Same same but different

The legality of parallel imports remains a grey area in India, write Pravin Anand and Nishchal Anand

The evolution of the law relating to parallel imports in India could aptly be titled “Four Shades of Grey”. This is because four decisions of Delhi High Court collectively form the cornerstone of the law relating to grey market goods in India.

International exhaustion and material differences (first shade of grey, 2006-11): One of the first cases dealing with parallel imports in India was Samsung v G Choudhary. The court assumed India would follow the principle of international exhaustion of trademark rights. It borrowed the “material differences doctrine” from US courts and held that if there are physical or non-physical differences between the product meant for sale in India and the imported product, the trademark owner would have the right to stop sales of the imported goods.

National exhaustion (second shade of grey, 2012): Next was Samsung v Kapil Wadhwa, in which a defendant challenged the material differences doctrine for the first time, stating that imported products must be physically changed or altered and the mere importation of a slightly different product would not amount to infringement. Countering this argument, the plaintiff contended that the act of importing a different product not meant for sale in India would itself amount to changing or impairing the goods. The plaintiff also for the first time argued that India follows the principle of national exhaustion of trademark rights. In addition, the plaintiff cited the principle of “legitimate reasons”, stating that change or impairment of goods was one of many reasons for trademark owners to stop parallel imports. The single judge agreed with the plaintiff’s contention that India follows the principle of national exhaustion, interpreting the expression “the market” used in the Trade Marks Act, 1999, to mean a domestic market. In view of this, the court did not deal with the issues of legitimate reasons and material differences.

Pravin Anand is the managing partner and Nishchal Anand is a senior associate at Anand and Anand.