Name: XYZ

Section: _
Class Roll No: —--------
Exam Roll No.: —------
Name of the Case: Kapil Wadhwa v. Samsung Electronics

Co. Ltd. 194 (2012) DLT 23; MIPR 2012 (3) 191

CASE COMMENT

Facts: Samsung sued Kapil Wadhwa for unauthorized importation of printers, manufactured
and sold by Samsung, from Korea and their subsequent sale in Indian market, thereby
constituting infringement under Section 29 of the Trade Marks Act, 1999. The learned Single
Judge observed that India follows the principle of national exhaustion and restrained Kapil
Wadhwa from importing and selling products bearing the Trade Mark ‘Samsung’. Kapil
Wadhwa appealed against the same.

Issue: Whether the Trade Marks Act, 1999, embodies the principle of domestic exhaustion or
international exhaustion?

The Division bench observed that though section 29 prohibits the import and export of goods
without the consent of registered proprietors regardless if the goods are genuine, one cannot
conclude that the intent of the legislature is to put barriers on importation of goods for Section
30 works as an exception to section 29. Further, section 30(3)(a) and 30(3)(b) are mutually
exclusive and the interpretation of one clause in a particular manner would not make the other
clause nugatory. To assess if the goods are placed in domestic or international market and their
subsequent assignment to balance the rights of assignee is not necessary for the interpretation
of section 30(3) since the assignee does not have a right to prevent further sale of goods once
they are already placed in market by the assignor. The trademark law doesn’t restrict the
lawful acquisition of goods to the country where their mark is registered for the purpose of
law is to regulate the use of the mark and not the sale or purchase of goods.

 To assess the meaning of “market” given in section 29 and 30 of the Act, the court noted that
the legislations abroad contain specific words to indicate the confined meaning of domestic
market, wherever applicable. In India, however, the neutral expression “the market” has been
used which does not become a basis to only conclude that it is the domestic market and by
doing so, the single judge has recognized a silence in the statute. The existence of “any
market” in section 30(2)(b) reflects that “any” is indicative of the noun “market” and in
context of ``exported to any market implies a global market. Therefore, ‘any’ works as a
determiner in this context. The use of the expression “the market” signifies the general
demarcation of an economic space distinguished from the other spaces. The use of ‘any
geographical area’ in the Statement of Objects in Trade Mark Bill envisages the intention of
the legislature to recognize the principle of international exhaustion of rights.

Before the TRIPS agreement, in Uruguay Round discussions on GATT, India’s position was to
permit parallel imports and this verifies that India favours the Doctrine of exhaustion of rights
linked to parallel imports. Even Art. 6 of the TRIPS Agreement has left it to the discretion of
the member States to either adopt or not to adopt any Principle of Exhaustion of Rights linked
to parallel imports. It was concluded that the market contemplated in section 30(3) includes
the international market and that the legislation in India adopts the principle of International
Exhaustion of Rights. In the present case since the said principle had taken away the right of
Samsung to control the sale and distribution of goods, the injunction had to be vacated,
provided the appellant was not providing any after sale service or warranties. However, for
meta-tagging the Appellant was correctly injuncted and the appeal was, therefore, partially
allowed.

Through this landmark judgment, the court gave validation to the international theory of
exhaustion in India and made parallel imports permissible. Since every coin has a flip side, the
court did indicate that by not adopting the principle of national exhaustion, that there may be a
lost opportunity for FDI in the manufacturing sector, however the adoption of the principle of
national adoption could certainly have had dampening effects for consumers due to dual
processing. The court further cautioned that it is a policy decision to look for what is best
suited for the interests of the country by emphasizing that neither situation could be a win-
win for India.