wordings/ terms are used so that the entire provision
may become workable/operative and should also not lead to conflict
between other provisions of the Act or making the other provisions
otiose.
64. It has been held in Bentley v. Rotherham (1876) 4 Ch D
588 p. 592 (Jessel, MR) "the rule is of general application as even
plainest terms may be controlled by the context".
65. Likewise, in the case of RBI v. Peerless General Finance
and Investment Co. Ltd., (1987) 1 SCC 424, the Apex court has
elucidated the rule of contextual interpretation by observing as under:
"Interpretation must depend on the text and the context.
They are the bases of interpretation. One may well say if the
text is the texture, context is what gives the colour. Neither
can be ignored. Both are important. That interpretation is
best which makes the textual interpretation match the
contextual. A statute is best interpreted when the object and
purpose of its enactment is known. With this knowledge, the
statute must be read, first as a whole and then section by section,
clause by clause, phrase by phrase and word by word. If a statute
is looked at, in the context of its enactment, with the glasses of
the statute maker, provided by such context its scheme, the
sections, clauses, phrases and words may take colour and appear
different than when the statute is looked at without the glasses
provided by the context. With these glasses the court must
look at the Act as a whole and discover what each section,
each clause, each phrase and each word is meant and
designed to say as to fit into the scheme of the entire Act. No
part of a statute and no word of a statute can be construed in
isolation. Statutes have to be construed so that every word
has a place and everything is in its place."(Emphasis Supplied)
66. While going through the above mentioned authorities and
illuminating observations of Supreme Court in relation to contextual
interpretation which has been followed consistently by Supreme Court
as well as High Courts, it becomes amply clear that the rule of
contextual interpretation is well recognized and in the case where there
is an ambiguity where the terms are amenable for two meanings; one is
wider and one is narrower, then the Court must give effect to the words
by adopting recourse to the plain rule of construction and also see the
context in which they are used.
67. Therefore, the present Section 30 (3) and 30(4) of Trade
Marks Act, 1999 are to be given interpretation of the words which are
plainly existing in the Statute which if read in isolation without
examining the context may in argumentation leave a room of doubt that
they may have some wider meaning but if they are read with the glasses
of the context in which they are used it becomes crystal-clear that they
cannot have any other meaning at all in the context in which they are
used in the Statute Book.
68. Let me now evaluate the wordings of Section 30 (3) and
Section 30 (4) with the glasses of the context in which they are used so
as to discern the true colour of the enactments. The same can be seen in
my analysis done below:
a) The import of opening words "where the goods bearing
registered trademark are lawfully acquired by a person" is to be
seen in the context in which they are used and further reading of
the said section along with other ingredients of the section would
make it clear that when the sub clause (a) speaks "the registered
trade mark having been assigned by the registered proprietor to
some other person", then the same should emanate from the
registered proprietor within the same market or a person lawfully
represents to be proprietor within the market and not outside the
same. This is due to the reason that the section uses the wordings
in sub clause (a) that the registered trade mark having been
assigned by the registered proprietor to some other person
after the acquisition of those goods. This presupposes that the
registered proprietor at the time of the assignment of the
registered trade mark to some other person is aware of the lawful
acquisition of the goods by a person. Resultantly, all of the
persons must coexist within the same market and it cannot be
said that the lawful acquisition takes place in international
market and assignment of the registered trade mark takes place
in some other market and thus the said provision may become
inoperative or otiose and leads to absurd results.
All this collectively and contextually means that if the goods
are once acquired by a person through a registered proprietor
within the same market or may be as a distributor of the
registered proprietor within the same market, then the registered
proprietor or his assignee cannot turn around and state that is an
infringement of his trademark solely on the count that there is
change of ownership by way of an assignment between the
registered proprietor and some other person and seek prohibition
on the dealings of the goods.
The said interpretation makes it more meaningful and
Section 30(3)(a) operates to the fullest extent as against in sharp
contradistinction if the opening words are given wider
interpretation to subsume that a person acquiring the goods from
a foreign market or importing goods, then it becomes highly
questionable and doubtful as to how Section 30(3)(a) stands in
favour of the person acquiring goods from foreign market.
b) If the interpretation of the wordings "where the goods bearing a
registered trade mark are lawfully acquired by a person" is
controlled by the context for the purposes of applicability of
clause (a) then it can be no different for the purposes of
applicability of clause (b) as well, because the wordings are
same for both the grounds and rather they are emerging from the
same provision. Thus, different import cannot be given for the
applicability of respective two grounds clause (a) and clause (b).
This is another reason which is compelling to give limited and
contextual interpretation of the opening words for the purposes
of clause (b) as well.
c) Thirdly, the opening words "where the goods bearing a
registered trade mark are lawfully acquired by a person" are
itself very clear by the mere reading of the same and implicit in
the same is that the said acquisition is within the domestic
market. This is due to the reason that the words say "where the
goods bearing a registered trade mark are lawfully acquired by
a person" . If the trademark is registered in one country, then
the goods bearing the said registered trademark can be lawfully
acquired from that country only. It cannot be the case that the
goods under the registered trademark can be acquired from
another country as otherwise it would be an infringement u/s 29
(1) read with 29(6) of the Act which says import of goods under
the identical mark amounts to use and thereby infringement.
Thus, the plain reading of opening words itself are clear and
unambiguous that the goods which are acquired bearing the
registered trade mark and further qualification of "lawfully
acquired" makes them unequivocal and clear that the said
acquisition has to be originated from the domestic market itself
where the trademark is registered and not from elsewhere.
Thus, the interpretation of widest amplitude cannot be given
to the opening words as otherwise it will lead to direct conflict
between the opening words of Section 30(3) and that of Section
29(6) (c) where the import of goods under the mark is an
infringement and if anyone is permitted to acquire the goods
anywhere from the world under the registered trademark, then
Section 29(6) (c) and its applicability shall stand nugatory.
It can be argued at this stage that the said Section 30 (3) is
itself the exception and thus the goods bearing the registered
trade mark and its lawful acquisition cannot be said to be
infringement under Section 29 (6). There is inherent fallacy in
the said argument as the Section 30 (3) permits as an exception
only those goods which bears registered trade mark which are
acquired lawfully. The word lawfully will also include operation
of trade mark law for the time being in force. In absence of any
exception under Section 29 or before beginning of Section 30 (3)
excluding the imports under the identical mark as an
infringement, it cannot be assumed that the wording lawful
acquisition will exclude the rigors of Section 29 (1) read with
Section 29 (6) and thus the said argument fails being
fundamentally wrong.
d) The opening words "where the goods bearing a registered trade
mark are lawfully acquired by a person" are merely if at all silent
about the lawful acquisition although it becomes clear if one
reads the same plainly in view of point No. (c) above, must bear
the registered trademark and therefore originate from the
domestic market. At the best, it can be said that they are silent
about the lawful acquisition.
The said words do not say that the said lawful acquisition
can be from anywhere or from any place and therefore it cannot
be read into the express provisions of the statute to modify the
words where the goods bearing the registered trademark are
lawfully acquired by a person from any place as the
interpretation which has been canvassed to use this terminology
in the manner to give the same effect where it may subsume
"import" would lead to adding the words from any place in the
Statute when in fact none exists.
It is well settled that the Courts are not to add the words in
the Statute or omit in the Statute or enlarge of limit the scope of
the wordings but they are to interpret the law as it stands.
Accordingly, it would be lawful to confine the wordings of
the section as where they stand in the Statute Book that adding
any words may lead to enlargement the scope of the section.
If one sees from that standpoint that the goods bearing the
registered trademark are lawfully acquired makes it amply clear
that they are originated from the same market or Indian market
where the trademark is registered, rather than from "any place".
e) The wordings "where the goods bearing a registered trade mark
are lawfully acquired by a person" also needs consideration as it
has been discerned above that import of the goods under the
mark is an infringement u/s 29(6) (c) of the Act. Therefore, it is
doubtful as to how the "import" can be said to be lawful
acquisition as the said import itself will contravene the
provisions of Trade Mark Act only, which is Section 29(6) (c).
Hence, it cannot be said that the said import of the goods is
lawfully acquisition till the time Section 29(6) (c) stands in the
way. Therefore, it is another compelling factor which militates
against the possible interpretation of acquisition from any place
rather than lawfully acquisition.
The reading of clause (b) also needs to be considered in
view of the fact that it is the bone of contention that once the
registered proprietor has put the goods on the market, therefore,
the market means "any market" or "world market" and the
registered proprietor is estopped from objecting to the same on
the counts of infringement.
Again, there is an inherent fallacy in the said argument as it
has been seen above that lawful acquisition of goods bearing the
registered trademark has been from the domestic market as per
the contextual reading done above. Thereafter, the sale of said
goods in the market or otherwise dealing in the said goods has to
be in the same market only and subsequently the registered
proprietor has put the goods within the same market only and not
in some other market.
The simple and precise example of applicability of sub
clause (b) would be again where the company supposedly
SAMSUNG has given the goods to the distributor to supply in
the market which can be said to be lawfully acquired by the
distributor bearing the registered trade mark or to some other
person for further selling. The said goods can be sold by him
freely within the market without objection from the registered
proprietor even if the registered proprietor has himself launched
the goods in the market by putting himself the said goods or with
his consent by someone else which means that by creating a
competition amongst the persons who have lawfully acquired the
goods, the proprietor cannot refrain the said lawful acquired
goods by himself coming into the market either by himself or
through someone else.
Now, this may not hold good again in the international
perspective. This is again due to the reason that lawful
acquisition has to be originated from the same market/ domestic
market as stated above in view of contextual reading and
therefore the sale of goods by such person has to be in the same
market from where the goods are originated and the reason of
proprietor not objecting so by putting the goods himself in the
market also has to be in the same market/ domestic market and
not otherwise. Thus, the entire Section 30 (3) read with clause
(b) is speaking about only one market which is Indian market
and no separate connotation to the word "market" can be given
within the same section. This is due to the following reasons:
I. Once the lawful acquisition has been made from the
domestic market then, the said Section 30 (3) when it
speaks sale of goods or further dealings in the market
has to be the same market from where the goods are
acquired and the said section cannot give permission to
the said acquirer to sell the goods to the worldwide
market. It is to be remembered that one is concerned with
Indian Trade Mark act wherein the section contemplates
that goods bearing registered trademark are purchased by
a person which according to the interpretation has to be
from the domestic market then it is incomprehensible to
assume by purchasing the goods from the Indian market,
the law of the land is giving permission to sell to the goods
worldwide which leads to anomalous situation and
therefore the words "in the market" cannot be
substituted/supplanted with the words "any market" which
shows fallacy in the argument of the defendants.
Thus, once the situation becomes clear about the import of
the opening words of the section, then the said lawful
acquisition due to the controlling words registered trademark
must originate from the domestic market/ national market, and
the subsequent wordings has to be also given contextual
reading and the wider import of the same words "in the
market" cannot be given to include "worldwide market". Thus,
it has to be confined to within the same market as otherwise it
would lead to giving permission to sell anywhere in the world
by purchasing from India which cannot be the purpose and
intent of legislature while enacting such exception to
infringement of Trade Mark in India in the Indian law.
II. The wordings which have been used in sub clause (3) of
Section 30 are "in the market" and "on the market", once in
sub section (3) which is "in the market" and in sub clause (b)
"on the market". Now, the argument which is raised is that
even if the goods are imported from anywhere in the world, the
said goods can be circulated in any market by the said
purchaser without any objection from the proprietor once he
has put the goods in the market on the presupposition that the
word "market" means "any market".
I am not inclined to accept this interpretation as it is not
clearly emerging from the section. This is due to the reason
which again makes its beginning from the opening words
which is that the lawful acquisition has to be in the same
market and thereafter the sale of goods has to be in the same
market by the purchaser and as seen from the preceding point I
above. It cannot be that the words "in the market" can be
given a worldwide effect as otherwise it will give a licence to
anyone to purchase the goods from Indian market and to sell
anywhere in the worldwide market. Therefore, the words "in
the market" in sub section (3) has to be domestic market.
Now, the only question left for consideration is whether the
goods having been "put on the market" is to be read in the
context of some separate market or within the same market
which is clause (b) and again the words goods having been put
on the market necessarily and invariably have to be in the
same market.
This is due to the reason that the word "market" is not
qualified by any other word either in clause (3) or sub clause
(b). It is just mentioned "in the market" and "on the market".
Had there been a separate meaning ascribed to the word
"market" in sub clause (3) and in (b), then there must have
been a qualification before or after the word "market" in both
the provisions which is not so present.
Furthermore, once it is clear that lawful acquisition has to
be from the domestic market, the permission to sell by the
purchaser has to be in the domestic market, then how come the
proprietor just having thrown the goods in international market
can benefit the lawful purchaser from domestic market to sell
goods in the domestic market. Therefore, the words "on the
market" are and have to be relating to the same market. Thus,
the word or words "in the market" or "on the market" has to
be read in the context from where the lawful acquisition is
made which is domestic market and cannot be ascribed any
other meaning like that of international market.
III. The words used under Section 30 (3) and (b) are "the market"
and not "any market". Again reading of the same otherwise
would lead to adding the words in the statute which is
impermissible and the market has to be the specific market and
not any market and has to be given grammatical, ordinary and
plain meaning, rather than departing from the plain rule by
giving the rule of any market.
IV. The words "on the market" are not merely used in Section
30(3) (b) of the Act, but are also used in the similar context in
Section 29((6) (b) of the Act wherein it contemplates that
offering, exposing or putting the goods on the market is an
infringement.
Now, one has to understand that if the words "on the
market" as stated in Section 29 (6) (b) are interpreted
international market, then there cannot be any infringement as
a trademark law of the registration extends only to the
territorial bounds of India. Therefore, if anyone exposes the
goods or put the goods on the market if that is the infringement
then the said market invariably has to be domestic market and
if that is so, then how the exception to an infringement u/s
30(3) when it uses the words "in the market" or "on the
market" can be given wider import extending it to international
market when the principal section of infringement uses the
identical words "on the market" which leads to the conclusion
it is domestic market upon its contextual reading.
V. Once the words "on the market" are used there both in
Section 29 and Section 30 of the Act and there is no separate
definition clause before the initiation of Section 30 for the
words "on the market", in the absence of the same, it is futile
exercise to assume that the "on the market" or "in the market"
can be given separate connotations for the purposes of
applicability of Section 29 and 30 differently.
It is well settled principle of law that when the legislature
uses the same word in different parts of the same section or a
Statute, there is a presumption that word is used in the same
sense throughout. (Kindly see Bhogi Lal Chunni Lal Pandya
Vs State of Bombay reported as AIR 1959 SC 356, p.357 and
Raghubans Narayan Singh Vs Uttar Pradesh Government
reported as AIR 1967 SC 465).
In Bhogi Lal (supra) Hon‟ble Wanchoo J. observed thus:-
"Words are generally used in the same sense
throughout in a Statute unless there is something
repugnant in the context"
In the present case if one analysis the words "on the
market" and "in the market" in the context in which they are
used, it cannot be said that contextually a departure can be
made between the section of infringement which defines an act
of putting the goods on the market as an infringement at one
place and it cannot be said that same word "on the market"
when used in Section 30, which is an exception to an
infringement, can be contextually different to denote it as an
international market which is so wide than the principal
provision of infringement.
Therefore, contextually both the words "on the market" in
Section 29 and Section 30 are same and likewise the term "in
the market". This again leans the interpretation to believe that
the words "in the market" or "on the market" are concerning
to the domestic market and not otherwise.
69. For all the above reasons, if one reads Section 30 (3) and its
sub clauses (a) and (b) contextually, it can be discerned that the
nowhere it indicates any concept of international exhaustion stemming
from the said section. Rather, the plain and contextual reading of entire
section reveals that the said section contemplates a particular situation
where the goods bearing the registered trade mark are lawfully acquired
and their consequence thereof which cannot be culminated into
infringement due to change of ownership or proprietor‟s putting himself
goods in the market. The said section operates within one market where
the registration of registered trade mark extends. Reading it otherwise
would be misreading or ignoring the words in the statute like
"registered trade mark", "lawful acquisition" and would be rendering
the words in the statute as dead letters or inoperative.
70. Given the analysis above on the basis of plain and
contextual reading of Section 30 (3), the matter can also be looked into
by comparing the similar provision existing under the law of trade
marks in UK so as to gauge what can be interpretation of the provision
in that scenario existing in UK.
Comparative Analysis of Indian provisions with that of UK Trade
Mark Act.
71. It is, at this stage, relevant to examine the position as it
exists in the UK Trade Mark law pertaining to the question which falls
for consideration which is that once the proprietor puts on the goods in
the market, then he loses the right to object for subsequent sale of
goods by the said purchaser.
72. For the sake of convenience, relevant provisions relating to
UK Trademark Act, 1994 are reproduced hereinafter and for the sake
of comparison, the relevant provisions of Indian Trade Marks Act,
1999 are also reproduced below:-
UK TRADE MARK ACT, 1994
Section 9- Rights conferred by registered trade mark -
(1) The proprietor of a registered trade mark has exclusive rights
in the trade mark which are infringed by use of the trademark in
the United Kingdom without his consent.
The acts amount to infringement, if done without the consent of
the proprietor, are specified in section 10.
(2) References in this Act to the infringement of a registered
trade mark are to any such infringement of the rights of the
proprietor.
(3) The rights of the proprietor have effect from the date of
registration (which in accordance with section 40(3) is the date
of filing of the application for registration):
Provided that -
a) No infringement proceedings may be begun before the date on
which the trade mark is in fact registered; and
b) No offence under section 92 (unauthorized use of trade mark,
& in relation to goods) is committed by anything done before the
date of publication of the registration.
Section 10 (4)
For the purposes of this section a person uses a sign if, in
particular, he-
a) affixes it to goods or the packaging thereof;
b) offers or exposes goods for sale, puts them on the market or
stocks them for those purposes under the sign, or offers or
supplies services under the sign;
c) imports or exports goods under the sign; or
d) uses the sign on business papers or in advertising.
Section 12
Exhaustion of rights conferred by registered trade mark
(1) A registered trade mark is not infringed by the use of the
trade mark in relation to goods which have been put on the
market in the European Economic Area under the trade mark by
the proprietor or with his consent.
(2) Sub.-section (1) does not apply where there exist 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).
Indian Trade Mark Act, 1999
28. Rights conferred by registration - (1) Subject to the other
provisions of this Act, the registration of a trade mark shall, if
valid, give to the registered proprietor of the trade mark the
exclusive right to the user of the trade mark in relation to the
goods or services in respect of which the trade mark is registered
and to obtain in respect of infringement of the trade mark in the
manner provided by this Act.
(2) The exclusive right to the use of a trade mark given under
sub-section (1) shall be subject to any conditions and limitations
to which the registration is subject.
(3) Where two or more persons are registered proprietors of
trade marks, which are identical with or nearly resemble each
other, the exclusive right to the use of any of those trade marks
shall not (except so far as their respective rights are subject to
any conditions or limitations entered on the register) be deemed
to have been acquired by any one of those persons as against any
other of those persons merely by registration of the trade marks
but each of those persons has otherwise the same rights as
against other persons (not being registered users using by way of
permitted use) as he would have if he were the sole registered
proprietor.
Section 29(6)(c)- imports or exports goods under the mark; or
Section 30(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
registered proprietor to some other person, after the
acquisition of those goods; or
(b) the goods having put on the market under the registered
trade mark by the proprietor or with his consent.
73. On fair comparison of both the provisions existing in UK
and Indian law, the following few points are noteworthy and can be
immediately discerned:-
a) That the rights conferred on the registered proprietor of trade
mark in UK is the exclusive right to use the said trademark and
to prevent infringement in the United Kingdom only.
b) The said Trade Mark Act in UK under the Section 12(2) of
infringement uses identical expression "on the market" just like
in the Indian Act but when it comes to the question of limitation
of infringement u/s 12, the wordings of Section are changed and
the wordings used are "put on the market in the European
Economic Area".
This has been a deliberate/conscious insertion vis-à-vis the
limitation section/ exception is concerned due to the reason that
the framers of that section or the law intended to give the wider
import to the provisions of exhaustion of rights knowingly or
consciously that if they will confine to the wordings, "on the
market" then it will only limit the principles of exhaustion in
United Kingdom only in view of the explicit terms of Section 9
of the UK Act. Therefore, the framers of UK Act have
consciously inserted the wordings "in the European economic
area" in order to confer the wider right so that even if the goods
are put on the market of European Economic area, the right to
object for further sale is taken away.
Although, this I have discerned out of plain reading of the
section itself which is differently worded with that of Indian Act,
but this view also finds support from the English authorities
including treatise on trade mark law namely Modern Law on
Trade Marks, 3rd Edition (2008) by Morcom, Roughton &
Malynicz - LexisNexis wherein the learned author observes that
the rationale of wordings "European economic area" which have
been inserted in the Act to give the exhaustion principle a wider
effect.
The learned author observes thus:
"EUROPEAN EXHAUSTION
Background to the ECJ jurisprudence
16.6 Under the Trade Marks Act 1938 (TMA 1938), as well as
the common law, the United Kingdom had developed a doctrine
of „exhaustion of rights‟ in cases where a trade mark proprietor
sought to restrain the importation and sale in t his country of its
own goods or the goods of an associated company, by means of
an action for infringement or passing off.
16.7 As the European Community developed, a doctrine of
exhaustion of rights also began to take shape under certain
provisions of the Treaty of Rome that related to free
movement of goods. After a period in which there was some
doubt as to how far the ECJ would countenance the
enforcement of any intellectual property rights to prevent
imports of goods from one Member State into another, it was
finally established that trade mark rights would generally be
enforced in such cases unless the goods in question had been
placed on the market in a Member State by the proprietor or
with his consent. Other decisions of the ECJ defined
circumstances, with particular reference to repackaged
pharmaceutical products, in which a trade mark proprietor might
object to the imports notwithstanding the fact that the goods had
been marketed in the Member State of export by him or with his
consent. Article 7 of the directive made a specific provision for
exhaustion of trade mark rights within the Community. In
accordance with the Agreement on the European Economic
Area (EEA) [The EEA is a slightly wider area than the
European Union. It was formed because of the wish of three
countries - Norway, Iceland and Liechtenstein - to participate
in the internal market, without assuming the full responsibilities
of EU Membership. The EEA Agreement gives them the right to
be consulted by the Commission during the formulation of
Community legislation, but not the right to voice in decision-
making, which is reserved exclusively for member States.....] of
2nd may 1992 the doctrine was effectively extended to the
whole of the EEA by s 12 of the TMA 1994. A similar
provision can be found in art 13 of the CTMR."
Section 12
Exhaustion of rights conferred by registered trade mark
(1) A registered trade mark is not infringed by the use of the
trade mark in relation to goods which have been put on the
market in the European Economic Area under the trade mark by
the proprietor or with his consent.
(2) Sub.-section (1) does not apply where there exist 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)."
74. From the bare reading of aforementioned excerpts quoted
from Modern Law of Trade Marks, it becomes amply clear that the
Section 12 as it exists in UK Act has been consciously given a wider
connotation to the words " on the market" by further adding the words
in the "European Economic Area" to give them an expansive effect
beyond the territorial bounds of UK, where the UK registration extends
so that free market movement can take place within the European
region/ territories covered in European economic areas. This has been
indicated by legislative history as mentioned in the excerpts quoted
above relating to background to framing of Section 12.
75. This insertion is intentionally done to give effect to treaty of
Rome for free movement of goods as well as EEA agreement wherein
this was resolved.
76. The above said position also further clarifies the doubt that
UK law follows the domestic exhaustion of rights. It is not merely
following any principle of law but rather UK Act has tried to give wider
effect to the extent permissible under their law and also to give effect to
the treaties relating to international free movements of goods entered by
EU countries to extend the said concept of UK market to European
economic Area.
77. The purpose seems to be that the EU policy framers
intended to treat Europe or community as one market perhaps due to
the proximity of areas between the countries and likelihood of
penetration of goods one country into another which may otherwise
cause trade barriers if the free movement of goods is not allowed to
happen or perhaps of the like nature of the economies which are
operating in neighboring states so that there should be less competition
between the similar economies within EU. All this have been result of
common multi partite convention wherein EU Countries are member
states and have common intention to give effect to treaty of Rome in all
the EU countries which consequently affected on the national
legislation in UK in form of Section 12.
78. This view of treating European Community as one market is
also well analyzed in another leading authority on the subject namely
Kerly‟s Law on Trade Marks and Trade Names [Fifteenth Edition],
Sweet and Maxwell 2011 wherein the learned author has culled out the
number of treaties and also the possible impact of the said treaties on
the UK legislation by observing to the following terms:
"THE PRINCIPLES ENSHRINED IN THE TREATY OF
ROME
16-019 Although the relevant treaties are now (a) the Treaty on
European Union (TEU) and (b) the Treaty on the functioning of
the European Union (TFEU), both as amended by the Treaty of
Lisbon, much of the relevant case law derives from the time
when the treaty of Rome prevailed. Accordingly, we will set out
the relevant provisions from the Treaty of Rome (TOR) which
constitute the first level of legislative provisions.
Article 2 TOR : The community shall have as its task, by
establishing a common market and an economic and
monetary union and by implementing common policies or
activities referred to in Article 3 and 4, to promote throughout
the community a harmonious and sustainable development of
economic activities"(Emphasis Supplied)
Article 3 TOR : " For the purposes set out in Article 2, the
activities of the community shall include, as provided in this
treaty and in accordance with the time table set therein:
(a) The prohibition as between Member States, of customs
duties and quantitative restrictions on the import and
export of goods, and of all other measures having
equivalent effect....
(b) An internal market characterized by abolition, as
between Member states, of obstacles to the
free movement of goods, persons, services and
capital. (Emphasis Supplied)
....
(g) a system ensuring that competition in the internal
market is not distorted.... " (Emphasis Supplied)
79. The possible effect of the aforesaid provision relating to
agreement to establish a common market place on UK legislation has
also been examined by the learned author in depth. The learned author
further observes thus:
" UNITED KINGDOM LEGISLATION
16-022 - First it is necessary to have regard to section 2(1) of
European Communities Act, 1972 which expressly provides the
supremacy of the Community Treaties, although the key treaties
to in the Act is the Treaty Establishing the European Community
- The „EC Treaty‟
" All such rights, powers, liabilities, obligations and restrictions
from time to time created or arising by or under the Treaties, and
all such remedies and procedures from time to time provided for
by or under the Treaties, as in accordance with the Treaties are
without further enactment to be given legal effect or used in the
United Kingdom shall be recognized or available in law and be
enforced, allowed and followed accordingly"
In the context of Trade Marks Act 1994, the provision serves
to reinforce what is already obvious: the relevant provision of
the 1994 Act implement and are derived from the Trade Marks
Directive. However, section 12/ article 7 represent the field of
trade marks just one manifestation of the more general rule
known as "exhaustion of rights" which applies to the other
intellectual property rights as well and in order to explain how
the hierarchy of interests is reconciled, it is necessary to track
something of the development of the "exhaustion of rights" rule.
(Emphasis Supplied)
80. The discussion relating to the aforementioned provisions of
treaties became necessary in order to examine the state of affairs
existing at the time of enactment of UK legislation. The careful reading
of the afore quoted provisions of the treaties further make it clear that
the mischief which was sought to be remedied was to create a single
market concept for European territories and the same has been done by
way of international covenant entered into by the EU states and
agreeing to give effect to the same in their respective laws and
consequently UK Act 1994 incorporated the said concept by way of
extension of the said concept of market legislatively. In sharp
contradistinction, these are not the state of affairs which may hold good
for Indian Act. There is never such an attempt by the law makers which
has been come to light to bring such a broader concept of world market
and the contextual reading of the provisions denotes otherwise which
tilts towards domestic market. Thus, the argument of the defendant of
free flow of goods may work in Europe context wherein there are
conventions and legal position giving effect to such a concept by way
incorporation their respective laws but not here in India.
81. In short, the intended purpose, international covenants
entered by states and state of affairs as existing in Europe warranted
the extension of the said concept of "on the market" to be extended as
"on the market in European Economic Area" in UK Act. Thus, the said
principle of exhaustion has been given a wider effect by widening the
conception of market. This is done by way of legislative measure by
adding the words "in European Economic Area" after the words "on
the market".
82. Now, if one compares, the said provision of law with
Section 30(3) of Indian Act of 1999, following marked differences can
be seen:
a) That the Indian Act uses the expression "on the market" although
infringement section as well as limitation Section in 29 and 30
respectively and it does not distinguish consciously just like UK
Act to either extend or to amplify the concept of exhaustion of
rights as done in the case of UK Act.
Rather, it confines itself by using the expression "on the
market" and putting the period thereafter without any further
addition or subtraction of the said expression in the section of
limitation of rights and there is no differential treatment
prescribed under 1999 Act of India which can lead to the
conclusion that both in Section 29 and 30, the expression "on the
market" is to be treated differently.
In that view of the matter, it becomes extremely difficult to
visualize the scenario when UK Act has gone ahead by changing
the wordings by way of legislative measures by adding the
wordings "in the European economic area" after the wordings
"on the market" in the section, how Indian Act which is more
narrower in terms when it uses the expression "on the market"
only, can be given even the wider effect than that of UK Act by
contemplating a situation and by accepting argumentation that
the Indian provision is made for purposes of international
exhaustion of rights solely on basis of a theory propounded by
handful of people including the defendants and some write ups or
articles written here and there, when the legislative history in UK
speaks about legislative extension of the concept of market,
mischief sought to be remedied also speaks to the contrary and
explicit terms of section in Indian act and their contextual
readings speak otherwise which limit it to the domestic market.
It only suggests one thing that it can be done only by way of
legislative amendments wherein the legislature in its wisdom can
extend the concept of "on the market" by adding or subtracting
words on it which is not within the domain of the Court to do so.
b) Secondly, if one compares the section carefully u/s 30(3) of the
Trade Marks Act and Section 12 of the UK Trade Marks Act,
1994, one can realize that the section which exists in UK states
that the registered trademark is not infringed by use of trademark
in relation to the goods which have been put on the market in the
European Economic Area under that trade mark by the
proprietor or with his consent. However, in sharp
contradistinction to the same, the Indian Act reads the similar
provision by stating that the goods having put on the market
under the registered trademark by the proprietor or with his
consent under the registered trademark.
The difference in the words "under the registered
trademark" used in the Indian Trade Mark Act and the words
"under that Trade Mark" in UK Act further gains relevance in
order to analyze what sort of market both the sections
contemplate. In the case of Indian Act, as it has been analyzed
above in extenso that it uses the word "on the market" and
possible impact of the words "under the registered trademark".
This is further indicated by the fact that registered proprietor
cannot object to further sale of goods after the goods having
been put on the market under the registered trademark by the
proprietor. The qualification that the goods put by the proprietor
shall bear registered trademark further clarifies the situation
that the goods which have been put in the market by the
registered proprietor is the goods in the same market where the
mark is registered as that is why it has been consciously used the
words "goods put on the market under the registered trademark".
However, in sharp contradistinction to the same, the UK Act
consciously omits the word "registered" due to the wider
expression "on the market" in European economic area as the
framers of that section were aware that even if the proprietor
puts the goods under that trade mark in any of the Member State
of European Economic Area irrespective of the fact as to
whether it is registered or not, the proprietor will lose its right to
object and that is why the expression used is "under that
trademark" so that wider import can be given. But, this is
conspicuously absent in the Indian Trade Mark Act, 1999 where
the wordings are goods having been put on the market under
the registered trademark.
The wordings "under that trade mark" has aptly examined
by Kerly‟s Law on Trade Marks and Trade Names [Fifteenth
Edition], Sweet and Maxwell 2011 wherein the learned author
analyzed the expression "under that trademark" in a very minute
terms. The learned Author observes thus:
"16-015 - Article 7 of the TM Directive is virtually
identical to art. 13 of the CTM Regulation. Despite the
fact that the CTM Regulation was passed some six years
after the Directive, the travaux preparatoires make it clear
that the two provisions were drafted at the same time.
Both provisions apply to goods put on the market in
the EEA "under that trade mark". That expression is
apt for a CTM Regulation, but is rather clumsy when
transposed into the TM Directive. In the context of the
Directive, it must be interpreted as referring not only
to the particular national registered trade mark but
also all trade marks which: (10 are owned by the same
proprietor or by another entity which is economically
linked (20 are identical or virtually identical, and (3)
are either registered or unregistered used by the
proprietor or with his consent for putting goods on the
market in any state of the EEA. The alternative
interpretation is untenable, that it refers only to the
particular national trade mark."(Emphasis Supplied)
83. From the bare reading of said excerpts from Kerly‟s
alongside the wordings of Section 30(3) of the Trade Marks Act, 1999
the conclusion becomes inescapable that the wordings "on the market"
"under the registered trade mark" makes the market confined to
domestic market/ Indian market/ the market which is used in
consonance with Section 29 and not the international market and the
wordings "under the registered trademark" further leads to inference
that the said market is the one wherein the national trademark is
registered and the wordings of Section 12 of the UK Trade Mark Act
are widely couched due to these two reasons; first being it uses the
expression "in the European economic area" which is by virtue of
effect of treaty of Rome and secondly, by using the expression „under
that trade mark" as in contradistinction to the "registered trademark".
84. Therefore, the provisions of UK Act although are indicators
to the effect as to how to interpret the Indian law in the limited context
but are not in pari materia and therefore cannot be strictly pressed into
service so as to equate the Indian law with UK law and rather UK law
is much more at the advance stage when it extends the principle of
exhaustion in the European economic area by virtue of legislative
measures which is absent in Indian context.
85. Thus, the comparative analysis between provisions of Indian
Act of 1999 and UK Act of 1994 further gives the clear indication that
contextually Indian provisions are intended to operate in domestic
market wherein the trade mark is registered and cannot be given a
wider effect as that of UK Act due to change in the wordings of the
corresponding provisions as existing in UK which is worded widely
consciously by the framers of the law in UK.
Contextual Reading of Section 30 (4)
Section 30(4) also needs consideration which reads as under:-
Section 30(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"
86. As it has been seen above that Section 30(3) relates to
lawful acquisition of the goods under the registered trade mark by a
person in the market which is the national market with the aid of
contextual construction. Therefore, the exception which has been
carved out u/s 30(4) is also applicable to the same provision and cannot
be said to be given any other interpretation.
87. This is necessary to examine as the argument can be taken
that why there is a need to enact an exception to the rule envisaged in
Section 30(3) which entitles the proprietor to oppose further dealings if
the legislative intent was to give a limited interpretation within the
domestic market itself.
88. However, the said argument is equally unmeritorious and it
is actually the intent of the legislature and mischief which is sought to
be remedied that further dealings within the market / domestic market
can be prohibited if there is a change or impairment of the goods after
they have been put into the market and there is no reason why it may
not hold true for domestic markets.
89. If one reads now the provision of Section 30(3) and 30(4)
contextually, it becomes very clear that the basic purpose was to
provide for recognition of principle of exhaustion in limited sense by
curtailing it in relation to the cases where the goods bearing the
registered trade mark are lawfully acquired by a person and the
mischief which his sought to be remedied is that the proprietor cannot
after throwing the goods in the market can turn around and prohibit the
very same goods on the pretext of change of ownership of the brand
name or on the pretext that he has himself or with his consent someone
else has put the goods in the market.
90. However, on limited grounds within the market itself he
realizes that there are some legitimate reasons which make those sales
unlawful or otherwise the goods are changed or impaired after they
have been put on the market; then the proprietor is entitled to object the
said circulation of goods.
91. The introduction of the exception under Section 30 (4)
further puts embargo on the applicability of the principle of exhaustion
within the market also which is only in cases where there is no change
or impairment of goods or where there no legitimate reasons to oppose.
Thus, It is very limited kind of exhaustion which is permissible under
the Act of 1999 wherein even the domestic circulation of goods can be
controlled if there exists legitimate reasons for the proprietor to object
the said further dealings more specifically the change or impairment of
the goods after they are put into the market.
92. This clarification also became necessary in order to dispel
the doubts which exist in some articles and/ or write-ups by the lawyers
from time to time that India follows the principle of international
exhaustion when in fact there is not even a whisper of international
market or international exhaustion either in Section 30(3) or in Section
30(4).
93. Furthermore, the term "legitimate reasons" are also invited
in interpretation and the said "legitimate reasons" can be given a
similar interpretation as given by the European Courts inasmuch as that
it is only in few context Section 12 is different from Section 30(3) i.e.
the initial qualification where the goods bearing a registered trade mark
are lawfully acquired by a person, and the addition of the words in the
European economic area after the words "on the market" and otherwise
Section 12 and Section 30 operate in similar sense of term as it takes
away the right of proprietor to conduct "further dealings" and it is only
by virtue of conditions of European countries and by virtue of addition
of wordings "in the European economic area", the same is extended to
European region and therefore Section 12(2) which is an exception to
Section 12(1) where there exists "legitimate reasons", is akin to Section
30(4) of the Indian Trade Marks Act. Therefore, there is no reason why
interpretation accorded by the European Courts with respect to the term
"legitimate reasons" cannot be pressed into service in a limited sense in
order to analyze and understand as what sort of legitimate reasons,
there can be entitling the proprietor to oppose further dealings.
94. Although those judgments may not be relevant for the
purposes of prohibiting the dealings outside the national region in
Indian context as widely worded Section 12 in UK Act extending the
said concept of market as against India where the provision is in
narrower terms but are certainly relevant for the purposes of gauging as
to what can be the "legitimate reasons" for the proprietor to oppose
further dealings of the goods by such persons.
95. Therefore, it follows that the legitimate reasons like loss of
goodwill, change and impairment of goods and establishing trademark
connection with that of the proprietor without any authorization or its
distributor channels, can be said to be all legitimate reasons entitling
the proprietor to oppose further dealings in the product u/s 30(4). It is
also to be noticed that sub section 4 of section 30 uses the expression
"....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" .
96. From the above discussion, it can be fairly stated that both
Section 30 (3) and Section 30 (4) operate in the domestic market and
the same cannot be said to be relating or introducing any such concept
of international exhaustion of rights on the basis of the putting of the
goods on the market. Rather the conception of market in the context of
Indian Act is confined to market where the trade mark is registered.
Statement of Objects & Parliamentary Debates As An Aid To The
Construction of the Provision.
97. Having discussed the interpretation of the provisions of the
Trade mark Act and testing the same on the bedrock of contextual
interpretation, Now, I shall deal with the reliance of parliamentary
debates and other write ups as relied by the defendants as an aid to
construction of the provision under the Act.
98. Learned counsel for the defendants have relied upon the
following material in order to argue that the said material is emanating
from parliament and thus required to be considered as aid to
construction of the provision:
a) Some Extract from Trade Mark Bill 1999 which is titled as
"Arrangement of clauses" wherein there notes relating to several
clauses of Trade Mark Bills wherein the relevant clause 30
excerpt is reproduced herein after:
"Sub clause (3) and (4) recognize the principle of
"exhaustion of rights" by preventing the trade mark owner
from prohibiting on ground of trade mark rights, the
marketing of goods in any geographical area, once the
goods under the registered trade mark are lawfully
acquired by a person. However, when the conditions of
goods are changed or impaired after they have been put on
the market, the provision will not apply".
This as per the learned counsel for the defendant is a clause
of statement of objects and reasons appended to the Trade Mark
Bill, 1999 as stated in the written submissions and thus the same
must be considered by the court as an aid to construction of the
provisions which are Section 30 (3) and 30 (4) of the Act.
Likewise, the Department related Parliamentary standing
committee on Human Resource Development‟s 227th Report on
Copyright Amendment Bill, 2010 wherein some incidental
reference to international exhaustion principle is there with
reference trade marks which is reproduced herein after:
"7.12 Committee was also given to understand by the
representative of publishing industry that the scheme of
copyright law was entirely different from The Trade Marks
Act and Patents Act 1970. The application of the standards
and principles of these two laws through the proposed
amendment of section 2(m) would completely dismantle the
business model currently employed , rendering several
industries unviable. On specific query in this regard, the
department informed that the concept of international
exhaustion provided under section 107 A of the Patent Act,
1971 and in section 30 (3) of Trade Marks Act and in section
2(m) of copyright law were similar. This provision was in
tune with the national policy on the exhaustion of rights."
By putting reliance upon the above two references, it has
been argued that this court should take into consideration the
aforementioned parliamentary material as an indicators to the
governing principle of international exhaustion and interpretation
to the provision must be then accordingly given by the court.
99. Let me now discuss the law relating to relevancy of
parliamentary material including the debates, statement of objects as an
aid to construction of the provision before examining the
aforementioned material relied upon by the defendants.
100. It is now well settled that the statement of objects and
reasons, parliamentary debates and material emanating from parliament
cannot be used to control the express language of the provision. The
said materials and debates are not true guide to the interpretation of the
provision and are only necessary to examine the antecedent state of
affairs existing at the time when the enactment was passed. The same
cannot however be used to construe the provisions when the plain and
contextual reading of the same speaks otherwise.
101. In the case of State of West Bengal v. Union of India,
AIR 1963 SC 1241, The Supreme Court observed thus:
"It is however well settled that the Statement of Objects and
Reasons accompanying a Bill, when introduced in
Parliament, cannot be used to determine the true meaning
and effect of the substantive provisions of the statute. They
cannot be used, except for the limited purpose of
understanding the background and the antecedent state of
affairs leading up to the legislation. But we cannot use this
statement as an aid to the construction of the
enactment....". (Emphasis Supplied).
102. In Aswini Kumar Ghose And Anr. vs Arabinda Bose And
Anr., AIR 1953 SC 75, Hon‟ble Patanjali Shastri J. (as his lordship
then was) speaking for the majority observed thus:
"As regards the propriety of the reference to the statement of
objects and reasons, it must be remembered that it seeks only to
explain what reasons induced the mover to introduce the Bill in
the House and what objects he sought to achieve. But those
objects and reasons may or may not correspond to the objective
which the majority of members had in view when they passed it
into law. The Bill may have undergone radical changes during its
passage through the House or Houses, and there is no guarantee
that the reasons which led to its introduction and the objects
thereby sought to be achieved have remained the same
throughout till the Bill emerges from the House as an Act of the
Legislature, for they do nor form part of the Bill and are not
voted upon by the members. We, therefore, consider that the
statement of objects and reasons appended to the Bill should
be ruled out as an aid to the construction of
a statute. (Emphasis Supplied)
103. Likewise in the case of S.S Bola v. B.D Sardana, AIR
1997 SC 3126, the Supreme Court again reiterated the same
proposition by observing:
" where words used in a statute are clear and unambiguous
showing the intention of the legislature, it is not
permissible for the Court to interpret the statute by
examining the objects and reasons for the statute in
question". (Emphasis Supplied)
104. From the reading of the aforementioned observations of the
Apex court, it can be safely said that the statement of objects and
reasons, parliamentary debates and committee reports are at the best
looked into examine the antecedent state of affairs and they cannot be
pressed into service to curtail the plain and contextual meaning of the
enactment. It is also not correct that they are not relied upon to gauge
the mischief sought to be remedied but only when the same are guide to
such mischief sought to be remedied and provision as enacted speaks in
consonance with the said object and not in cases where there are
contradictory voices. In the cases of conflict between the language of
the provisions and parliamentary debates, it cannot be assumed that the
voice of the few persons in the parliament is the voice of the entire
legislature or lawmakers as enunciated clearly in Ashwini Kumar
Ghose (supra).
105. Applying the said principles to the facts of the present case,
firstly, the statement of objects are not true guide to construction of the
provision of the statute and cannot be pressed into the service in case
the provision clearly speaks otherwise. But in the present case, the
reliance has been placed by the defendant which has been stated to be
an arrangement of clauses in the Trade Marks Bill, 1999 wherein the
clause 30 reads as under:
" Sub clause (3) and (4) recognize the principle of "exhaustion of
rights" by preventing the trade mark owner from prohibiting on
ground of trade mark rights, the marketing of goods in any
geographical area, once the goods under the registered trade
mark are lawfully acquired by a person. However, when the
conditions of goods are changed or impaired after they have been
put on the market, the provision will not apply."
106. It is highly doubtful as to how the defendant can call this as
a statement of objects and reasons of the Trade Marks Act. The source
of the document is not known, it is not the statement of the object and
reasons appended to the Trade Marks Act. In fact, the statement of
objects and reasons appended to the Trade Marks Act, 1999 reads as
under:
" STATEMENT OF OBJECTS AND REASONS
The Trade and Merchandise Act, 1958 has served its purpose
over the last four decades. It was felt that a comprehensive
review of the existing law be made in view of developments in
trading and commercial practices, increasing globalization of
trade and industry, the need to encourage investments flows and
transfer of technology, need for simplification and harmonization
of trademark management systems and to give effect to
important judicial decisions. To achieve these purposes, the
present Bill proposes to incorporate, inter alia the following
namely:-
(a) providing for registration of trademark for services, in
addition to goods;
(b) registration of trademarks, which are imitation of well
known trademarks, not to be permitted, besides enlarging
the grounds for refusal of registration mentioned in clauses
9 and 11. Consequently, the provision for defensive
registration of trademark are proposed to be omitted;
(c) amplification of factors to be considered for defining a
well known trademark;
(d) doing away with the system of maintaining registration of
trademark in Part A and Part B with different legal rights,
and to provide only a single register with simplified
procedure for registration and with equal rights;
(e) simplifying the procedure for registration of registered
user and enlarging the scope of permitted use;
(f) providing for registration of "Collective Marks" owned by
associations, etc;
(g) providing for an Appellate Board for speedy disposal of
appeals and rectification applications which at present lie
before High Courts;
(h) transferring the final authority relating to registration of
certification trademarks to the Registrar instead of the
Central Government;
(i) providing enhanced punishment for offences relating to
trademark on par with present Copyright Act, 1957, to
prevent the sale of spurious goods;
(j) prohibiting use of someone else‟ trademarks as part of
corporate names, or name of business concern;
(k) extension of application of convention country to include
countries which are members of groups or union of
countries and Inter-Governmental Organizations;
(l) incorporating other provisions, like amending the
definition of "trademarks", provisions for filing a single
application for registration in more than one class,
increasing the period of registration and renewal from 7 to
10 years, making trademark offences cognizable,
enlarging the jurisdiction of courts to bring the law in this
respect on par with the copyright law, amplifying the
powers of the court to grant ex parte injunction in certain
cases and other related amendments to simplify and
streamline the trademark law and procedure.
2. In view of the extensive amendments necessitated in the
Trade and Merchandise Act, 1958, it has been though fit
to repeal and re-enact the said Act incorporating the
necessary changes.
3. The Bill seeks to achieve the above objects."
107. From the bare reading of the said statement of objects and
reasons appended to the Act of 1999, no where, the said objects and
reasons speaks of any such mischief controlling markets by the
proprietors and also it does not speak at all about the principle of
international exhaustion of rights introduced in the Trade Marks Act
1999. Therefore, the statement of objects and reasons appended to the
Act even if relied in the present case does not aid the case of the
defendants as they are not indicative of any legislative intent towards
the principle of international exhaustion as propounded by the
defendants.
108. The reliance of the Arrangement of clauses by the defendant
by calling it as a statement of objects and reasons is misplaced as they
are not statement of objects and reasons in the true sense of term. They
may be either some parliamentary recommendation or some sort of
arrangement proposed during the time when bill was about to pass. But
then again, not all parliamentary material can be said to be true guide to
construction of the provision. Even the statement of objects and reason
as an extrinsic aid to the construction is rejected in many cases, then it
is doubtful as to how any parliamentary material can be relied upon as
an aid to construction. In any case, applying the principles of Ashwini
Kumar Ghose (Supra) and S.S. Bhola (supra), the said noting the clause
30 does not speak of the legislative intent of the entire legislature and
cannot be used to enlarge or limit the construction of the provision
when the plain and contextual reading provides for to the contrary.
Similar is the case with the Copyright committee report which is
relating to copyright amendment bill where there is a passing reference
to the Trade marks Act. The said reference is again just the passing
reference and is not conclusive of the legislative intent. The said
reference only states that the department answers the said question on
specific query. The said query must be answered by lawyers or
informers to the department and not on the basis of the interpretation
contextually as done above. Thus, it is an indicative of the fact that the
said principle of exhaustion is much a talked about topic in relation to
the subject of Intellectual property and the said copyright committee
report is prepared on the basis of what the lawyers or the lobbies of
publishers which work or follows such principles internationally
informs the persons working in such committees in parliament. The said
excerpts are just reproduced in the said committee reports on basis
hearsay of those persons and even in the cases where the true import of
the provision is something different. Thus, the said committee report of
copyright relating to amendment of the different statute cannot be relied
upon to amplify the stand that the said report speaks of any such
legislative intent to re-modify the mischief of market controlling right
of the proprietor.
109. Thus, the submission of the defendants to the extent, it
relies the parliamentary material and committee report as an aid to
construction of Section 30 of the Trade Marks Act is rejected.
110. The another connected submission is the reliance on some
report/ map issued by International Trade Marks Association wherein
the legal regimes across the globe are mentioned. Again the said report
is just something what lawyers or lobbies as a member of the
international organizations inform them. The said organization is a
brand owners association and takes the aid and assistance of the
lawyers worldwide for basing their own opinion to publish such data.
Thus, again the said reports are just hear say material and cannot be
said to be a guiding force for legislative intent.
111. A similar state of affairs exist with some communication
issued in from India on 10.07.1989 relating to negotiation of TRIPS
agreement wherein there is a recommendation that principles of
international exhaustion should be followed in Trade Mark Laws. The
said communication or report is again an advise while negotiating an
agreement and as far as back in 1989 cannot by any stretch of
imagination be pressed into service to interpret the provisions of 1999
Act which is passed on 15.09.2003 and no parallel can be drawn from
such report vis a vis new enactment.
112. Likewise is the case with the write ups or articles written by
the students of the law school or research papers. Most of these write
ups are written on the basis of what has been talked about in the
lobbies again and nowhere the said write ups attempt to examine the
true import of the provision by reading the provision as it stands. The
conclusions are just drawn on the stray basis that India follows
international exhaustion without comparison of the wordings of the
statute in Indian law vis a vis UK Act and other provision of
commonwealth countries. On the contrary, I have also been able to
find some internet write ups which speak to the contrary wherein the
conclusions are deduced that India follows national exhaustion. One
such article written by Senha Jain from ILS Law College Pune in the
Journal Of Intellectual Property Rights cited as JIPR Volume 14
(January 2009) pp 14- 27 issued by NISCAIR which recommends as
under:
" Hence it can conclusively suggested that India Should follow
national exhaustion. The view seems to have been reinforced
after passing of the 2007 notification....."
In such fluidic state of affairs, it would be unwise to draw
any inference from such write ups or articles either of Sonia Baldia or
of Ms. Jain (although seems to be more extensive) as a guiding force
towards the legislative intent behind enacting Section 30 of the Trade
Marks Act unless the provision seems to be in consonance with the
discussion.
113. Thus, the write ups, articles and parliamentary material
relied upon by the defendants as an extrinsic aid to construction of the
provision is rejected in view of the aforementioned reasons and
discussions.
114. Let me now examine the submission of the defendants that
this court should follow the judgment passed in the Xerox (supra). I am
not convinced as to how the Xerox case can at all aid the case of the
defendants at all and my reasoning for the same can be as follows:
i) It is settled principle of the law that the judgment is a precedent
for the legal principle decided therein and not what is logically
deduced there from. This has been well settled by the Supreme
Court in the case of Southern Petrochemicals Co. Limited vs.
Electricity Inspector, 2007(5) SCC 477 wherein the apex court
observed thus:
"A decision, as is well known, is an authority for what it
decides and not what can logically be deduced therefrom.
A decision is not an authority on a point which has not
been considered." (Emphasis Supplied)
115. A logical corollary to this principle is also that the ratio
decidendi of the case is the legal principle decided therein and not the
one what can be inferred there from. In Union Of India & Ors vs.
Dhanwanti Devi & Ors, (1996) 6 SCC 44 the Supreme Court
explained what constitutes a binding precedent in the following words:
"It is not everything said by a Judge while giving judgment that
constitutes a precedent. The only thing in a Judge's decision
binding a party is the principle upon which the case is
decided and for this reason it is important to analyze a
decision and isolate from it the ratio decidendi. According to
the well-settled theory of precedents, every decision contains
three basic postulates -- (i) findings of material facts, direct
and inferential. An inferential finding of facts is the
inference which the Judge draws from the direct, or
perceptible facts; (ii) statements of the principles of law
applicable to the legal problems disclosed by the facts; and
(iii) judgment based on the combined effect of the above. A
decision is only an authority for what it actually decides.
What is of the essence in a decision is its ratio and not every
observation found therein nor what logically follows from the
various observations made in the judgment Every judgment
must be read as applicable to the particular facts proved, or
assumed to be proved, since the generality of the expressions
which may be found there is not intended to be exposition of the
whole law, but governed and qualified by the particular facts of
the case in which such expressions are to be found. It would,
therefore, be not profitable to extract a sentence here and there
from the judgment and to build upon it because the essence of
the decision is its ratio and not every observation found therein.
The enunciation of the reason or principle on which a question
before a Court has been decided is alone binding as a precedent.
The concrete decision alone is binding between the parties to it,
but it is the abstract ratio decidendi, ascertained on a
consideration of the judgment in relation to the subject matter of
the decision, which alone has the force of law and which, when it
is clear what it was, is binding. It is only the principle laid down
in the judgment that is binding law under Article 141 of the
Constitution. A deliberate judicial decision arrived at after
hearing an argument or a question which arises in the case or is
put in issue may constitute a precedent, no matter for what
reason, and the precedent by long recognition may mature into
rule of stare decisis. It is the rule deductible from the application
of law to the facts and circumstances of the case which
constitutes its ratio decidendi" (Emphasis Supplied)
116. Now let me apply the said principles of law relating to ratio
decidendi or binding precedent to the Xerox case. After due application
of the aforementioned principles of law to the Xerox (supra), it is clear
that in Xerox case, while passing the order, learned single judge of this
court observed thus:
" Learned counsel for the parties state that it has not been
possible to arrive at any agreed interim arrangement. In these
circumstances , these applications will have to be heard on the
date fixed...."
" The only question to be examined today is what is the interim
arrangement till such time the interim applications are
heard........"
"I do not deem it necessary to go into the merits of
submissions, as it may prejudice either of the parties at the
hearing of the interlocutory applications. Suffice it to say that
at this stage, I am of the considered view that it will be
appropriate to permit import of such Xerox machines, which
have proper documentation provided there is no change or
impairment in the machine."
117. From the bare reading of the afore quoted observations of
the learned single judge of this court, it is clear that the learned single
judge has made these observation while passing some interim
arrangement keeping the hearing of the interim applications alive.
Further, it is clear from the observations of the learned single judge that
he himself observes that he does not intend to the go into merits of the
submissions canvassed by both the parties as it may prejudice the
hearing of injunction applications.
118. Thus, it is wrongful on the part of the defendants to contend
that there is any legal principle evolved in the Xerox case which has
been decided after hearing the submissions of both the parties. The
binding precedents are made when the decision is rendered upon
examining the submissions of the parties after due application of the
law on the same.
119. It is another thing that on facts, the learned single judge
while noting the submissions and remaining it left open to be examined
later proceeded to pass an order lifting the embargo on importation as a
matter of interim injunction. But it does not follow from the said order
that it declares some binding principle of law after applying the tests
laid down by the Supreme Court so as to carve out the ratio decidendi
from the case. Rather, the Xerox case leaves the submissions open to
examined by this court at the later stage.
120. Therefore, the reliance of the defendants of the said decision
of Xerox (Supra) to articulate that it is binding precedent and thus this
court should conclude what has been done therein without examining
the submissions of parties in this case is totally misconceived. The case
in Xerox is thus an order passed in its own facts and circumstances
wherein there was already an interim arrangement in place which was
modified by the court reserving the right of the parties to urge the
submissions in the interim applications at the later stage and cannot
come in the way of this court to examine the provisions of the law and
interpret them as done above.
121. The order in the Xerox (supra) has been passed keeping in
mind the importation of second hand machines which are being
imported. The present case does not also relates to second hand goods
but is a case where the defendants are alleged to have been selling
genuine products without the permission of the registered proprietor by
way of importation which is an infringement under Section 29 (1) read
with Section 29 (6). On that count too, the order of this court in
Xerox(supra) is clearly distinguishable.
122. Thus, the case in Xerox‟s case also does not aid the case of
the defendants in view of my reasoning mentioned above.
123. Let me now examine the impact of an admission of a legal
position or principle by the plaintiff if any on the case in hand.
124. It has been contention of the defendants that even the
plaintiffs admits that India follows the principle of international
exhaustion and therefore this court should hold the same against the
plaintiff. The defendants in this context rely upon the paragraph 17 in
the replication which reads that it is not denied that India follows the
principle of international exhaustion.
125. The plaintiffs in response to the same state that the legal
principle cannot be said to be admitted in as much as in number of
places the plaintiffs have disputed the same and the main submission of
the plaintiff has been that the defendants should be restrained from
importing in view of Section 29 of the Act and thus, there cannot be
said to be clear or unambiguous admission on the part of the plaintiff.
This leads me to delve in to question as to whether there can be any
admission of the legal principle and what can be the possible impact of
the same in the case in hand.
126. The law of admission has its genesis from the rules of
evidence wherein it is well settled that the admission is best evidence
and no further evidence is required once the admission is clear and
unambiguous. However, the admissions are usually made of some facts
and not of pure questions of law. Admission is the best piece of
evidence against the persons making admission. (As was observed by
this Court in Avadh Kishore Das v. Ram Gopal and Ors.; AIR 1979
SC 861 in the backdrop of Section 31 of Indian Evidence Act, 1872 (in
short the `Evidence Act') it is true that evidentiary admissions are not
conclusive proof of the facts admitted and may be explained or shown
to be wrong; but they do raise an estoppel and shift the burden of proof
placing it on the person making the admission or his representative-in-
interest. Unless shown or explained to be wrong, they are an
efficacious proof of the facts admitted).
127. As observed by Phipson in his Law of Evidence (1963
Edition, Para 678) as the weight of an admission depends on the
circumstances under which it was made, these circumstances may
always be proved to impeach or enhance its credibility. The effect of
admission is that it shifts the onus on the person admitting the fact on
the principle that what a party himself admits to be true may reasonably
be presumed to be so, and until the presumption is rebutted, the fact
admitted must be taken to be established. An admission is the best
evidence that an opposing party can rely upon, and though not
conclusive is decisive of matter, unless successfully withdrawn or
proved erroneous.
128. It needs to reiteration that the interpretation of the provision
is a pure question of the law and it is only dependent upon the interplay
of the provisions of the statute.
129. Chief Justice Munir in his Book Law of Evidence, Fifteenth
Edition, 2010, Universal Publishing House, has observed about the law
on admission of the purely legal question in the following terms:
20 Admission on Pure matter of law
"In England , admissions are receivable to prove matter of law or
mixed law and fact. But an admission having been defined by the
Evidence Act as "a statement which suggests any inference as to
a fact in issue or relevant fact", it seems that an admission on
pure matter of law is not within the scope of section 17- 31 and
will be governed by the rules of pleadings".
130. It is thus clear that the admission in the context of Indian
Evidence Act, 1872 shall always be of facts due to the definition of the
admission under Section 17 of the Act is confined to statement which
may suggest inference as to fact or relevant fact. A logical corollary to
this which follows is that the admissions shall always be of facts or
relevant facts but cannot be of law.
131. Further, if one examines the concept of admissions on the
basis of law of pleadings as envisaged under the code of civil
procedure, it is realized that the cardinal rule of pleadings is that the
pleadings should contain the facts, material facts and not the law. There
again, it is not practical or feasible to give rise any such admission of
the law or legal position. Afortiori, it follows that the admission of the
legal position or legal principle which may or may not be correct is no
admission in law and it is inconsequential in law.
132. In the case of Ram Bharosey versus Ram Bahadur Singh,
AIR 1948 Oudh 125, the Court has observed that the admission by a
party on pure question of law is not binding on him. (The same view
was also taken by the Nagpur Bench in the case of Gulabchand versus
Bhaiyalal, AIR 1929 Nag 343).
133. It is also well settled that there cannot be an estoppel
against the law or statutory provisions. When one is concerned with the
statutory right or constitutional guarantee, there cannot be any estoppel
against the same. ( Kindly see the judgment passed in A. C. Jose Vs
Sivan Pillai & Ors, 1984 SCR (3) 74).
134. One of the facet of the proposition that there is no estoppel
against the statute is that the admissions or concessions made by the
counsel for the parties under the wrong understanding of law cannot
operate to the detriment of the party making such admissions and it is
only on the basis of correct legal position, the rights of the parties are to
be determined. This proposition has been laid down in the case of
Union Of India And Ors vs Mohanlal Likumal Punjabi & Ors,
(2004) 3 SCC 628 wherein the apex court observed thus:
"In our view the concession, if any, is really of no
consequence, because the wrong concession made by a
counsel cannot bind the parties when statutory provisions
clearly provided otherwise. It was observed by Constitution
Bench of this court Sanjeev Coke Manufacturing Co v.
Bharat Coking Coal Ltd (1983 (1) SCC 147) that courts are
not to act on the basis of concession but with reference to the
applicable provisions. The view has been reiterated in (1988 (6)
SCC 538) and Central Council for Research in Ayurveda and
Sidhha & others versus Dr. K Santhakumari (2001 (5) SCC 60).
In para 12 of Central Council's case (supra) it as observed as
follows:
"In the instant case, the selection was made by the
Departmental Promotion Committee. The Committee must
have considered all relevant facts including the inter se merit
and ability of the candidates and prepared the select list on
that basis. The respondent, though senior in comparison to
other candidates, secured a lower place in the select list,
evidently because the principle of "merit-cum-seniority" had
been applied by the Departmental Promotion Committee. The
respondent has no grievance that there were any mala fides
on the part of the Departmental Promotion Committee. The
only contention urged by the respondent is that the
Departmental Promotion Committee did not follow the
principle of "seniority- cum-fitness". In the High Court, the
appellants herein failed to point out that the promotion is in
respect of a "selection post" and the principle to be applied is
"merit-cum-seniority". Had the appellants pointed out the true
position, the learned Single Judge would not have granted
relief in favour of the respondent. If the learned counsel has
made an admission or concession inadvertently or under a
mistaken impression of law, it is not binding on his
client and the same cannot enure to the benefit of any
party." (Emphasis supplied)
135. Again in Uptron India Ltd vs. Shammi Bhan and Another
(1998 (6) SCC 538), the court also explained the said principle is one
of species of the principle that there cannot be any estoppel against the
statute. It was held that a case decided on the basis of wrong
concession of a counsel has no precedent value. That apart, the
applicability of the statute or otherwise to a given situation or the
question of statutory liability of a person/institution under any
provision of law would invariably depend upon the scope and
meaning of the provisions concerned and has got to be adjudged
not on any concession made. Any such concessions would have no
acceptability or relevance while determining rights and liabilities
incurred or acquired in view of the axiomatic principle, without
exception, that there can be no estoppel against statute. (Emphasis
Supplied).
136. In view of the above discussion, it is clear that the
admissions made of law or legal provisions are inconsequential, they
cannot operate as an estoppel against the person making it. The courts
are not to act upon the admissions of wrong legal principles made by
the parties. Rather, the court has to adjudicate rights and liabilities of
parties basing on the true legal position emerging from the interplay of
the provisions of the statute and not upon any such wrong admissions.
137. Accordingly, the statements made in the replication by the
plaintiff if any to the effect that India follows the principle of
international exhaustion cannot be termed as admission of the legal
principle and the same cannot operate to the detriment of the plaintiff.
The said admission whatsoever does not also absolve the court from its
duty to analyze the legal position as exists on the plain and contextual
reading of statute merely because the plaintiff mistakenly or otherwise
has written or made such statement in the replication.
138. Further, Mr. Anand, learned counsel for the plaintiffs has
informed the court that the same has been inadvertently written by
some junior advocate which means that the same is an accidental slip
and confirms the applicability of the afore quoted rule that the rights
cannot be adjudicated on the basis of the mistaken concessions of law
given by the parties or their counsel and cannot bind the parties.
Therefore, the statement made in para 17 or 11 of the replication
wherein the plaintiffs have not denied that India follows the principle
of information exhaustion is inconsequential in law and does not aid the
case of the defendants.
139. Let me now deal with the submissions made by the
defendants in seriatim:
a) Firstly, I have already dealt with the submissions of the
defendants that India follows the principle of international while
analyzing Section 30 (3) by contextually reading the same and
arrived at the finding that the said submission is without any
force.
b) Secondly, the submissions of the learned counsel for the
defendants that the imports amounts to the goods lawfully
acquired by a person is also incorrect and the same stands dealt
with in the discussion relating to Section 30 (3).
c) Thirdly, I have already discussed the conception of market in my
discussion on Section 30 (3) in great detail and thus the
submissions of the defendants that there is a worldwide free
market and importation is allowed and is not an infringement is
also rejected. The same does not hold true that Indian Act is
narrower in terms when it comes to the concept of market.
d) Fourthly, I have already rejected the parliamentary material
which is not statement of objects and reasons and even it is
assumed to be so that they are not true aid of construction of the
provision where the language speaks otherwise. I have rejected
the other aids including write ups or maps which cannot be guide
to the interpretation. Thus, the said argument is again without
any force and is rejected.
e) Fifthly, I have also dealt with the decision of Xerox (supra)
reliance of the defendant as per my view is misconceived.
Similarly, I am also not basing my decision on the basis of ex
parte order passed in earlier case of Samsung Electronics Co
Ltd vs. G Chaudhary and thus it does not call for discussion as I
have independently formed an opinion on the basis of plain and
contextual reading of the provisions as well as the comparative
analysis with UK law.
f) Sixthly, the defendants have argued that Section 30 (4) has to
construed as if it is a proviso to Section 30 (4). Although, there is
no need to examine the said submission as the case of the
defendant as per my view does not even come within the
purview of the Section 30 (3). Still I am examining the said
submission in following manner:
The reading of Section 30 (3) and Section 30 (4) reveals
that although the Section 30 (4) clearly states that the Section 30
(3) shall not apply in some cases but no where it uses the
language as "provided" which may make it in as much as that of
the proviso. The said Section 30 (4) is at the best the exception
to Section 30 (3) but cannot be assumed to be proviso when it is
couched in such language.
It is well settled that the provision which acts as an
exception cannot necessarily be presumed to be proviso to the
main section. This has been examine in detail by Supreme Court
in the case of London Rubber Co. Ltd vs Durex Products, 1964
SCR (2) 211 wherein Section 10 (1) and (2) of the Trade Marks
Act, 1940 which are exceptions to each other were contended to
be proviso to each other. The Supreme Court recorded the
submission in the following words and thereafter rejected the
same:
"Mr. Pathak, however, contends that sub-s. (2) is merely a
proviso to sub-s. (1) and as such it cannot apply to a case
which squarely falls under s. 8 (a). Being a proviso to sub-s.
(1), the argument proceeds, it must apply to the matter contained
in the main provision and that since sub-s. (1) applies only to a
case where a competing trade mark is already on the register it
cannot apply to a case falling under s. 8 (a) which provision
deals, according to him, only with cases where there is no mark
on the register. He contends that the language used in sub-s. (2)
is in material respects identical with that used in sub-s. (1) and
thus establishes the mutual connection between the two
provisions. A similar argument was advanced before the
High Court and was rejected by it, in our opinion
rightly." (Emphasis Supplied)
"The question, however, is whether sub-s. (2) can be regarded
by itself or it is, as contended by Mr. Pathak, only a proviso to
sub-s. (1) and being a proviso it must apply only to cases which
are contemplated by the main enacting provision, that is, sub-s.
(1) of s. 10. He concedes that sub-s. (2) is not described by the
legislature as a proviso to sub-s. (1) but he wants us to
construe it as a proviso because it occurs in the same section
as sub-s. (1) and its language is similar to that of
sub-s. (1)." (Emphasis Supplied)
"In support of this contention he has referred us to Ram Narain
Sons Ltd., v. Assistant Commissioner of Sales Tax(,). That was a
case where this Court was considering the proviso to Art. 286(2)
of the Constitution and the Court held that a proviso was meant
only to lift the ban under Art. 286(2) and nothing more.
Bhagwati J., who delivered the judgment of the Court has
observed thus :
"It is a cardinal rule of interpretation that a proviso to a particular
provision of a statute only embraces the field which is covered
by the main provision. It carves out an exception to the main
provision to which it has been enacted as a proviso and to no
other."
These observations, however, must be limited in their
application to a case of a proviso properly so called and
there is no justification for extending them to a case like the
present where the legislature has, when it could we I do so if
that were its intention, not chosen to enact it as a proviso.
The decision.. therefore, affords no support to the contention."
(Emphasis Supplied)
Thus, it is clear that in cases where one provision is
exception to another, the same cannot be called as proviso to the
same on the basis of the assumption unless the legislature
expressly enacted the same to be properly so called proviso. In
the given case, if I apply the said principle, it is clear that the
terms of Section 30 (4) cannot be cut down by treating it as a
proviso. The submission of the defendant is thus rejected as
unmeritorious.
g) Sixthly, the submission of the defendants that there are other
entities, who are also doing the importation within the
knowledge of the plaintiffs and for the same reason, the plaintiff
are estopped from suing the defendants and seeking injunction.
In reply, the plaintiffs submit that the defendants have now
informed about the same and they shall be taking necessary
action accordingly. I have given due consideration to the
submission and reject the same as incorrect. I have already
arrived at the finding that the importation of goods under the
mark is an infringement envisaged under Section 29 (1) read with
Section 29 (6) with no exception as to genuine or non genuine
goods. Therefore, by virtue of the acts of defendants being an
infringement, the third party misuse cannot be pressed into
service to escape the liability of infringement which is well
settled principle in view of dictum of Pankaj Goel Vs. Dabur
India Limited and Castrol Limited Vs. A.K. Mehta of Division
Bench of this court. (Pankaj Goel Vs. Dabur India Limited
2008 (38) PTC 49 (Delhi) held that merely because others are
carrying on business under similar or deceptively similar
trademark or have been permitted to do so by the plaintiff,
cannot offer a licence to the world at large to infringe the
trademark of the plaintiff. It was further held that even otherwise,
the use of similar marks by a third party cannot be a defence to
an illegal act of passing off. In Castrol Limited v. A.K. Mehta
1997 (17) PTC 408 DB it was held that a concession given in
one case does not mean that other parties are entitled to use the
same). In that view of the matter, mere fact that there are other
traders in the market who are also doing similar acts is
inconsequential in law when it comes to testing the acts on the
defendants on thresholds of statutory infringement. Therefore,
the said submission of the defendant is equally without force.
h) Seventhly, the submission of the defendants that the concept of
material alteration is distinct from that of material differences in
US. The said submission needs no examination as in my view the
case of defendants does not even fall with Section 30 (3) which
talks of domestic market where the mark is registered. Thus, the
question of examining the said concepts and differences in the
context of the provisions existing in different statutes does not
arise. The judgments relied upon the defendants to urge this
point of material differences and material alteration also warrants
no discussion. The submission is thus not considered as the
defendants has failed to show how its case falls within section 30
(3) even.
i) Eighthly, the submission of defendants that the private
arrangement between the plaintiff No. 1 and plaintiff No. 2
cannot contract out the law of the land which is otherwise is also
rejected. This is due to the reason that the legal position as
emerging from the analysis done above is to the effect that
Section 30 (3) operates an exception to an infringement under
Section 29 within the same market. Therefore, it is only the
registered proprietor or permitted user who can cause such
importation. In that view of the matter, there is no reason to
accuse the plaintiffs to contract out the law as there is no such
legal position as contemplated by the defendants.
j) Ninethly, the distinctions between EU directives vis a vis Indian
statute so far as its comparison with Section 30 (4) with Article 7
of EU directive is concerned, the same are immaterial as the
conclusions which I have set out herein are not based on
legitimate reasons and thus the said discussion is again
unwarranted.
k) Tenthly, so far as the other admissions are concerned as alleged
by the defendant. The one which relates to the plaintiffs
themselves recognizing the legitimate reasons as an exception to
international exhaustion falls within the same domain that the
plaintiffs cannot suffer on the counts of admissions made on the
basis of mistaken position in law as discussed above and the
same admissions are inconsequential in law. Further, the other
admissions as pointed by the defendants do not clinch the issue
as either they are not clear or ambiguous which do not aid the
case of the defendants.
l) Eleventhly, the submissions of the defendants on the aspect of
guarantees given by the defendants as that of original also do not
require further consideration as I have arrived at the prima facie
conclusion that importation by virtue of Section 29 (1) read with
Section 29 (6) is an infringing act. Thus, the said submissions of
the defendants do not take the defendant‟s case anywhere
further.
m) Twelvethly, the submission of the defendants on meta tagging
being fair use as the same is the only way to describe the article
which they are selling through importation which according to
the defendant is permissible under the law. The said contention
also becomes unmeritorious as the act of importing the products
without being a registered proprietor or permitted user is
impermissible, consequently, the promotion of the same on
website in order to take advantage over and above the market of
the plaintiffs which the plaintiffs can control cannot in any
manner categorized as fair use. Once, the plaintiffs object to the
said use of the mark SAMSUNG and other trade description on
internet, the same cannot be said to be fair use in order to
promote infringing act.
n) Thirteenthly, the submissions of the defendants that there are
misrepresentation in the suit and thus the injunction application is
liable to be dismissed is also rejected. The reasons for the
rejection of the submissions are enlisted as under:
The defendants‟ contention that there is a misrepresentation
due to some past relations between the plaintiffs and
defendants as the defendants acted as an outlet for the
plaintiffs product, the same does not aid the case of the
plaintiff, the same rather shows that the defendants who were
earlier selling products under the permission of the plaintiffs
have also started selling parallel imported products later. The
plaintiff in any case refutes this contention by urging that it is
only when the defendants started selling such low costs
printers imported from foreign countries to the detriment of
the plaintiffs, the suit has been filed and thus the prior relation
is immaterial. I am convinced with the said submission as the
case of the plaintiff is confined to the parallel importation of
the printers and the same cannot be allowed to divert by
showing past legal relations and rather it reflects upon the
conduct of the defendants. The agreement dated 1 st January
2001 relied upon by the defendants to show relation also
shows that the defendants agreement was relating to PC
Camera and further in the said agreement also contains the
clause relating to market channels conflicts and to avoid such
conflicts. The effect of such an agreement is rather that the
defendants have subjected to such market conflicting
restrictions. It is doubtful as to how the defendants if intend
to use this agreement against the plaintiff can at all raise the
point of exhaustion against the plaintiff if they want to rely
this agreement as a past relation as they have by way of
covenant subjected themselves to such market conflict
minimization conditions. Thus, the past relation cannot be
operated against the plaintiffs or in favour of the defendants
and this has to be examined in trial.
The defendants‟ contention that there is misrepresentation
due to the reason that the plaintiffs have not disclosed that the
defendants were already acting as parallel importers at the
time when the plaintiff was doing business with them. The
defendant say this as general statement but does not talk
about the plaintiffs products in specific along with the
documents as to the fact that the defendant so called products
which are subject matter of the proceedings like printers etc
are also available by way of parallel importation within the
knowledge of the plaintiff since the time both are engaged
with the business. If that is not so clearing coming out, then
the contention of the defendants deserves to be rejected.
Rather if one sees the document of engagement with the
defendants, the agreement clearly spells out that there should
be a market conflict minimization which means that the
plaintiff has been always been conscious about such parallel
importation with the defendant. Thus, the knowledge element
cannot be ascribed to the plaintiffs. In fact, the plaintiff again
disputes the same which becomes a matter of trial again.
The defendants‟ contention that there is a misrepresentation
due to the fact that the plaintiffs themselves are importing
goods from the other countries. Again, there is no parallel
which can be drawn with the situation of the plaintiff No. 2
with that of the defendants. The plaintiff No. 2 is the
authorized user and rather on affidavit stated to be exclusive
licencee of the plaintiff No. 1 which can clearly escape the
case of the plaintiff No. 2 from Section 29 as against the
defendants who are clearly dealing with the products without
the consent or authorization and are guilty of infringement
under Section 29.
All other submissions of misrepresentation are rejected as
there is no force in the argument of concealment to the effect
that there is anything which is being misrepresented by the
plaintiff. The defendants have failed to substantiate any such
submission on misrepresentation. There is no counter blast
litigation which can be inferred at this stage nor is the
knowledge of the plaintiff in relation to the defendants
activities clearly shown towards the parallel importation of
the printers. Thus, the contention of misrepresentation is
without any force.
The contention that the defendants are actually purchasing the
goods from the legitimate channels is also not correct that
there is no misrepresentation by the plaintiff. In law, I have
held that the goods are lawfully acquired by a person has to
bear a registered trade mark which means that the said
acquisition has to be from the domestic market. Thus, the
lawful channels as argued by the defendant does not fit within
the purview of Section 30(3) of the Act and thus the argument
is meritless.
140. No further submission of the defendants has remained
unanswered. The judgments relied upon both the parties in relation to
material alteration and material differences. Those judgments passed by
US courts holding in some cases material difference in affirmative and
in some negative are not relevant for the present discussion as my
prima facie conclusion is based on the fact that the case of the
defendants does not fall within Section 30 (3) and I have not based my
findings on the basis of Section 30 (4), thus all those decisions of US
and UK court do not warrant discussion. So far as other judgments of
US courts holding international exhaustion are concerned and EU court
holding the exhaustion are concerned, the same may hold good in the
light of their legal position and in the context of the legal provisions
existing therein. In the Indian context, I have already done the plain and
contextual reading of the Section 30 (3) and Section 30 (4) whereby I
have come to the conclusion that the said sections provide for a very
limited applicability of the said principle of exhaustion within the
domestic market. Even in those cases, the right to oppose the dealings
is available. In these circumstances, the discussion relating to US and
UK decision laying down tests for the purposes of express consent or
implied consent or when can international/ domestic exhaustion
principle be invoked do not warrant any detailed discussion. Likewise,
the detailed discussion on legitimate reasons is not required and suffice
it to say that aid from the said decisions can be drawn in the limited
sense as the context in which the provisions exist for opposition of
dealing in UK is the same as the context in Indian Act although the
principal provision of exhaustion vary in terms of concept of market.
The judgments on the point of legitimate reasons also do not further
warrant discussion as in the present case, I am not invoking the said
doctrine of legitimate reasons in the present case in the absence of any
need as the case of the defendants does not fall in Section 30 (3) even.
141. In view of the above discussion, it is for me now to discuss
the principles relating to grant of temporary injunction which are:
a) Prima facie case
b) Balance of convenience
c) Irreparable loss
142. The plaintiffs in the present case has been able to show
prima facie case of infringement of the registered trade mark in view of
my discussion above wherein Section 29 (1) read with Section 29 (6),
the imports of the goods under the mark amounts to infringement of the
trade mark. The defendants have not able to establish any plausible to
defence to such an infringement. The balance of convenience lies in
favour of the plaintiffs as the plaintiffs will be more inconvenienced if
the defendants are allowed to run such market of parallel importation to
the deteriment of the plaintiffs. The irreparable loss shall also ensure to
the plaintiff in form of loss of market and depreciation in the goodwill
under the mark in the event the goods which are not meant for the
present market are allowed to be continued to be sold by the defendants
when the statute clearly prohibits so and on the contrary no irreparable
loss shall occur to the defendants as it is the case of the defendants that
they are selling the genuine products and capable of selling the same.
Thus, the defendants can easily switch over to the genuinely purchased
printers which are emanating from the plaintiffs.
143. Accordingly, the prayers made in IA No.7774/2011 are
allowed and the defendants, their agents, servants and all other acting
for and on their behalf are restrained from importing, exporting and
dealing in printers and their ink cartridges/toners bearing the trademark
SAMSUNG and also restrained from using the mark SAMSUNG in
any manner in respect of promotional activities including on website.
As far as other products are concerned as prayed in the application, as
clarified in the order dated 17.11.2011, the plaintiffs are at liberty to
take an action in accordance with law. The defendants‟ application
being I.A. No.10124/2011 under Order XXXIX Rule 4 read with
Section 151 CPC is dismissed with cost of Rs.30,000/- which shall be
deposited by the defendants with High Court Advocates Welfare
Fund within four weeks from today.
144. I.A. No.7774/2011 and I.A. No.10124/2011 are disposed
of.
MANMOHAN SINGH, J.
FEBRUARY 17, 2012
