Unauthorized exports held illegal

An interesting question on infringement of copyright under the Indian Copyright Act 1957 was recently discussed before the Delhi High Court in the case of John Wiley & Sons Inc & Others v Prabhat Chander Kumar Jain & Others.

John Wiley & Sons and the other plaintiffs in the case, including Pearson Education, are world-renowned publishers of academic, scientific, technical and medical books. John Wiley & Sons, which is based in the US, incorporated subsidiary companies in India and authorized them to reprint, sell and distribute copyrighted works within the territory of India and in the south Asian region by way of exclusive licences.

Most of these works were printed in India, and distributed with a territorial notice on the cover or spine of the books stating that they were “specifically meant for sale only in Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka”. These books are popularly known as low-priced editions or low-priced Indian editions.

Allegations

The plaintiffs alleged that the defendants in the suit, namely Prabhat Chander and others, were engaged in the export of low-priced editions to countries other than those specifically mentioned on the notices printed on the covers of the books. It was alleged that the defendants were offering low-priced editions for sale to university stores and students in the United States, through various websites, at much cheaper prices than the standard prices of US editions of those books, and thus were infringing the copyright of the plaintiffs. The plaintiffs alleged that low-priced editions sold by the defendants in the US in contravention of the territorial notices on their covers were unauthorized copies, and thus infringed the plaintiffs’ copyright in those books.

Along with the suit, the plaintiffs also filed an application seeking a temporary injunction against the defendants. The Delhi High Court issued notices to the defendants restraining them by way of an ex parte order from advertising, offering for sale or exporting any publications of the plaintiffs to countries other than those specified on the covers of the books. Pursuant to the notice, the defendants appeared in the matter and filed their defence on the grounds that (i) the nature of the activities carried out by them, i.e. the export of the books, does not amount to infringement of copyright as export is not an exclusive right of the copyright owner; and (ii) that no act of infringement of copyright was performed by them, as they purchased the copies of the books legally in India.

Exhaustion of rights

The defendants relied on the rule of “exhaustion of rights” enshrined in the copyright regime, whereby the rights of the copyright owner are lost once the first sale of the article is effected.

Under this rule, the copyright owner’s control over the article and the rights therein are exhausted on the first sale and the copyright owner has no control over any subsequent sale. To counter this, the plaintiffs argued that it is the prerogative of the owner of the copyright to issue copies of the work to the public if the same are not in circulation already, and by putting into circulation the low-priced editions meant for specific territories, the defendants violated the rights of the copyright owners. It was contended by the plaintiffs that the “exhaustion of rights” doctrine was misplaced and was not applicable in this case. The plaintiffs submitted that if there was any exhaustion of rights, it was limited to the territories where the sales were effected by the owners, which meant the territories indicated on the books and not beyond.

The judgment

While adjudicating on the issue, the court observed that the act by the defendants of purchasing low-priced editions which were under the exclusive licence of the plaintiffs in India was legitimate, and did not hinder or take away anyone’s rights, including the rights of the exclusive licensees. But once the defendants offered the books (which are fettered by territorial restrictions) for sale and put them into circulation in territories beyond the ones for which the permission had been granted by the owners of the copyright, this would, on the face of it, be tantamount to violation of the exclusive right of the copyright owner as stipulated in section 14 of the Copyright Act and thus infringement of copyright within the meaning of section 51 of the act.

Section 51 of the Copyright Act reads as follows:

51. Copyright in a work shall be deemed to be infringed:

(a) When any person, without a licence granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a licence so granted or of any conditions imposed by a competent authority … (i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright….

(b) When any person … (iv) Imports into India, any infringing copies of the work …

With regard to the contention of the defendants that the act of “export” was not expressly recognized as infringement of copyright in the scheme of the Copyright Act, the court observed that the question in the present case was not merely whether export should be recognized as infringement, but rather whether the rights of the owner were circumvented by purchasing the books from the exclusive licensee of the owner and selling the same to the countries outside the territories prescribed.

The court held that the later act of the defendant amounted to infringement of copyright as stipulated in section 51(a) of the Copyright Act, and accordingly the court allowed the plaintiff’s application seeking a temporary injunction against the defendants.

Manisha Singh Nair is a partner at Lex Orbis, an intellectual property practice law firm headquartered in New Delhi.