EXHAUSTION UNDER TRIPS AND PARALLEL IMPORTATION: CHALLENGES AND OPPORTUNITIES.

EXHAUSTION UNDER TRIPS AND PARALLEL IMPORTATION: CH ALLENGES

AND OPPORTUNITIES.

1

Project

On the Topic

EXHAUSTION UNDER TRIPS AND PARALLEL

IMPORTATION: CHALLENGES AND

OPPORTUNITIES.

Submitted towards the partial fulfilment of grading for

the

1st semester of LL.M. Degree course for the subject

IPR Through WTO

Submitted To: Submitted By:

Prof. Amit Singh Rupendra Singh

Faculty- in- Charge LL.M - Corporate Law

National Law University 1st Semester,

Roll no: 442

NATIONAL LAW UNIVERSITY, JODHPUR .

24st September, 2012


AND OPPORTUNITIES.

2

Table of Contents

S.No.

Heading

Page No.(s)

I.

Acknowledgement

4

II.

List of Abbreviations

Annex-I

III.

List of Authorities

Annex-I

IV.

Chapter –I

1. An Introduction

5-6

V. Chapter-II- Doctrine of Exhaustion

2. Concept and Meaning of Exhaustion

3. Triggering Principle of Exhaustion

4. Concept of Exhaustion

5. Reason behind the concept of Exhaustion

6. Scope of ‘principle of Exhaustion’

A. National regime

B. International regime

C. Regional regime

7-14

VI. Chapter-III- Parallel Imports

7. Parallel import, how it works.

8. Definition of parallel importation

9. Working mechanism of Parallel

Importation

14-20


AND OPPORTUNITIES.

3

VII. Chapter – IV- Parallel Importation and The

governing legal obligation:

10. Parallel Importation, Exhaustion and

TRIPS Agreement:

10.1. History of the Provision:

10.2. Negotiating History

21-24

Chapter –V-Parallel Importation and Unparallel

laws – Need of Harmony

11. Necessity of a Global Exhaustion Regime –

Harmonization Between Parallel Imports and

Principle of Exhaustion

12. International Exhaustion is the sole solution to

harmonise the conflict of parallel importation

13. Rationale against International Exhaustion

14. International Exhaustion or not?

25-30

VII. Chapter – VI- Legal Framework of Governance

of Parallel Importation in India

15.Parallel Importation and IPR in India.

16.Customs Board issues Circular allowing 'Parallel Imports'

under Patents Act and Trademarks Act

31-34

VIII. 17.Conclusion 34

IX. Synopsis of the Project Annex – I

35-46


AND OPPORTUNITIES.

4

ACKNOWLEDGEMENT

The project is the fruit of meticulous research, therefore, it is apt to acknowledge the contributions of those who aided in the finality of the research. First and foremost, appreciation is extended to Mr. Amit Singh, Associate Professor for Corporate Law at National Law University, Jodhpur for providing an opportunity to work upon the subject. I would take the opportunity to thank the staff and the Library of National Law University, Jodhpur and B.V.P.D.U. New Law College, Pune for their constant help and support.


AND OPPORTUNITIES.

5

1. INTRODUCTION :

“Industry’s at war. I think its about control. You can make all the financial arguments that the

industry has been shooting itself in the foot, but it is an industry built on a foundation of

ownership and exploitation of Intellectual Property Rights.“ -Don Rose.

Intellectual property and competition law constitute two fields that maintain interdependent

yet conflicting roles. As is known, intellectual property protects artistic creativity, scientific

progress, investment in the business industry and in general information and ideas worth of

commercial exploitation by granting exclusive rights to their owners1 in order to enjoy the

“fruits of their labour”. An intellectual property rights, such as patent, trademark or

copyright, is typically defined in terms of rights granted to the holder to prevent others from

making use of it. Therefore, the Intellectual Property Rights are also called as negative

rights2. It leads to many questions (1) whether the exclusive right granted to an Intellectual

property rights is an absolute or it can be qualified by any limitation? (2) When it can be said

that the intellectual property owner has exhausted his right over that property? (3) What kind

of protection available to intellectual property owner when a intellectual property resold? The

proposed research work is specifically intended to examine all these issue in reference to the

existing legal situation.

Article 63 of the TRIPS addresses the exhaustion of intellectual property rights. The concept

of exhaustion plays an enormously important role in determining the way that intellectual

property rules affect the movement of goods and services in International Trade.4 The

dictionary meaning of exhaustion is the action or state of using something up or of being used

1 W.R. Cornish, D. Llewelyn and T. Aplin, Intellectual property: patents, copyright, trade marks and allied rights, 7th edn (London: Sweet & Maxwell, 2010), p.6. 2 Wadhera 3 Article 6 read as “For the purpose of dispute settlement under this agreement, subject to the provisions of Article 3 and 4 nothing in this agreement shall be used to address the issue of the exhaustion of Intellectual Property Rights.” 4 UCTAD-ICTSD, Resource Book on TRIPS and Development, , (New York: Cambridge University Press,2005), p.92. Herein after Mentioned as Resource Book.


AND OPPORTUNITIES.

6

up completely.5 The doctrine of exhaustion basically addresses the point at which IPR holders

control over the goods or services ceases. Generally, IPRs are exhausted once the goods or

services which incorporate these rights are put on market. It means once a patented,

trademarked or copyrighted article has been sold by the IPR owner the further sale of this

article can no longer be controlled by him. As soon as the holder loses its control it comes

into public domain therefore it is quite critically related with the functioning of a market

economy. But this doctrine is basically depends on the practice adopted by the nations in its

domestic law.6 The history of the doctrine of exhaustion can be traced out in the court rooms,

emerged as a creature judicial practice in Germany. Gradually this doctrine was started to be

used across the globe with the development of international trade. Though the doctrine had

been effectively used across the globe but still there is not an international consensus for a

uniform regime of exhaustion. Article 6 of the TRIPS agreement disclaims any intent in the

TRIPS agreement to limit the members’ freedom to regulate the issue of the exhaustion of

rights with regard to all types of IPRs.

A very closely associated factor to the regime of exhaustion is the parallel importation.

Parallel importation is closely associated with the exhaustion because parallel importation

can be defined as “the importation of a good or service as to which exhaustion of an IPR has

occurred abroad is commonly referred as Parallel Importation.7” Therefore, the validity of

such importation in country is closely associated with the regime of exhaustion adopted by

that nation. It is also required to notice that in the absence of the doctrine of exhaustion, the

original IPR holder would perpetually exercise control over the sale, transfer or use of a good

or services embodying on IPR. Article 6 of the TRIPS agreement deals with exhaustion it

specifically not provide to adopt any special regime. It leads to confusion and abuse of the

intellectual property rights. It may deprive the rights of general public against the individual

rights. Therefore, this area is quite debatable as there is no universal factor to say that the IPR

has been exhausted. Different regime adopted by the members states made the situation

complex and leads to absurdity. But scholars had argued that the international exhaustion

regime is in harmony with the rights of the Intellectual Property holders well as the parallel

importer or the public as a whole. 5 http://www.thefreedictionary.com/exhaustion visited on 31-08-2012. 6Carloss.M.Correa, “Trade Related Aspect of Intellectual Property Rights” A Commentary on the TRIPS Agreement, (London: Oxford University Press, 2007), 78. 7 Resource Book P.93.


AND OPPORTUNITIES.

7

CHAPTER-II

DOCTRINE OF EXHAUSTION

2. CONCEPT AND MEANING OF EXHAUSTION:

An industrial property right is exhausted (in the sense that it is consumed8) and, therefore,

ceases to exist) by first act of introduction into the commercial circuit of the product

incorporating the claimed invention (be it product itself or the process of directly

manufacturing the product), or bearing the protected distinct signs, provided that introduction

has been made by the right owner or with his/her consent. The fist sale of the trademarked

article (or of the article bearing or manufactured in conformity with a protected a protected

design), therefore, frees it from the protection of the other industrial property rights.

Exhaustion consumes the exclusive rights associated with commercialisation only.9 The basic

idea behind the exhaustion is that once the right holder hs been able to obtain an economic

return from the first sale or placing on the market, the purchaser or the transferee of the good

or service is entitled to use and dispose of it without further restriction.10 The doctrine of

exhaustion addresses the point at which the IPR holder’s control over the goods ceases. This

termination of control is critical to the functioning of any marketing economy because it

permits the free transfer of goods and services. Without an exhaustion doctrine the original

IPR holder would perpetually exercise the control over the sale, transfer or use of good or

Service embodying an IPR, and would control economic life, The Doctrine of exhaustion of

Intellectual Property law, however, limits the exclusive rights of the Intellectual Property (IP)

owner ‘to control the disposition of an article after the article has been sold by or under the

8 Webster’s College Dictionary (Randum House, New York, 1991) 9 Carvalho, Nunu Pires de, “The TRIPS Regime of Trademarks and Design”Second Edition(Netherland, Wolters Kluwer Law and Business, 2011). P. 10 Resource Book


AND OPPORTUNITIES.

8

authority of the IP owner’.11 According to this doctrine, an authorized sale of a patented

article terminates the patent monopoly as to that article12 to the extent that the article

embodies the invention.

[W]hen the patentee, or the person having his rights, sells a machine or instrument

whose sole value is in its use, he receives the consideration for its use and he parts

with the right to restrict that use… . That is to say, the patentee or his assignee having

in the act of sale received all the royalty or consideration which he claims for the use

of his invention in that particular machine or instrument, it is open to the use of the

purchaser without further restriction . . 13

In other words, the patent owner surrenders ‘his monopoly in whole by the sale of his patent

or in part by the sale of an article embodying the invention,14 thereby foregoing his rights to

control the resale or re-distribution or use of the good.15 Without an exhaustion doctrine, the

original patent (or copyright or trademark) holder would perpetually exercise control over the

‘sale’, ‘transfer’ or ‘use’ of a good or service embodying an IPR, thereby preventing a

purchaser of such good or service from selling it or even ‘using’ it, since such ‘sale’ or ‘use’

would then affect the exclusive rights of the IP owner16.

Concept of exhaustion can be illustrated in this manner:

Consider a can of Foster Beer labelled with the famous “FOSTER” in combination of blue

and golden Colour. Because the Foster’s group holds right to that mark, it may prevent other

from first selling the Can of beer without its consent. If you by the can of beer from an

11 See James B. Kobak Jr., Exhaustion of Intellectual Property Rights and International Trade, 5 GLOBAL ECON. J. 1, 13 (2005) (the ‘doctrine of exhaustion’ is applicable to various classes of Intellectual Property Rights such as patents, copyrights, and trademarks). 12 LG Elecs., Inc. vs.Bizcom. Elecs. Inc., 453 F. 3d 1364, 1369 (Fed. Cir. 2006) (quoting B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997) rev’d sub nom Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008). 13 Adam v. Burke, 84 U.S. 453, 456 (1873) [emphasis added] (since 1873, the US Courts have consistently held that intellectual property products are free for further distribution after the authorized first sale. This principle is called ‘the first sale doctrine’); accord Keeler v. Standard Folding Bed Co., 157 U.S. 659 (1895); Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908); Curtiss Aeroplane & Motor Corp. v. United Aircraft Eng’g Corp., 266 F. 71 (2d Cir. 1920); see also Abdulquwi A. Yusuf & Andres Moncayo von Hase, Intellectual Property Protection and International Trade: Exhaustion of Rights Revisited, 16World Competition L. & Econ. Rev. 115, 117 (1992) (this concept was later introduced into Europe by a German judge under the terminology ‘exhaustion of intellectual property rights’ and cited in the Supreme Court of Germany, defining the concept of ‘exhaustion’ in early 1902). 14 United States v. Univis Lens Co., 316 U.S. 241, 250 (1942). 15 See Kobak, Supra n.11 at P. 16 See Anton/Bauer Inc v PAG, Ltd., No. 3:01CV577 (CFD), 2002 US Dist. LEXIS 11583, at *20-22 (D. Conn. June 13, 2002) (explaining that under an implied licence doctrine, the ‘use’ of a patented good that had been lawfully bought from a patent owner (or his assignee) may not be liable for patent infringement).


AND OPPORTUNITIES.

9

authorised first seller, the Foster Groups’ right in its trademark is exhausted, and it cannot

prevent you from drinking the beer, or from giving and selling the can of beer to someone

else. The trade mark holder has lost its right to control further disposition of the product.

Your purchase of the can of Foster beer dos not authorize you to begin making your own cans

of Foster beer, or licensing the mark of other to others. In other words the first sale does nit

grant you rights in the trademark, but rather it extinguishes Foster Group’s entitlement to

control the movement of that particular can of soda.17

The rationale behind the ‘principle of exhaustion’ or ‘doctrine of first sale’ is that whenever

an article protected by patents (or copyrights or trademarks) is sold, the IP Owner has

received the fair reward for surrendering her right to hold back a product from the market or

has realized the benefits of the protection.18 Hence, those rights are ‘exhausted’ at the point of

first sale19. In other words, the doctrine of exhaustion, thus, restricts ‘patent owner’s rights to

enjoin, control, or extract royalties from a patented product after an authorized, unconditional

sale of that product’.20 In this way, it is thought, IP rights will not unduly disrupt a modern

and efficient system of distribution, and goods will not be encumbered with a maze of

contractual restrictions and restraints on alienation.

3. TRIGGERING OF THE ‘PRINCIPLE OF EXHAUSTION:

Though the patent (including any other IP) exhaustion doctrine appears deceptively simple,

the application of this apparently straightforward doctrine has not been simple,

straightforward, or consistent.21 Nevertheless, the case law, ‘although confusing and

seemingly conflicting, contains a consistent theme: the exclusive right in a patent claim is

exhausted when an article embodying the ‘essential features’ of the claim is transferred in an

authorized and unrestricted manner’.22 In addition to the requirements that the goods be

lawfully produced, the ‘first sale’ be made by the patent holder or (by her assignee) and that

the article sold embodies the invention, the sale must also be ‘unconditional’ to invoke the

patent exhaustion doctrine. Moreover, the patent exhaustion doctrine is not invoked if the

17 Resource Book P 93 18 See Kbak, Supra Note: 11 at P. 19 See Kobak Supra Note: 11 at P. 20 John C. Paul et al., US Patent Exhaustion:Yesterday,Today, and Maybe Tomorrow, 3 J. Intell. Prop. L. Prac. 461, 461 (2008). 21 ohnW. Osborne, A Coherent View of Patent Exhaustion:A Standard Based On Patentable Distinctiveness, 20 Santa Clara Computer & High Tech. L.J. 643, 646 (2004). 22 Ibid


AND OPPORTUNITIES.

10

patent owner imposes lawful restrictions on the sale of an article embodying the patented

invention provided that the restrictive conditions are clear, explicit, and otherwise lawful.

Subject to the overruling conditions of the sale, the buyer of a patented good has the same

rights as any buyer of personal property, including the right to use, repair, modify, discard, or

resell,23 but the right of ownership does not grant the buyer the right to manufacture an

essentially new article on the pattern of the original because the right to manufacture the

article remains with the patent owner. Patent exhaustion with respect to a particular patented

good does not affect any of the exclusive rights of the patent owner with respect to his or her

other patented articles, i.e., a buyer of a patented good does not acquire rights the use,

manufacture, modify, etc., such other patented goods.24 The matter of reconstruction and

repair has been thoroughly discussed in the context of patents,25 but it also applies to some

extent to trademarks, ad afar as the reconstruction or repair may change the characteristics of

the product and thus undermine the reputation or good will associated to it.26

Exhaustion, rather than a construction of law, is a spontaneous concept. Without exhaustion,

the reseller would need a licence every time he resells the product to the final consumers.27 If

I want to sell my used car, in the absence of exhaustion of trademark rights right upon the act

of my purchase, I would need a license from the car maker so as to publish an advertisement

and, later, to transfer the title over it. Otherwise, the reselling products automatic entail

automatic compulsory licence. Judge Posner rejecting that trademark are tying products,

separately from the tied ones, because a product and its name are inseparable,28 said that “to

accept it [the notion that the trademarks are tying products] would be to impose in the name

of antitrust a regime of compulsory licensing of Trademarks- an absurd project.” This is the

essence of the concept of exhaustion: because of the operation of exhaustion, the reseller

does not need to apply for a license nor does he need to rely on a compulsory license in the 23 Jazz Photo Corp. v. U.S. Int’l Trade Comm’n, 264 F.3d 1094, 1102 (Fed. Cir. 2001) (quoting Mitchell v. Hawley, 83 U.S. 544, 548 (1872)). 24 United States v. Moore 604 F. 2d 1228 (9th Cir. 1979). 25 See Arthur R. Miller and Michael H. Davis, Intellectual Property- patents, Trademarks, and nutshell, at 135-137 (2nd ed, west publ., St. Paul, 1990) 26 Article 13 (2) of the Council Regulation (EC) No. 40/94 of December 20, 1993 on the community Trademark, as amended:

“Paragraph 1 [which provides for the regional exhaustion] shall not apply where there exist legitimate reasons for the proprietor to oppose further commercialization of the goods, especially where the condition of the good is changed or impaired after they have been put on market.”

The EC rules and jurisprudence on trademark and design law can be found on the website of the office for Harmonization of Internal Market (OHIM), at <oami.eu.in>. 27 Jeremy Philips, Trade Mark Law: A practical Anatomy, at 272 (Oxford University Press, Oxford, 2003) 28 Jack Walters & Sons Corp. V. Morton Building Inc., 737 F. 2d 698, 704 (7th Cir, 1984)


AND OPPORTUNITIES.

11

event he has no relation with the manufacturer. But this is true only as far as those acts that a

reseller would undertake are concerned. Exhaustion does not reach repairing or

reconstructing because these act that belong to the manufacturer, not the simle reseller.

4. CONCEPT OF EXHAUSTION:

Exhaustion is an intuitive concept that stems naturally from the very notion of intellectual

property rights, Article 6 is nevertheless important so far as it helps the interprete the scope

and the extent of exclusive rights granted by Article 16, 26.1 and 28.1 of the TRIPS

Agreement. In the absence of Article 6, lawmakers in WTO members might feel hesitant in

setting forth provisions dealing with the exhaustion, either at the national or international

level, but especially at the latter.

5. REASON BEHIND THE CONCEPT OF EXHAUSTION:

There are two basic reasons behind the concept of Exhaustion:

Firstly, there is the legal reason that the intellectual property right and its subject matter are

distinct. A good may bear a distinctive name or a particular shape, but the right in teh

(tangible) good is different from the right in the (intangible) brand or design. Therefore, when

the Article is sold, the property right in the tangible good are transferred along with the

material possession of the material improved or new article itself, but the intellectual property

rights do not accompany the article. Intellectual Property owner thus, may not oppose any

commercial act the buyer may wish to practice as regards the article.29

The second reason is that the IP holder should not be allowed to extract to extract monopoly

revenue more than once. Once the article incorporating or bearing the Intellectual Property

right has been sold, the intangible right owner has already been duly “rewarded.”30 If the

intellectual property owner, as the argument goes, were allowed to impose restrictions on the

buyer’s downstream acts of trade, the intellectual property right would expand beyond the

purpose and the objectives of the law.

6. SCOPE OF ‘PRINCIPLE OF EXHAUSTION’

The exhaustion doctrine can be applied nationally, regionally, or internationally. 29 Copyright Law knows a limited Exception to this principle, the droit de suite. See Article 14ter (1) of the Berne Convention 30 If this were true, exhaustion would only take place3 when the intellectual property owner had been able to get profits from the first sale. A first sale at a loss is not a “reward” and therefore, it would never cause a right to be exhausted.


AND OPPORTUNITIES.

12

I. NATIONAL REGIME OF EXHAUSTION : The first model of the exhaustion of rights is

the national exhaustion. In countries adopting the doctrine of national exhaustion of rights,

the placement of the products on the domestic market with the consent of the intellectual

property owner (or assignee) exhausts the national right to control the commercial

exploitation of goods.31 After the first sale within the national territory, the intellectual

property owner cannot control the subsequent circulation of the products in the domestic

territory. The concept of a national exhaustion of rights is based upon the principle of

territoriality and independence of intellectual property right. The principle of territoriality

implies that protection is ordinarily granted on a national basis and that the issues relating to

scope of protection, validity, maintenance, and termination of rights are determined by the

law governing the country for which protection is granted. The exclusive right granted to the

intellectual property owner covers only the State granting protection and the infringing acts

can only take place within the territorial boundary of the State granting the protection. In

general, extraterritorial application of intellectual property laws is very rare.32 Illustratively,

under strict national exhaustion application, a sale in country A under a country A patent (or

copyright or trademark) would exhaust the IP owner’s rights only in country A, and the IP

owner could rely on her separate patents (or copyrights or trademarks) in other countries to

enjoin sales, block imports, and/or seek damages. This principle would hold even though the

IP rights in all the countries are essentially the same. Hence, a system of national exhaustion

gives patent holders absolute control over the distribution of their products on international

scale.33 The main arguments against the national exhaustion doctrine is that it decreases

‘intra-brand competition’34 and that it provides the distributors an opportunity to collude.35

II. INTERNATIONAL EXHAUSTION: The second model of exhaustion of rights is the

international exhaustion. It essentially implies that the placement of the products in the

31 Carsten Fink, Intellectual Property and Development Lessons from Recent Economic Research 173 (Carsten Fink & Keith E. Maskus eds., A Co-publication ofWold Bank and Oxford Press 2005). 32 See Curtis A. Bradley, Territorial Intellectual Property Rights in an Age of Globalism, 37 Virginia Journal of International Law 505 (1997) (describing some instances of extraterritorial application of intellectual property laws concerning the US). 33 Rajnish K. Rai, Does India needs to harmonize the law of patent exhaustion and parallel imports? 19 Info. & Comm.Tech. L. 115, 130 (2010). 34 Christopher B. Conley, Parallel Imports:The Tired Debate of Exhaustion of Intellectual Property Rights and Why the WTO Should Harmonize the Haphazard Laws of the International Community 2 (2008), available at http://www.foley.com/files/tbl_s31Publications/ FileUpload137/4444/Conley.pdf (accessed Aug 19, 2012). 35 Ibid


AND OPPORTUNITIES.

13

market anywhere in the world exhausts the right to control the movements of the products.36

Consequently, the owner of the intellectual property rights cannot restrict the subsequent

movements of the products irrespective of where the products are first sold with his

consent.37 In other words, after the first sale, the intellectual property owner (or her assignee)

loses her exclusive right and no longer has the right to prohibit parallel imports from abroad.

Many developed countries such as Japan, Australia, and New Zealand have adopted this

approach. The EU Member States had also previously applied this approach. Many

developing countries such as India, Thailand, Singapore, Argentina, Chile, and Hong Kong,

have also adopted the principle of international exhaustion of rights.38 International

exhaustion of rights takes extra-jurisdictional issues into consideration. But this is not

uncommon in the area of intellectual property rights and does not tantamount to an

extraterritorial application of the law.39 The opponents of international exhaustion of rights

use the territoriality principle of intellectual property rights as one argument against parallel

imports. However, the territoriality principle should rather be seen as a ‘choice of law’ rule,

only deciding the applicable law on the basis of the relevant territory.40The territoriality

principle does not lead to the irrelevance of factors taking place outside the national

boundaries.41

III. REGIONAL EXHAUSTION: The principle of regional exhaustion of rights is a

Combination of national and international exhaustion principles.42 This approach is also

known as Community-wide exhaustion doctrine. It implies an extension of the territory

within which the marketing of the products leads to exhaustion to cover an area larger than a

36 Carsten Fink, Intellectual Property and Development Lessons from Recent Economic Research 173 (Carsten Fink & Keith E. Maskus eds.,A Co-publication ofWold Bank and Oxford Press 2005). 37 Ibid 38 See Florian Albert & Christopher Heath, Parallel Imports and Trade Marks in Germany, 28 Intl. Rev.Indus. Prop. & Copy. L. 32 (1997) (explaining that many Asian countries favour international exhaustion of most intellectual property rights). 39 With respect to grant of patents, novelty and prior art is assessed worldwide. Paris convention. (guaranteeing a right of priority covering all signatory countries from the date of the first application); Berne Convention for the Protection of Literary and Artistic Works (July 24, 1971), 1161 U.N.T.S. 3 (first concluded in 1886) (providing that copyright for a work created in one country is established simultaneously in all countries of the Berne Union.) [hereinafter Berne Convention]. 40 See Herman C. Jehoram, International Exhaustion versus Importation Right: A Murky Area of Intellectual Property Law, GRUR INTL. 281(1996); See also Case C-9/93 IHT Internationale Heiztechnik GmbH and Uwe Danziger v. Ideal-Standard GmbH, 1994 ECR I-02789 ¶ 22 (where the European Court of Justice defined the principle of territoriality in a similar fashion). 41 Hanns Ullrich, TRIPS: Adequate Protection, Inadequate Trade, Adequate Competition Policy, 4 P. Rim L. & Policy J. 190 (1995). 42 Carsten Fink, Intellectual Property and Development Lessons from Recent Economic Research 173 (Carsten Fink & Keith E. Maskus eds.,A Co-publication ofWold Bank and Oxford Press 2005).


AND OPPORTUNITIES.

14

single country. In other words, the first sale by the intellectual property owner (or her

assignee) exhausts the intellectual property right over the products not only domestically but

also within the whole region, and parallel imports within the region can no longer be opposed

based on the intellectual property right.43 The European Union has adopted the principle of

regional exhaustion of rights. The placement of a protected product on the market by the

intellectual property owner (or her assignee) anywhere in the area consisting of the twenty-

seven Member States of the EU exhausts the rights in all Member States.44 Thus, the

intellectual property owner may not oppose the further movement of the goods in the

common market of the EU after the first sale of the goods with her consent in the EU.45

However, the intellectual property owner can still prohibit parallel importation from outside

the region because her right has not been exhausted.

The regional exhaustion doctrine could, however, be considered inconsistent with the basic

most-favoured-nation (MFN) principle in the TRIPS Agreement as they render a different

status to goods imported from countries within the region as compared to goods imported

from countries outside the region.46 In the case of the regional exhaustion doctrine, IP owners

(or their assignees) within Member States which are part of the region may be at a

disadvantage vis-a-vis IP owners (or their assignees) in Member States outside the region.47

These regimes of exhaustion can be summarised by the help of following table.

Exhaustion

Regime

When the Exhaustion Occurs Impact on the Flow of

goods

International

Exhaustion

Exhaustion occurs when good or service is

first sold or marketed anywhere in the

world.

Goods and services flow

freely across borders after

they have been first sold or

placed on the market under

certain conditions anywhere

in the world.

Regional Exhaustion occurs when the good or Good and services flow

43 Ibid 44 Tuomas Mylly, A Silhouette of Fortress Europe? International Exhaustion of Trade Mark Rights in the EU (2000) available at http://www.law.utu.fi/en/faculty/staff/silhouette.pdf (accessed Sept. 23, 2011). 45 Ibid. 46 Artilce 4 of TRIPS 47 Resource Book at P. 108


AND OPPORTUNITIES.

15

Exhaustion service first sold or marketed anywhere in

the specified region.

freely across the region after

they have been fist sold or

marketed under certain

conditions in the Region

specified.

National

Exhaustion

Exhaustion occurs at the first sale or

marketing of a good or service within the

territory of that country.

Goods and services may be

blocked by IPR holders.

Under national exhaustion,

IPR holders have the power

to segregate markets.

CHAPTER-III- PARALLEL IMPORT, HOW IT WORKS

7. MEANING OF PARALEL IMPORTATION:

"Parallel imports” involve fundamental issues of trade and intellectual property policy. This

briefing paper starts with an introduction to the concept of parallel importation, and

proceeds to discuss the complex economic and developmental issues raised by it.48 Parallel

imports are one of the most complicated and puzzling phenomena of international trade

because on the one hand, they strictly follow the laws of the market; yet on the other, the laws

of the market are not the only ones that apply to this kind of activity.49 The phenomena of

parallel imports represent a complex interaction between the issue of free flow of

international trade on one hand and the protection of intellectual property rights (IPRs) on the

other.50 The phenomena of parallel imports are the natural consequence of doctrine

48 Frederick M. Abbott, Parallel Importation: Economic and social welfare dimensions, June 2007 Published by the International Institute for Sustainable Development available (accessed September 10, 2012) 49 Christopher Heath, Parallel Imports and International Trade 1 (1999), available at http://www.wipo.int/edocs/mdocs/sme/en/atrip_gva_99/atrip_gva_99_6.pdf (accessed September 10, 2012). 50 Ibid


AND OPPORTUNITIES.

16

of exhaustion. Parallel importation represents a form of price arbitrage whereby a legitimate

product is imported from the market intended by the patent holder to another market where it

can be sold at a higher price.51

7.1. UNDER STANDING OF PARALLEL IMPORTATION:

Apex, a company that manufactures Watches and has also registered the trade mark “Apex”

for its products, places a new series of watches in the markets of countries X and Y. The price

of the same goods in country X is higher than the price in country Y. Climax, an retailer that

operates within market X, motivated by the fact that the price difference in Apex watches

between these two markets is so high that it will cover not only any possible costs for

transportation, export and import duties. Climax is of the view that it will also result in

considerable profits, purchases a quantity of Apex branded watches from country Y with the

purpose of importation in country X. These importation of watches constitute “parallel

imports” or “grey goods”. The only difference is that the phrase “grey goods” bears a

negative connotation and is almost invariably used by the rivals of such practices.52 In other

words, such goods are neither “black” as counterfeit goods in black markets nor “white”

since, despite the fact that they are genuine, they are distributed without the authorisation and

against the will of the manufacturer and intellectual property owner.53 In other words, parallel

imports involve the importation of genuine goods outside the authorized channels of

distribution.54 Importantly, the term ‘parallel import’ does not refer to the products

themselves, but to the manner in which they are imported.55 Parallel imports may be defined

in two ways: (i) focussing on the goods (which implies that sometimes parallel imports be

referred to as ‘grey market goods’), and (ii) focussing on the channels of commerce.56

51 Gene M. Grossman & Edwin L. C. Lai, Parallel Imports and Price Controls, 39 RAND J. ECON. 378, 378 (2008). 52 J.T. McCarthy, McCarthy on Trademarks and Unfair Competition, 4th edn (Database available on Westlaw International), para.29:46. 53 H. Chen, “Grey Marketing: Does It Hurt the Manufacturers?” (2009) 37 Atl. Econ. Journal 23; Stothers, Parallel Trade in Europe (2007), p.2. 54 See James Cross et al., Gray Markets: A Legal Review and Public Policy Perspective, 9 J. of Pub. Pol’y & Market 183 (1990) (explaining that the importation of genuine foods from a foreign source bypasses the authorized US distributor and trademark licensee, allowing for the sale of genuine goods directly to the US retailers or consumers). 55 Raul I. Gonzalez, Parallel Imports: A Copyright Problem with no Copyright Solution 27 (2009) https:// space.library.utoronto.ca/bitstream/1807/18765/1/iturraldegonzalez_raul_200911_LLM_thesis.pdf (accessed May 19, 2012). 56 ibid


AND OPPORTUNITIES.

17

8. DEFINTION OF PARALLLEL IMPORTATION:

Bucklin defines ‘parallel imports’ from the perspective of channels of commerce through

which goods move:

[T]he only distinction between gray and regular goods is the distribution channel

through which they travel to reach the consumer. Gray channel operators acquire and

resell branded goods without the sanction of the trademark owner. Regular goods

travel through intermediaries designated by the trademark owner as the authorized

purveyors of the product. Gray channels acquire merchandise from Members of the

authorized channel, including even the manufacturer… The term gray is applied only

because the diversion is against the professed policies of the brand owner.57

National Economic Research Associates (NERA), by combining both the above points of

view, has defined ‘parallel trade’ as follows:

Parallel trade: sometimes referred to as the ‘grey market’, consists of trade in genuine

trademark (or other intellectual property) protected goods that takes place without the

consent of the trademark owner. Official channel goods reach the final customer

through the intermediaries and distribution networks that are designed by the

trademark owner. Parallel traders acquire goods, typically without the consent of the

trademark owner, from some layer of the authorized channel. This can either be

directly from the manufacturer from an intermediary (wholesaler or middleman) or

from authorized retailers.58

9. HOW DOES PARALLEL IMPORTATION WORK ?

From the perspective of the person who undertakes the activity, parallel imports can generally

take two forms – passive and active parallel imports.59 The most common form is passive

parallel imports, ‘whereby arbitrageurs buy goods in a foreign country and sell them in the

57 Louis P. Bucklin, Modeling the international gray market for public policy decisions, 10 Intl. J. Research in Mktg. 387, 388(1993). 58 National Economic Research Associates, S.J. Berwin & Co. and IFF Research, The Economic Consequences of the Choice of a Regime of Exhaustion in the Area of Trademarks (1999) (commissioned by DGXV of the European Commission). [hereinafter NERA Report], available at http://ec.europa.eu/ internal_market/indprop/docs/tm/summary_en.pdf (accessed Aug 19, 2012) 59 Christopher B. Conley, Parallel Imports:The Tired Debate of Exhaustion of Intellectual Property Rights and Why the WTO Should Harmonize the Haphazard Laws of the International Community 2 (2008), available at http://www.foley.com/files/tbl_s31Publications/FileUpload137/4444/Conley.pdf (accessed Aug 19, 2012).


AND OPPORTUNITIES.

18

domestic market.’60 The other form, active parallel imports, occurs ‘when a foreign licensee

(or distributor) of the IPR holder enters the domestic market to compete with the IPR holder

himself or his official domestic licensee.’61Parallel importation does not mean the duty

evasion, it is as legal as a normal importation. It is also subject to same duty, tariff, custom

clearance and restrictions as other normal importation. There can be various modes of the

parallel importation basically depends on the motive of the importer or the arbitrage

capability and the currency difference. Modes parallel importation can be illustrate by the

following chart.62 Image no.1 shows the parallel imports between a developed country and a

developing country based on the price difference in the developed country and developing

country. On the same premise image no.2 shows the parallel importation between a

developing country and an under developed country. Image no.3&4 shows the active parallel

importation. Image no.3 deals with the parallel imports between a developed country and a

developing country. Image no.4 deals with the parallel imports between a developing country

and a least developed country.

60 Parallel Imports and Unparallel Laws: Does the WTO Need to Harmonize the Parallel Import Law? by Rai, Rajnish Kumar & Jagannathan, Srinath, Journal of World Trade 46, no. 3 (2012): 657–694. 61 Ibid 62 Supra Note 60.



AND OPPORTUNITIES.


19



AND OPPORTUNITIES.


20



AND OPPORTUNITIES.


21



AND OPPORTUNITIES.


22


AND OPPORTUNITIES.

23

CHAPTER – IV

PARALLEL IMPORTATION AND THE GOVERNING LEGAL OBLIGA TION

10. PARALLEL IMPORTATION, EXHAUSTION AND TRIPS AGREEMEN T:

1o.1. History of the Provision:

10.1.1 Situation pre-TRIPS:

Prior to negotiation of the TRIPS Agreement governments maintained different policies and

rules on the subject of exhaustion of intellectual property rights in so far as those policies and

rules affected international trade.63

In the United States, the Supreme Court had interpreted domestic law to establish a “common

control” doctrine for exhaustion of IPR in trademark cases.64 The Supreme Court had never

expressly addressed the question of parallel importation in the field of patents.65 Several

important Court of Appeals decisions held in favour of international exhaustion of patent

rights.66 The European Court of Justice (ECJ) pioneered the exhaustion question in so far as

it affected the movement of goods across borders The ECJ has recognized that the goal of

European market integration would be inhibited if trademark holders could block the free

movement of goods, and at that early stage invoked competition law principles to preclude

such action. Subsequently, the ECJ framed its jurisprudence on this subject, fashioning an

“intra-Community exhaustion doctrine”, on the basis of the prohibition in the EC Treaty

against quantitative restrictions and measures with equivalent effects (Article 28, EC Treaty,

1999 numbering). Other countries and regions had also considered the national or

international exhaustion for protection of IPR. Japan67 and Switzerland68 each had substantial

63 The first clear articulation of the concept of exhaustion of IPRs is sometimes traced to an 1873 U.S. Supreme Court decision, Adams v. Burke U.S. (17 Wall) 453 (1873). This case involved an attempt by the holder of a patent on a funeral casket lid to impose territorial restrictions on a purchaser’s resale of caskets incorporating that lid. The Supreme Court held that the patent holder’s control over the invention was exhausted on the first sale. 64 Kmart v. Cartier, 486 U.S. 281 (1988). 65 Boesch v. Graff 133 U.S. 697 (1890) 66 Curtiss Aeroplane & Motor Corp. v. United Aircraft Engineering Corp., 266 F. 71 (2d Cir. 1920) and further cases discussed in Margreth Barrett, The United States’ Doctrine of Exhaustion: Parallel Imports of Patented Goods, 27 N. KY. L. REV. 911 (2000); Reference book P. 95. 67 Report of Mitsuo Matsushita to Committee on International Trade Law of the International Law Association, noted in Abbott, First Report, Frederick M. Abbott, First Report (Final) to the Committee on International Trade Law of the International Law Association on the Subject of Parallel Importation, 1 J. Int’l Econ. L. 607 (1998).; Reference Book P.97


AND OPPORTUNITIES.

24

jurisprudence on the subject. The countries of Latin America appeared largely to favour

international exhaustion. Decision 85 on Industrial Property of the Andean Commission

excluded the right to prevent importation from patent holders, effectively providing for

international exhaustion.

10.1.2. Negotiating History: The situation has been aptly summarized by Dr Cottier,69

‘[b]oth, the concepts of national and international exhaustion, are not entirely satisfactory

from a trade-related point of view. National exhaustion (or regional exhaustion in the case of

the european Union) is not satisfactory from a consumer’s point of view. It allows for

considerable market segmentation and differential pricing policies to the extent that (cheaper)

parallel imports can be banned in any case. International exhaustion on the other hand, is

deficient from the right holder’s point of view’.70In other words, Article 6 of the TRIPS

Agreement grants ample flexibility to Member States to determine the scope and extent of

‘exhaustion’ by stipulating that no complaint can be heard in this respect.71

It is the only TRIPS agreement which allowed the Parallel Importation. The Paris Convention

is silent on the issue of parallel importation, but other international treaties, specially TRIPS

agreement, may influence domestic law on this issue.72 Article 6 of the TRIPS Agreement

explicitly states that practices relating to parallel importation cannot be challenged under the

WTO dispute settlement system. The Doha Declaration has reaffirmed that Members do have

this right, stating that each Member is free to establish its own regime for such exhaustion

without challenge.73 Even though it was acknowledged during the Uruguay Round debates

that parallel importation was a concept which fitted perfectly within the goal of international

free trade advocated by the General Agreement on Tariffs and Trade (GATT) and that it

68 See Thomas Cottier and Marc Stucki, Parallelimporte im Patent-, Urheber- und Muster-und Modellrecht aus europarechtlicher und v¨ olkerrechtlicher Sicht, in B. Dutoit (edit.), Conflits entre importations parallèles et propriété intellectuelle?, Librairie Droz, Geneva 1996, P. 29 et seq. 69 Dr Thomas Cottier was Member of the Swiss negotiating team at the GATT Uruguay Round from 1986-1993. He has also been a Member of various dispute settlement panels inWTO/GATT. 70 See Thomas Cottier, The Value and Effects of Protecting Intellectual Property Rights within the World Trade Organization, Association Littéraire et Artistique Internationale [A.L.A.I.], 13, 22 (1994). 71 Rajnish K. Rai, Does India needs to harmonize the law of patent exhaustion and parallel imports? 19 Info. & Comm.Tech. L. 115, 130 (2010). 72 Florian Albert & Christopher Heath, Parallel Imports and Trade Marks in Germany, 28 Intl. Rev.Indus. Prop. & Copy. L. 32 (1997) (explaining that many Asian countries favour international exhaustion of most intellectual property rights). 73 The Doha declaration on the TRIPS Agreement and Public Health, available at, http://www.who.int/medicines/areas/policy/doha_declaration/en/index.html (last visited on 18th September, 2012)


AND OPPORTUNITIES.

25

should be comprehensively dealt in the treaty covering all aspects of IP rights,74 agreement

could not be reached among the Member States over this contentious issue.75

Article 6 which basically deals with the exhaustion provided as:

For the purposes of dispute settlement under this Agreement, subject to the

provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the

issue of the exhaustion of intellectual property rights.

Article 6 disclaims any intent in the TRIPS Agreement to limit the Members’ freedom to

regulate the issue of exhaustion of rights with regard all types of IPRs Article 6 of the TRIPS

Agreement is extremely relevant for Members countries to incorporate the principle of

exhaustion of rights into their domestic law with the national, regional, or international

reach.76 Article 6 of the TRIPS Agreement is extremely relevant for Members, especially

developing countries, and particularly the least developed and smaller economies among

them. Article 6 provides that Members are free to incorporate the principle of international

exhaustion of rights in national legislation. Consequently any member can determine the

extent to which the principle of exhaustion applied in its own jurisdiction, without breaching

any obligation under the TRIPS Agreement.77 An interpretation of the scope of the Article 6

of the TRIPS Agreement has been suggested, according to which the patent’s owner consent

will be required as a condition for legality of parallel imports.78 This interpretation is

grounded on teh footnote to Aticle 51 and the approach adopted by the treaty on Intellectual

Property in respect of Integrated Circuits, Washington DC, on 26 May, 1989.

Most importantly the right to allow parallel imports under Article 6 of the TRIPS agreement

was categorically confirmed by the Doha Declaration on the TRIPS agreement and Public

health. According to its paragraph 5 (d): Accordingly and in the light of the paragraph 4

above, while maintain our commitments in the TRIPS Agreement, we recognise that these

flexibilities include:

74 Florian Albert & Christopher Heath, Parallel Imports and Trade Marks in Germany, 28 Intl. Rev.Indus. Prop. & Copy. L. 32 (1997) (explaining that many Asian countries favour international exhaustion of most intellectual property rights). 75 United Nations Conference on Trade and Dev., Int’l Ctr. for Trade and Sustainable Dev., Patents: Subject Matter and Patentability Requirements, in Resource Book on TRIPS And Development 94 (Cambridge University Press) (2005) [hereinafter Resource Book]. 76 Correa M. Carlos, “Trade Related Aspects of Intellectual Property, A commentary on TRIPS Agreement,” (Great Claredon Street, Oxford,Oxford University Press First Edition, P. 79) 77 See IP/C/W/280, P 6. 78 Supra Note 76 at P 84.


AND OPPORTUNITIES.

26

(d) the effect of the provision in the TRIPS agreement that are relevantto the exhsution of

Intellectual property rights is to relevant to the exhaustion of IPR is to leave the each member

free to establish its own regime for such exhaustion without for such exhaustion without

challenge, subject to national treatment and MFN provisions of article 3 and 4. The right to

parallel import under an international principle of exhaustion of rights has been regarded by

the many developing countries as a key component of a patent system sensitive to public

health needs. Developing country very keen to clarify in the Doha Declaration the Member’s

right to to adopt an international exhaustions regime, in accordance with Article 6 and

paragraph 5 (d) provide so. However, this paragraph does not add substantively to the TRIPS

agreement, it certainly reassures Members wishing to apply an international exhaustion

principle that it would be legitimate and fully consistent with the Agreement to do so. This

paragraph however does not solve all the issues, particularly when the rights of title holder

may be deemed exhausted in the country of exportation


AND OPPORTUNITIES.

27

CHAPTER –V

PARALLEL IMPORTATION AND UNPARALLEL LAWS – NEED OF HARMONY

11. NECESSITY OF A GLOBAL EXHAUSTION REGIME – HARMONIZA TION

BETWEEN PARALLEL IMPORTS AND PRINCIPLE OF EXHAUSTIO N:

Parallel imports are the subject matter of international trade; the issues must be addressed by

remaining within the boundaries of the WTO, and should be addressed in a manner, which is

consistent with the objectives of the WTO, of providing ‘the framework for the

implementation, administration and operation of the Plurilateral Trade Agreements’.79 In

other words, to further the basic idea on which the WTO operates is the free, fair and

predictable trade flows i.e. ‘elimination of barriers to the movement of goods and services

across as the same encourages specialization and efficiency in production and distribution,

and results in an increased output of goods and services’.80 Therefore the WTo has

incorporated the provisions to reduce tarrifs and non tarrifs barrier based on the principle of

exhaustion.81 Thus, although the harmonization of laws governing parallel imports looks

desirable, the moot question is how and when to go about it, especially when the

GATT/TRIPS negotiations have already exposed the wide differences between the Member

States on this aspect. The problems are legal as well as economic.82

The problems are legal as well as economic.

79 Marrakesh Agreement Establishing the World Trade Organization Art. 3.1 (Apr. 15, 1994) 1867 U.N.T.S. 154. 80 See Frederick M. Abbott, First Report (Final) to the Committee on International Trade Law of the International Law Association on the Subject of Parallel Importation, 1 J. Intl. Econ. L. 607, 632 (1998) (citing Arts III and XI:1 of GATT 1994 as problematic in this regard). 81 Ibid.


AND OPPORTUNITIES.

28

(a) Adopting the principle of regional exhaustion of patent exhaustion worldwide would not

be advisable, as it may prove to be economically disastrous to patentees.83 It would allow the

importers to legally import the goods from wherever they were produced by the IPowner or

with her consent, irrespective of whether the said good was protected under intellectual

property right.84 In order to obtain a reward upon first sale under a monopolistic right, the IP

owner would be required to apply for intellectual property protection in all countries with

possible future production facilities or marketing plans. To acquire intellectual protection,

they have to hire the lawyer to register the copyright, patent, and trademark. Finally, after

successfully inventing a new product, the product has to be approved by a government agent

before the product is distributed in the marketplace. All the stages of this process are time-

consuming and very costly.85

(b) Similarly, adopting the principle of national exhaustion of rights, and thereby prohibiting

parallel importation may be the best choice for intellectual property owners; it would be

against the spirit of free trade, which is the main objective of the WTO. In addition, it would

also have many detrimental economic side effects. Though, proponents of national

exhaustion of rights argue that even if parallel imports are prohibited, intellectual property

owners could themselves respond to price differences in different markets, it should not be

ignored that IP owners can also propagate such price differences by not catering to some

markets, which is not in tune with the concept of free global trade. 86

c. Finally, we are left with the principle of international exhaustion of rights, which provides

the intellectual property owner one opportunity to release the goods protected under

intellectual property. the principle of international exhaustion of right would help the free-

market, which is advantageous to all nations, producers, and consumers.87

12. INTERNATIONAL EXHAUSTION IS THE SOLE SOLUTION TO

HARMONISE THE CONFLICT OF PARALLEL IMPORTATION:

83 Supra Note 38 at P. 84 Ibid 85Parallel Imports and Unparallel Laws: Does the WTO Need to Harmonize the Parallel Import Law? by Rai, Rajnish Kumar & Jagannathan, Srinath, Journal of World Trade 46, no. 3 (2012): 657–694. 86 Supra Note 85 87 See David A. Malueg & Marius Schwartz, Parallel Imports, Demand Dispersion, and International Price Discrimination, Economic Analysis Group Antitrust Division, US Department of Justice, 4 (Aug. 25, 1993).


AND OPPORTUNITIES.

29

The hypothetical adoption of an international exhaustion regime would automatically imply

that IPR owners would not be able to block parallel importation within their jurisdiction.

Genuine products would flow freely across national markets without any restriction by the

manufacturers. Arguments in favour of International Exhaustion:

1. Parallel trade contributes to the harmonious and effective operation of the

markets: parallel trade contributes to the harmonious and effective operation of the

markets by eliminating potential anti-competitive behaviours. Under circumstances

where IP rights are only exhausted nationally business entities almost invariably seize

the opportunity to keep out of their jurisdiction any likely competitor in order to

develop monopolistic behaviours.88 “In such a situation, consumers will be at the

mercy of the title-holder's distribution and marketing policies, and competition will

then be restricted among the licensees of different countries of the same right holder89

2. Parallel imports will significantly benefit consumers by lowering prices90:

Permitting genuine products which eventually found their way outside the authorised

distribution channels to enter a national market will eliminate abusive and excessive

pricing tactics developed by IP holders. As has characteristically been stated,

“sometimes just the threat to undergo parallel imports suffices to persuade right

owners to lower prices”.91

3. Model of national exhaustion is not in harmony with the current status of

international trade: 92 Since 1994, when the Marrakesh Agreement was signed and

the World Trade Organization was brought to life, “liberal trade” on a global basis has

become a daily reality. Any attempt of IPR owners to restrain the flow of genuine

products which were legitimately acquired is indeed not compatible with the

88 Verma, “Exhaustion of intellectual property rights and free trade” [1998] I.I.C. 534. 89 Ibid 90 T. Hays, Parallel importation under European Union law (London: Sweet & Maxwell, 2004), p.10; S. Zarpellon, “The scope of the exhaustion regime for trade marks rights” (2001) 22(9) European Competition Law Review 382; Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153; Maskus, Intellectual property rights in the Global Economy, 2000, p.211; Verma, “ Exhaustion of intellectual property rights and free trade” [1998] I.I.C. 534; see also NERA Report, (1999). 91 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153. 92 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153; Maskus, Intellectual property rights in the Global Economy (2000), P.211;


AND OPPORTUNITIES.

30

GATT/WTO regime. As demonstrated above “[O]nly international exhaustion

regimes are consistent with WTO principles and provisions and should therefore be

imposed on WTO countries.”93

4. Movement towards a global exhaustion regime would promote and improve the

status quo of international governmental relations:94 It is a general truth that after

the end of the Second World War international trade was one of the main vehicles to

improve the already unpleasant political situation on a global basis.

13. RATIONALE AGAINST INTERNATIONAL EXHAUSTION:

As one may guess, numerous arguments have also been brought forward by the other side,

the rivals of parallel trade.

1. Absence of Price Discriminations may leads towards the high rates of Product: A

situation where parallel trade cannot be blocked through the exercise of IP rights

would probably lead to an elimination of price differentials on behalf of the

manufacturers in order to prevent unauthorised sales of their goods. Moreover, one

may guess that IPR owners would probably choose to raise the prices in developing

countries rather than lowering them in developed economies.

However, my personal opinion is that the one cannot raise price of its product in a

developing country, because one knows that the developing country must not have the

capacity to purchase his products. In the field of commerce one will do business only

for the profit. If no profit no business.

2. Parallel traders “free ride” on IPR owner's investment and effort:95

Usually authorised dealers promote their products along with a rather attractive

package of after-sales services which is included in the final price. On the other hand,

93 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153. 95 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153; Maskus, Intellectual property rights in the Global Economy, 2000, p.213; Zarpellon, “The scope of the exhaustion regime for trade marks rights” (2001) 22(9) European Competition Law Review 382.


AND OPPORTUNITIES.

31

parallel imported products most of the times are not accompanied by such services.

Like international warranty and replacements and free services. Consequently, IPR

holders contend that such practices not only harm the image of the brand but also do

not benefit the consumers who have paid in order to acquire a product of high quality.

It is true that manufacturers spend a rather considerable amount of money in order to

produce and promote their products.

However, it is the my personal opinion that such practices do not ruin the brand's

image. As has rightly been stated, “with the provision of adequate information,

parallel imports of different quality can actually increase the choices of consumers

and thus be beneficial”.96 Thus parallel trade may give consumers the opportunity to

purchase a luxurious product at a lower price if not also accompanied by luxurious

services which further raise the final price.

3. Parallel Import discouraged discouraged to reinvest in innovation: it has been argued

that in high-technology fields, such as pharmaceuticals, is that by permitting parallel

trade without restrictions IPR owners will eventually be discouraged to reinvest in

innovation since they cannot prevent unauthorised dealers from engaging in “free-

riding” practices.97 Subsequently, this will have a detrimental effect on the consumer's

quality of life. Indeed, this argument raises serious issues.

However my personal opinion is that an invention is done with the motive to facilitate

the society by his invention not to exploit the invention so as to it will create a trouble

the society. So it is my opinion that the pharmaceutical and life saving drugs should

not be at least the matter of trade.

4. International exhaustion and unrestricted parallel trade would encourage piracy

and counterfeiting:98 Maskus rightly states: “Piracy is trade in unauthorized versions

of products. However, my personal opinion is that the parallel import is always of

original product. It never suggests to import those products which are copied, or

deceptive or pirated in any of the manner.

14. INTERNATIONAL EXHAUSTION OR NOT? 96 Fink, “Entering the Jungle of Intellectual Property Rights Exhaustion and Parallel Importation” in Intellectual Property and Development (2005), p.180; Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153. 97 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153. 98 Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153; Maskus, Intellectual property rights in the Global Economy (2000), p.215; Stothers, Parallel Trade in Europe (2007), p.22.


AND OPPORTUNITIES.

32

The answer to the fundamental question of whether steps should be taken towards an

international exhaustion regime will now follow. The solution can be found by striking the

balance between the pros and cons of a global exhaustion model.

It is true that some of the points against permitting unrestricted parallel trade are of

unquestionable importance. More specifically, arguments such as differences in quality

between supposedly identical products bearing identical trademarks cannot be overcome

easily.

Having taken into serious consideration the various arguments forwarded by opponents as

well as supporters of parallel trade, the conclusion which can be drawn that international

exhaustion constitutes the most preferable model. Admittedly, there are several negative

effects this model may bring. The advantages mentioned above overweigh any potential

disadvantages. However, two exceptions should be made.

First of all, The basic source of the product must be remain same. So that the interest of the

IP holder must be protected properly. Examples such as removal of the production codes99

should not trigger the application of such a powerful exception which enables IPR owners to

oppose parallel trade.

The second exception concerns the sensitive field of pharmaceuticals. A new suitable

mechanism must be evolved taken into the interest of both the inventor as well as of

consumer.

99 See Zino Davidoff 571 F.3d 238, 246 (2d Cir. 2009).


AND OPPORTUNITIES.

33

CHAPTER – VI

LEGAL FRAMEWORK OF GOVERNANANCE OF PARALLEL IMPORTA TION IN

INDIA

15. PARALLEL IMPORTATION AND INTELLECTUAL PROPERTY RIGH TS

IN INDIA:

Curiously, although the Indian patent regime recognizes international exhaustion, a literal

reading of the section 107 A of the patent Act, 1970 suggests that it does not provide for

“national” exhaustion. Contrast this with other IP legislations such as the Trademarks Act,

1999,100 whose wording is broad enough to subsume both national and international

exhaustion principles.

Section 30(3) of the Trademarks Act provides in pertinent part that:

100 Act No. 47 of 1999 dated 30th Dec., 1999. The Trademarks Act, 1999 came into force in September 2003.


AND OPPORTUNITIES.

34

[w]here 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) …

or (b) the goods having been put on the market under the registered trade mark by the

proprietor or with his consent.

Although the section does not use the term “exhaustion”, the use of terms such as “sale of

goods in the market” or “otherwise dealing in those goods” clearly indicates that what is

envisaged is “exhaustion”. Unlike section 107A(b) of Indian Patent Act, section 30(3) is not

limited to “imports” and can therefore be read to allow both domestic and international

exhaustion. A recent decision of the Delhi High Court makes this clear:

In Xerox Corporation v. Puneet Suri,101 the plaintiff owned the trademark “Xerox” and

claimed that the defendant’s act of importing and selling second hand Xerox machines

constituted trademark infringement. The defendants argued that their acts were covered under

Section 30(3), which recognized the principle of international exhaustion.102 Justice Sanjay

Kishen Kaul of the Delhi High Court agreed with the defendants, holding that the “import of

[second hand] Xerox machines that have proper documentation” is permissible under the

Trademarks Act, provided that “thereis no change or impairment in the machine.”103

Given this statutory endorsement of exhaustion, both national and international, in the

Trademarks Act, might one argue that the absence of a similar clause envisaging “national

exhaustion” in the Patents Act meant that Parliament did not intend to provide for such a

doctrine? Since the Patents Act expressly provides for “international exhaustion” in section

107A(b), which is a relatively more liberal defence to infringement, it is unlikely that an

Indian court will refuse to endorse a narrower “national exhaustion” exemption in India.

Particularly since the lack of a specific national exhaustion principle appears to be an

101 C.S. (OS) No. 2285/2006; (Feb 20, 2007). 102 ‘Exhausting’ Patent Rights in India: Parallel Imports and TRIPs Compliance, by Shamnad Bashee, Mrinalini Kochupillai, 13 Journal of Intellectual Property Rights, 486-497 (2008). 103 The latter part of the order appears to be have been based on a straightforward application of Section 30(4) of the Trademarks Act, 1999, which provides that “…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.”


AND OPPORTUNITIES.

35

oversight rather than a deliberate attempt by Parliament to restrict the scope of Section

107(A) (b).

Even if a court does insist on a strictly technical reading of the Patents Act to deny scope for

national exhaustion, a purchaser would nevertheless have an implied right to use and re-sell a

patented good purchased in the market under the Sale of Goods Act, 1930 (section 1422 and

section 1923 of the said Act). This debate has been ended by the recent circular of the

Central Board of Customs & Excise (CBEC) dated 8th May, 2012.

16. CUSTOMS BOARD ISSUES CIRCULAR ALLOWING 'PARALLEL IM PORTS'

UNDER PATENTS ACT AND TRADEMARKS ACT 104

In a circular dated 8th May, 2012 the Central Board of Customs & Excise (CBEC) has

instructed all of its officers that the IPR (Imported Goods) Enforcement Rules, 2007 will not

apply to ‘parallel imports’ under the Patents Act, 1970 and the Trademarks Act, 1999. The

circular states that this interpretation of the law is based on the views of the DIPP, which is

the nodal government agency for the implementation of the patents and trademarks

legislation. In pertinent part the Circular states the following:

In this regard, the Department of Industrial Policy and Promotion which is nodal authority

for all matters relating to (i) Trade Marks Act, 1999 (ii) Patents Act, 1970 and (iii) Designs

Act, 2000 has, interalia, stated that:

(i) Section 107A (b) of the Patents Act, 1970 provides that importation of patented products

by any person from a person who is duly authorised under the law to produce and sell or

distribute the product shall not be considered as an infringement of patent rights. Hence, in

so far as Patents are concerned, Section 107A (b) provides for parallel imports.

(ii) Section 30(3)(b) of the Trade Marks Act, 1999 provides that where the goods bearing a

registered Trade Mark are lawfully acquired, further sale or other dealing in such goods by

purchaser or by a person claiming to represent him is not considered an infringement by

reason only of the goods having been put on the market under the registered Trade Mark by

the proprietor or with his consent. However, such goods should not have been materially

altered or impaired after they were put in the market.

104 http://spicyipindia.blogspot.in/2012/05/customs-board-issues-circular-allowing.html


AND OPPORTUNITIES.

36

With regard to ‘parallel imports’ under the Copyright Act, 1957 the CBEC is still awaiting a

clarification from the Registrar of Copyrights. The circular defines parallel imports as import

of original/genuine products (not counterfeit or pirated) which are sold/ acquired legally

abroad and imported into the country, by persons other than the intellectual property right

holder without permission/authorisation of the IPR.105

The Circular explains that such a clarification was necessary since it had received several

queries from its field units regarding the applicability of the IPR (Imported Goods)

Enforcement Rules, 2007 to parallel imports. These rules are notified under the Customs Act,

1962 and seek to implement various IP legislations at the different ports of entry. Over the

last year there have been several cases filed before customs authorities and the High Courts

by Dell, Samsung, Ericson, L.G. and a host of other multinational companies, mostly under

the Trade Marks Act, 1999 aimed at stopping imports of their own genuine products by third

parties resellers from different countries where the products are sold at lower prices.

In a recent judgment of the Delhi High Court, in a case filed by Samsung, the Delhi High

Court had interpreted Section 30(3) of the Trade Marks Act, 1999 to rule that the Indian

legislation did not allow for parallel imports. We had a guest post on that decision over.

When Dell tried to use this judgment to halt the parallel imports of some of its products into

the country, the Customs officer refused to allow Dell’s plea on the grounds that the Samsung

judgment by the Single Judge of the Delhi High Court had been stayed by a larger bench of

the same High Court. All eyes will now be focussed on the Registrar of Copyrights and his

interpretation of Section 2(m) of the Copyright Act, 1957. Although there is a Delhi High

Court judgment on the point, there have been differing views on the Delhi High Court’s

interpretation of the law.

17. CONCLUSION:

While there are fascinating arguments both in favour as well as against the systems of

national and international exhaustion, the issue of exhaustion is far from a settled law.

besides, which of the systems of exhaustion – national or international – is better, cannot be

determined conclusively; it depends upon the goals the Member States are pursuing. Whereas

the national system of exhaustion is more suitable if the goal of intellectual property rights is

105 Supra Note 104 at P.


AND OPPORTUNITIES.

37

to safeguard the interests of inventors and concurrently propagate new technology and

knowledge, the international system of exhaustion is considered more appropriate if the aim

is to open markets and to remove the barriers to international trade with a view to exploit the

advantages of the theory of comparative advantage.106 The “exhaustion” matter has captured

the public attention for it reflects the long-lasting struggle between intellectual property

holders and parallel traders. It is true that sometimes the exercise of intellectual property

rights may lead to abuse of a dominant market position or other anti-competitive practices.

Nonetheless, it should be kept in mind that granting intellectual property to a legal or natural

person is the award for substantial investment, creativity or innovation. Thus, the core of

these rights and their legitimate exercise should remain intact. This is the reason that the

implementation of a worldwide exhaustion model without any restriction is not the panacea

to our problem. Therefore the author suggests the adoption of an international exhaustion

regime combined with an effective “material-differences” rule along with the maintenance of

the current state in the particular field of pharmaceuticals. Whether such a solution will

succeed in striking a fair balance between the two rival sides is something that remains to be

seen.

Synopsis for Project

On the Topic

EXHAUSTION UNDER TRIPS AND PARALLEL

IMPORTATION: CHALLENGES AND

OPPORTUNITIES. 106 Christopher B. Conley, Parallel Imports:The Tired Debate of Exhaustion of Intellectual Property Rights and Why the WTO Should Harmonize the Haphazard Laws of the International Community 2 (2008), available at http://www.foley.com/files/tbl_s31Publications/ FileUpload137/4444/Conley.pdf (accessed Aug 19, 2012).


AND OPPORTUNITIES.

38

Submitted towards the partial fulfilment of grading for

the

1st semester of LL.M. Degree course for the subject

IPR Through WTO

Submitted To: Submitted By:

Prof. Amit Singh Rupendra Singh

Faculty- in- Charge LL.M - Corporate Law

National Law University 1st Semester,

Roll no: 442

NATIONAL LAW UNIVERSITY, JODHPUR .

21st August, 2012

Table of Contents

1. Subject of Research

2. Area of Research

3. Research Topic

4. Object of Study

5. Introduction.

6. Research Objectives and Research Questions.


AND OPPORTUNITIES.

39

7. Hypothesis.

8. Identification proposed Data Collection Methods.

� Research Technique.

� Research Data.

� Research Sources.

� Research resources.

9. Identification of Literature for Study.

� Enactments & Legal Instruments.

� Reports and Research work.

� Books and References

� Dictionaries

� Articles

� Published Interviews

� Websites

� E-Encyclopaedia

� E-Paper

� Cases.

10. Proposed Chapterization

1. Research Subject: This proposed research paper is based on the new branch of

property rights namely Intellectual property law.

2. Area: Present research proposal falls within the trade related aspect of intellectual

property rights (TRIPS), World Trade organisation and other international trade laws, within

there is an apparent correlation.


AND OPPORTUNITIES.

40

3. Research Topic: Exhaustion and Parallel Importation under TRIPS: Challenges and

Opportunities.

4. Object of Study: The object of this term paper proposal is to make an economic and

legal analysis of the implications of non-uniform exhaustion regime over the protection of

Intellectual Property and over the parallel importation by taken into consideration the practice

followed across the globe.

5. Introduction of Research Topic:

An intellectual property rights, such as patent, trademark or copyright, is typically defined in

terms of rights granted to the holder to prevent others from making use of it. Therefore, the

Intellectual Property Rights are also called as negative rights. It leads to many questions (1)

whether the exclusive right granted to an Intellectual property rights is an absolute or it can

be qualified by any limitation? (2) When it can be said that the intellectual property owner

has exhausted his right over that property? (3) What kind of protection available to

intellectual property owner when a intellectual property resold? The proposed research work

is specifically intended to examine all these issue and to reach to appropriate answer.

Article 6 of the TRIPS addresses the exhaustion of intellectual property rights. The concept

of exhaustion plays an enormously important role in determining the way that intellectual

property rules affect the movement of goods and services in International Trade. The

dictionary meaning of exhaustion is the action or state of using something up or of being used

up completely. The doctrine of exhaustion basically addresses the point at which IPR holders

control over the goods or services ceases. Generally, IPRs are exhausted once the goods or

services which incorporate these rights are put on market. It means once a patented,

trademarked or copyrighted article has been sold by the IPR owner the further sale of this

article can no longer be controlled by him. As soon as the holder loses its control it comes

into public domain therefore it is quite critically related with the functioning of a market

economy. But this doctrine is basically depends on the practice adopted by the nations in its

domestic law. The history of the doctrine of exhaustion can be traced out in the court rooms,

emerged as a creature judicial practice in Germany and the word exhaustion was used for the

first time in Kolnesh Wasser a trade mark in 1902. Gradually this doctrine was started to be


AND OPPORTUNITIES.

41

used across the globe with the development of international trade. Though the doctrine had

been effectively used across the globe but still there is not a international consensus for a

uniform regime of exhaustion.

A very closely associated factor to the regime of exhaustion is the parallel importation.

Parallel importation is closely associated with the exhaustion because parallel importation

can be defined as “the importation of a good or service as to which exhaustion of an IPR has

occurred abroad is commonly referred as Parallel Importation.” Therefore, the validity of

such importation in country is closely associated with the regime of exhaustion adopted by

that nation. It is also required to notice that in the absence of the doctrine of exhaustion, the

original IPR holder would perpetually exercise control over the sale, transfer or use of a good

or services embodying on IPR. Article 6 of the TRIPS agreement deals with it and required to

develop an international regime to deal with the exhaustion and parallel importation related

thereto.

6. Research Objectives and Research Questions:

• To study, understand and analyse the historical and conceptual aspect of

Exhaustion of Intellectual Property Rights.


AND OPPORTUNITIES.

42

1. What is the meaning of Exhaustion?

2. How does the concept of exhaustion developed in the field of Intellectual Property

law?

3. How the exhaustion of different Intellectual Property does take place?

4. What are the sources of recognition of exhaustion any legislative history related

thereto?

• To identify the kinds of Exhaustion regime adopted worldwide for the protection

intellectual property.

1. What are the different types of Exhaustion regime adopted across the border?

2. What are the reasons of the growth of the different exhaustion regime?

• To identify the effective exhaustion regime on comparison the kinds of

exhaustion regime adopted the worldwide.

1. What are the defects in the national and regional exhaustion regime?

2. How the international exhaustion regime emerged as the effective?

• To study, understand the existing legal arrangement covering the exhaustion,

specifically to understand the reasons of not adopting of an International regime

by the member nations of TRIPS.

1. What are the laws governing the exhaustion?

2. What is the object and scope of the Article 6 of the TRIPS specifically dealing

with the exhaustion?

3. Does Article 6 provide for, If not, Why the said article did not provide an

international obligation on the member states rather give liberty to the member

states to adopt national arrangement for exhaustion?

• To study and understand the relation of Exhaustion and Parallel Importation.

1. What is the parallel Importation?

2. How the parallel importation is associated with the exhaustion?

3. How the block can be created by an intellectual property owner in order to restrain

the importation by the country where the IPR holder has exhausted his rights?

• To examine the economic aspects related to Parallel importation and

Exhaustion.


AND OPPORTUNITIES.

43

1. How the parallel importation does protect the economic rights of the consumer

against the national exhaustion regime which provide exclusive distribution

channel?

2. How does the international exhaustion regime economically sound?

3. Whether the national or international exhaustion regime is in harmony with the

current status (liberal trade) of international trade?

4. Whether the adoption of the international exhaustion regime is beneficial to the

transport industry?

• To scrutinise effect of an International Exhaustion Regime.

1. Whether the adoption of an international exhaustion regime which allows the

parallel trade contributes to the harmonious and effective operation of the markets

by eliminating potential anti-competitive behaviours?

2. How the international exhaustion regime does facilitate the international trade and

also is in conformity with the WTO principles?

3. Whether global exhaustion regime would promote and improve the status quo of

international governmental relations?

7. Hypothesis

Adoption of an international exhaustion regime may be an effective step towards the

liberalization of international trade and the adequate protection of the Intellectual Property

Holder.

8. Identification of Proposed Data collection Methods:

I have decided to adopted following Research aspects in my term paper proposal in order to

research on the above mentioned Objectives and Questions on the Topic.

(i)Research Technique: The term paper is prepared using deductive methodology of

research. Primary surveys and observations and review of articles, records and reports of

various eminent persons, organisation would be examined and the challenges which has been

faced by the member nation by their exhaustion regime and then come to a concluding point

as which regime is the effective one and serves the interest of larger number of society.


AND OPPORTUNITIES.

44

(ii)Research Data: This paper will be based on collecting both primary and secondary data

as well as at the same time preparing, recording and making an observation by administration

of questionnaires, surveys and interviews.

(iii)Research Source: The paper will be based on analysing and collecting data from various

books, articles in the magazine, newspapers articles and publications, use online data base

also. And Along with this primary source of information will be made use.

(iv)Research Resource: This paper is being prepared at an individual level. The National

Law University, Jodhpur library will be made use of and journal subscription will be utilised.

9. Identification of literature for study : In the limited time limit for the literature

survey it has been found out that in India or the world at large there has been no in depth

research on the Topic but many articles, comments and proposals have been written on

similar aspects of the topic. The titles and sources of those are mentioned below as follows:

(i)Enactments & Other Legal Instruments:

1. Agreement on Trade Related Aspect of Intellectual Property Rights, 1994.

2. General Agreement on Trade and Tariff, 1994.

3. Paris Convention for the Protection of Intellectual Property, 1967.

4. Berne Convention for the Protection of Copyright work, 1979.

5. Rome Convention, 1980.

6. Washington Treaty, 1989.

7. Indian Patent Act, 1970.

8. Trade Mark Act, 1999

(ii)Books Referred:

1. Arthur R. Miller and Michael H. Davis, Intellectual Property- patents, Trademarks,

and nutshell, at 135-137 (2nd ed, west publ., St. Paul, 1990)

2. Bainbridge I. David, Intellectual Property, Intellectual Property, Eigth Edition,

(Edinburgh Gate, Harlow, England, Pearson Education Ltd.2010).

3. Carloss.M.Correa, “Trade Related Aspect of Intellectual Property Rights” A

Commentary on the TRIPS Agreement, (London: Oxford University Press, 2007)


AND OPPORTUNITIES.

45

Carvalho, Nunu Pires de, “The TRIPS Regime of Trademarks and Design”Second

Edition(Netherland, Wolters Kluwer Law and Business, 2011).

4. Carsten Fink, Intellectual Property and Development Lessons from Recent Economic

Research 173 (Carsten Fink & Keith E. Maskus eds., A Co-publication of Wold Bank

and Oxford Press 2005).

5. Jeremy Philips, Trade Mark Law: A practical Anatomy, at 272 (Oxford University

Press, Oxford, 2003)

6. Kur Annette, Levin Marianne,“Intellectual Property Rights in A Fair Trade System-

Proposal for Reform of TRIPS”(Chelttenham,UK Edward Elgar Pulishing Ltd.,

2011).

7. UCTAD-ICTSD, Resource Book on TRIPS and Development,(New York:

Cambridge University Press,2005).

8. Webster’s College Dictionary (Randum House, New York, 1991.

9. W.R. Cornish, D. Llewelyn and T. Aplin, Intellectual property: patents, copyright,

trade marks and allied rights, 7th edn (London: Sweet & Maxwell, 2010).

10. Watal Jayshree, “Intellectual Property Rights in The WTO and Developing Countries,

Second edition, (New Delhi, Oxford University Press, 2005).

(iii)Reports and Research Work:

1. Abdulquwi A. Yusuf & Andres Moncayo von Hase, Intellectual Property Protection

and International Trade: Exhaustion of Rights Revisited, 16World Competition L. &

Econ. Rev. 115, 117 (1992).

2. Bonadio, “Parallel imports in a global market” [2011] E.I.P.R. 153; Maskus,

Intellectual property rights in the Global Economy, 2000, p.211.

3. Curtis A. Bradley, Territorial Intellectual Property Rights in an Age of Globalism, 37

Virginia Journalof International Law 505 (1997).

4. Christopher B. Conley, Parallel Imports:The Tired Debate of Exhaustion of

Intellectual Property Rights and Why the WTO Should Harmonize the Haphazard

Laws of the International Community 2 (2008), available at

http://www.foley.com/files/tbl_s31Publications/FileUpload137/4444/Conley.pdf


AND OPPORTUNITIES.

46

(accessed Aug 19, 2012).

5. Christopher Heath, Parallel Imports and International Trade 1 (1999), available at

http://www.wipo.int/edocs/mdocs/sme/en/atrip_gva_99/atrip_gva_99_6.pdf (accessed

September 10, 2012).

6. Florian Albert & Christopher Heath, Parallel Imports and Trade Marks in Germany,

28 Intl. Rev.Indus. Prop. & Copy. L. 32 (1997).

7. Frederick M. Abbott, Parallel Importation: Economic and social welfare dimensions,

June 2007 Published by the International Institute for Sustainable Development

available (accessed September 10, 2012).

8. Gene M. Grossman & Edwin L. C. Lai, Parallel Imports and Price Controls, 39

RAND J. ECON. 378, 378 (2008).

9. H. Chen, “Grey Marketing: Does It Hurt the Manufacturers?” (2009) 37 Atl. Econ.

Journal 23; Stothers, Parallel Trade in Europe (2007), p.2.

10. Herman C. Jehoram, International Exhaustion versus Importation Right: A Murky

Area of IntellectualProperty Law, GRUR INTL. 281(1996);

11. Case C-9/93 IHT Internationale Heiztechnik GmbH and Uwe Hanns Ullrich, TRIPS:

Adequate Protection, Inadequate Trade, Adequate Competition Policy, 4 P. Rim L. &

Policy J. 190 (1995).

12. James B. Kobak Jr., Exhaustion of Intellectual Property Rights and International

Trade, 5 GLOBAL ECON. J. 1, 13 (2005).

13. James Cross et al., Gray Markets: A Legal Review and Public Policy Perspective, 9 J.

of Pub. Pol’y & Market 183 (1990).

14. J.T. McCarthy, McCarthy on Trademarks and Unfair Competition, 4th edn (Database

available on Westlaw International), para.29:46.

15. JohnW. Osborne, A Coherent View of Patent Exhaustion:A Standard Based On

Patentable Distinctiveness, 20 Santa Clara Computer & High Tech. L.J. 643, 646

(2004).

16. John C. Paul et al., US Patent Exhaustion:Yesterday,Today, and Maybe Tomorrow, 3

J. Intell. Prop. L. Prac.461, 461 (2008).

17. National Economic Research Associates, S.J. Berwin & Co. and IFF Research, The

Economic Consequences of the Choice of a Regime of Exhaustion in the Area of


AND OPPORTUNITIES.

47

Trademarks (1999) (commissioned by DGXV of the European Commission).

[hereinafter NERA Report], available at http://ec.europa.eu/

internal_market/indprop/docs/tm/summary_en.pdf (accessed Aug 19, 2012)

18. Rajnish K. Rai, Does India needs to harmonize the law of patent exhaustion and

parallel imports? 19 Info.& Comm.Tech. L. 115, 130 (2010).

19. Raul I. Gonzalez, Parallel Imports: A Copyright Problem with no Copyright Solution

27 (2009) https://

space.library.utoronto.ca/bitstream/1807/18765/1/iturraldegonzalez_raul_200911_LL

M_thesis.pdf (accessed September 19, 2012).

20. Report of Mitsuo Matsushita to Committee on International Trade Law of the

International Law Association, noted in Abbott, First Report, Frederick M. Abbott,

First Report (Final) to the Committee on International Trade Law of the International

Law Association on the Subject of Parallel Importation, 1 J. Int’l Econ. L. 607 (1998).

21. Shamnad Bashee, Mrinalini Kochupillai, ‘Exhausting’ Patent Rights in India:

Parallel Imports and TRIPs Compliance, 13 Journal of Intellectual Property Rights,

486-497 (2008).

22. Thomas Cottier, The Value and Effects of Protecting Intellectual Property Rights

within the World Trade Organization, Association Littéraire et Artistique

Internationale [A.L.A.I.], 13, 22 (1994).

23. Tuomas Mylly, A Silhouette of Fortress Europe? International Exhaustion of Trade

Mark Rights in the EU (2000) available at

http://www.law.utu.fi/en/faculty/staff/silhouette.pdf (accessed Sept. 23, 2012).

24. Verma, “Exhaustion of intellectual property rights and free trade” [1998] I.I.C. 534.

(iv) Websites:

• www.wto.org

• www.wipo.int

• www.westlawindia.com

• www.nujs.edu

• www.jstor.org


AND OPPORTUNITIES.

48

• www.spicyip.com

• www.oxfordjournal.org

• www.commerce.nic.in

• www.mhrd.gov.in

• www.worldtradelaw.net

• www.kluweronline.com

(v) E-Encyclopaedia and Reports:

• Encyclopaedia Britannica

• http://en.wikipedia.org/wiki/Exhaustion_doctrine.

• International Exhaustion of Industrial Property Rights: Brazil (AIPPI Congress in

Melbourne 2001), http://www.aippi.org/reports/q156/gr-q156-Brazil-e.htm.

(vi) E-Papers

• http://www.globaltimes.cn/content/724212.shtml

• http://infojustice.org/archives/26799

• http://www.law.ed.ac.uk/ahrc/script-ed/vol5-2/basheer.asp.

(vii) Cases

1. Adam v. Burke, 84 U.S. 453, 456 (1873)

2. Accord Keeler v. Standard Folding Bed Co., 157 U.S. 659 (1895)

3. Anton/Bauer Inc v PAG, Ltd., No. 3:01CV577 (CFD), 2002 US Dist. LEXIS 11583,

at *20-22

4. Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)

5. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1426 (Fed. Cir. 1997)

6. Boesch v. Graff 133 U.S. 697 (1890)


AND OPPORTUNITIES.

49

7. Curtiss Aeroplane & Motor Corp. v. United Aircraft Engineering Corp., 266 F. 71

(2d Cir. 1920)

8. Curtiss Aeroplane & Motor Corp. v. United Aircraft Eng’g Corp., 266 F. 71 (2d Cir.

1920)

9. Danziger v. Ideal-Standard GmbH, 1994 ECR I-02789 ¶ 22

10. Jack Walters & Sons Corp. V. Morton Building Inc., 737 F. 2d 698, 704 (7th Cir,

1984)

11. Jazz Photo Corp. v. U.S. Int’l Trade Comm’n, 264 F.3d 1094, 1102 (Fed. Cir. 2001)

12. Kmart v. Cartier, 486 U.S. 281 (1988)

13. LG Elecs., Inc. vs.Bizcom. Elecs. Inc., 453 F. 3d 1364, 1369 (Fed. Cir. 2006)

14. Mitchell v.Hawley, 83 U.S. 544, 548 (1872

15. Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008)

16. United States v. Univis Lens Co., 316 U.S. 241, 250 (1942)

17. United States v. Moore 604 F. 2d 1228 (9th Cir. 1979)

EXHAUSTION UNDER TRIPS AND PARALLEL IMPORTATION: CHALLENGES AND OPPORTUNITIES.

Documents