The Asia-Pacific Subcommittee of INTA’s Amicus Committee has filed an amicus brief with the Supreme Court of India seeking leave for INTA to intervene in a closely watched case on parallel imports and international trademark exhaustion. This is the first time the Association has sought to act as amicus in an Indian court.

In Samsung Electronics Co. Ltd. v. Kapil Wadhwa & Ors., the Supreme Court will consider whether the High Court of Delhi at New Delhi was correct in ruling that Kapil Wadhwa (Kapil) should be allowed to purchase Samsung printers from abroad and then import and sell them in India using the SAMSUNG trademark. Kapil argued that the doctrine of trademark exhaustion—which holds that a trademark owner’s right to control the goods bearing its mark becomes exhausted upon first sale of the goods—should apply. But Samsung countered that Kapil was infringing its trademarks because Kapil was reselling the products in another market without Samsung’s permission and because the printers sold by Samsung in India were materially different from those sold in other markets. The Appellate Bench of the High Court of Delhi ruled largely in Kapil’s favor. (Kapil Wadhwa & Ors. v. Samsung Electronics Co. Ltd. & Anr., FAO(OS) 93/2012 (Del. A.B. Sept. 7, 2012).) Samsung then appealed to the Supreme Court.

INTA’s brief supports the contention that the principle of exhaustion should apply only nationally with respect to parallel imports unless there is clear proof that the trademark owner has expressly consented to the sale and import of the goods in a foreign market.

The Association’s key arguments include the following:

• As use of a mark in one country does not automatically confer rights in all countries, the principle of exhaustion should likewise apply only nationally. “The principle of law applicable must be the same for creating a right as for the exhaustion of a right so created.”
• Buying products in one jurisdiction cheaply and then reselling them in another for less than the trademark owner’s price point in that country “causes irreparable prejudice to trade mark owner and its franchisee/licensee/subsidiary who have invested in market research, product development, brand promotion, after sales service, and distribution network.”
• Quality control and oversight are compromised, leading to loss of goodwill for the trademark owner in the country of resale and potential harm to consumers. Examples of potential harm to consumers who purchase parallel imports include unworkable consumer helpline numbers in the country of import, lack of regulatory approval in the country of import, variations in recipe/taste/ formulation according to cultural preferences or climate, and varying environmental protection standards.
• Economic analysis favors the concept of regional or national exhaustion. International exhaustion threatens to undermine low-pricing policies in underdeveloped countries, can be unfair to local distributors and encourages counterfeits by legitimizing parallel imports, which often are shipped through the same channels as or mixed with counterfeit goods.

INTA believes that the Indian Trade Marks Act prescribes a system of national exhaustion and that the Delhi appellate court erred in its interpretation of the relevant provisions of that Act.

INTA advocates that governments adopt policies that support a system of national or regional exhaustion. For a full explanation of the Association’s view on parallel imports, see INTA’s 2007 position paper on the topic.

The Association’s brief was written by Hemant Singh (Inttl Advocare, India) with feedback from the Amicus Committee—Asia-Pacific Subcommittee.

If there is a case in which you believe INTA’s input as an amicus would be beneficial, please visit the Amicus Briefs home page for procedures and contacts.

(Source: www.inta.org)