ABSTRACT

THE FIRST SALE OF A COPY OF A COPYRIGHTED WORK EXHAUSTS THE RIGHTS

OF THE OWNER OF THE COPYRIGHT IN THE WORK TO CONTROL THE RESALE OF
THAT COPY, IF THE FIRST SALE WAS A LEGAL SALE OF A LEGAL COPY. THE
EXHAUSTION OF RIGHTS MAY BE INTERNATIONAL, REGIONAL OR NATIONAL.

ONCE THE EXHAUSTION PRINCIPLE IS ESTABLISHED IN INTELLECTUAL

PROPERTY LAW, THE NEXT QUESTION IS, WHETHER THIS OPERATES ONLY ON A
TERRITORIAL, NATIONAL OR REGIONAL SCALE OR WHETHER ON THE
CONTRARY IT HAS WORLDWIDE EFFECT. IN THE LATTER CASE ONE SPEAKS OF
INTERNATIONAL EXHAUSTION. THE CONTRARY SOLUTION, THE TERRITORIAL
EXHAUSTION, MEANS THAT THE EXHAUSTION ENDS AT THE NATIONAL (OR IN
THE CASE OF THE EC AT REGIONAL) BORDERS.
 TABLE OF CONTENTS

SR.NO. TOPIC PAGE NO.

1. INTRODUCTION
2. EXHAUSTION UNDER TRADE MARK AND
PATENT LAW

3. EXHAUSTION UNDER INDIAN COPYRIGHT

LAW

4. WHAT DOES THE TERM REPRODUCE

MEANS?

5. SECTION 51 OF THE COPYRIGHT ACT

6. COPYRIGHT AND RELATED RIGHTS

7. JUDICIAL APPROACH

8. CONCLUSION

9. BIBLIOGRAPHY
 ABBREVIATIONS

SC- SUPREME COURT

HC- HIGH COURT

V. – VERSUS

S. – SECTION

LTD.- LIMITED

EDN. – EDITION

UK – UNITED KINGDOM

USA – UNITED STATES OF AMERICA

DEL.- DELHI
 ACKNOWLEDGEMENT

THE SUCCESS AND FINAL OUTCOME OF THIS PROJECT REQUIRED A LOT OF

GUIDANCE AND ASSISTANCE FROM MANY PEOPLE AND I AM EXTREMELY
FORTUNATE TO HAVE GOT THIS ALL ALONG THE COMPLETION OF MY PROJECT
WORK. WHATEVER I HAVE DONE IS ONLY DUE TO SUCH GUIDANCE AND
ASSISTANCE AND I WOULD NOT FORGET TO THANK THEM.

I RESPECT AND THANK Dr. PRABHAT SAHA FOR GIVING ME AN OPPORTUNITY TO

DO THE PROJECT WORK ON “DOCTRINE OF EXHAUSTION IN INDIA” AND I AM
EXTREMELY GRATEFUL TO HIM, OUR SUBJECT TEACHER FOR PROVIDING ALL
THE SUPPORT AND GUIDANCE.
 TABLE OF CASES

 FRANCIS DAY AND HUNTER LTD. V. BRON (1963)2 ALL ER 16

 NOVELLA V. LUDLOW (1952)12 CB 177
 JOHN WILEY AND SONS INC. AND ORS. V. PRABHAT CHANDRA KUMAR
JAIN, 2010(44) PTC 675 (DEL)
 1. INTRODUCTION

In every intellectual property law it is necessary to decide which steps in a chain of

production and distribution requires the licence of the right owner: manufacturer, first sale,
subsequent sales and other dealings, exports and imports, uses etc.1 the exhaustion or first
sale doctrine implies that once the owner of intellectual property has parted with the title to a
copy of his creation, the buyer is under no obligation to negotiate with him for the
subsequent sale or transfer of the copy. 2 In other words, usually it is considered that the rights
of the intellectual property owner are exhausted after first sale by him or with his consent.

This principle that once a copy is sold that copy can freely move anywhere is commonly
known as international exhaustion. If this doctrine is confined to first sales within the
territory of the country granting intellectual property, it is known as national exhaustion. In a
nation that follows national exhaustion, owner of intellectual right enjoys the right to prohibit
the importation of the work/ product into its territory. Internationally this right is left open
and countries are free to take the decisions based on the domestic requirements.

It is well established principle stated in section 16 of the Copyright Act that the copyright is
confined to the rights specifically mentioned in the Act. If one examines section 14 of the
Act, he could see that even today there is no express provision recognizing right of export or
import.

This assignment covers the rights of owner and licensee of the copyright, the doctrine of
exhaustion as applied in Indian context, exhaustion under patent and trademark law,
aftermaths of the Amendment Act, 2012 in relation to the exhaustion principle etc.,

2. EXHAUSTION UNDER TRADE MARK AND PATENT LAW

 Sec. 30 (3) of the Trade Marks Act, 1999 recognizes the principle of national as well as
international exhaustion.

Where 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) the registered trade mark having been assigned by the registered proprietor to some other
person, after the acquisition of those goods; or

1
W.R. Cornish, Intellectual Property Law (4th Edn., Sweet & Maxwell) 41
2
Paul Goldstein, International Copyright: Principles, Law and Practice (OUP 2001)306.
(b) the goods having been put on the market under the registered trade mark by the proprietor or
with his consent.

 In the context of the Patents Act, 1970, Sec. 107A (b) has been ambiguously worded and
it expressly recognizes the principle of international exhaustion.

Importation of patented products by any person from a person [who is duly authorized under the
law to produce and sell or distribute the product],

3. EXHAUSTION UNDER INDIAN COPYRIGHT LAW

Section 14 of the copyright act

Meaning of copyright -For the purposes of this Act, “copyright” means the exclusive right
subject to the provisions of this Act, to do or authorize the doing of any of the following acts in
respect of a work or any substantial part thereof, namely-

(a) in the case of a literary, dramatic or musical work, not being a computer programme -

(i) to reproduce the work in any material form including the storing of it in any medium by
electronic means;

(ii) to issue copies of the work to the public not being copies already in circulation;

(iii) to perform the work in public, or communicate it to the public;

(iv) to make any cinematograph film or sound recording in respect of the work;

(v) to make any translation of the work;

(vi) to make any adaptation of the work;

(vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in
relation to the work in sub-clauses (i) to (vi);

(b) in the case of a computer programme,

(i) to do any of the acts specified in clause (a); to sell or give on commercial rental or offer for
sale or for commercial rental any copy of the computer programme;

Provided that such commercial rental does not apply in respect of computer programmes where
the programme itself is not the essential object of the rental.

(c) in the case of an artistic work,

(i) to reproduce the work in any material form including depiction in three dimensions of a two-
dimensional work or in two dimensions of a three-dimensional work;

(ii) to communicate the work to the public;

(iii) to issue copies of the work to the public not being copies already in circulation;

(iv) to include the work in any cinematograph film;

(v) to make any adaptation of the work;

(vi) to do in relation to an adaptation of the work any of the acts specified in relation to the work
in sub-clauses (i) to (iv);

(d) in the case of a cinematograph film,

(i) to make a copy of the film including a photograph of any image forming part thereof;

(ii) to sell or give on hire or offer for sale or hire, any copy of the film, regardless of whether
such copy has been sold or given on hire on earlier occasions;

(iii) to communicate the film to the public;

(e) in the case of a sound recording,

(i) to make any other sound recording embodying it;

(ii) to sell or give on hire, or offer for sale or hire, any copy of the sound recording, regardless of
whether such copy has been sold or given on hire on earlier occasions;

(iii) to communicate the sound recording to the public.

Explanation. - For the purposes of this section, a copy which has been sold once shall be deemed
to be a copy already in circulation.

4. WHAT DOES THE TERM REPRODUCE MEANS?

In Francis Day and hunter Ltd. V. Bron3, court observed the following-

1. In order to constitute reproduction, there must be both enough objective similarity

between the two works and some causal connection between the work infringed and the
infringer’s work, namely it must be proper to infer derivation of the latter from the
former.
2. The existence of both these elements is a question of fact, similarity being an objective
issue, and causal connection being a subjective question, but not to be presumed as a

3
(1963)2 All ER 16
 matter of law merely from proof of possible access by the alleged infringer to the
copyright work.

 Reproduction rights in relation to different classes of works

Reproduction has different meaning in relation to different classes of works. In case of literary,
dramatic and musical work, it means the reproduction of the work in any material form including
the storing of it in any medium by any electronic means. This would include making a sound
recording, a cinematograph film of the work and copies by the digital process. In case of artistic
work, it means reproduction in material form and includes the storing of the work in any electronic
or other means or depiction in three dimensions of a two-dimensional work or depiction in two
dimensions of a three-dimensional work.

 What is the meaning of the expression “to issue copies “mean?

The expression issue copies “mean publication as defined in section 3 of the act it says hat for the
purpose of this act, “publication means making a work available to the public by issues of copies
or by communicating the work to the public.

 Right to issue of work to the public

Under section 14(a)(ii) the owner of the copyright has the right to issue copies of the work to the
public not being copies already in circulation.

 Copy already in circulation means –

1. A copy of any work which has been sold is deemed to be a copy already in
circulation.
2. Any reference to sub-section (1) to the doing of any act in relation to a work or a
translation or an adaptation thereof shall include a reference to the doing of that act
in relation to substantial part thereof.

If any person other than copyright owner issues the work to the public without consent
or authority of the owner than he has infringed the right of copyright owner. But if the
owner has validly issued to the public, the subsequent publication of those copies shall
not infringe the right of the owner because in the case of copies already sold or in
circulation there can be no restriction in re-issuing those copies to the public by a person
who has acquired them by purchasing it.
 In Novella v. Ludlow4, the court has held that mere presentation of copies to
individuals, or to a limited class, or even the sending of advance copies to the press for
review is not publication.

5. SECTION 51 OF THE COPYRIGHT ACT

When copyright infringed. Copyright in a work shall be deemed to be infringed—

(a) when any person, without a license granted by the owner of the copyright or the Registrar of
Copyrights under this Act or in contravention of the conditions of a license so granted or of any
condition imposed by a competent authority under this Act—

(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the
copyright, or

(ii) permits for profit any place to be used for the communication of the work to the public where
such communication constitutes an infringement of the copyright in the work, unless he was not
aware and had no reasonable ground for believing that such communication to the public would
be an infringement of copyright; or permits for profit any place to be used for the communication
of the work to the public where such communication constitutes an infringement of the copyright
in the work, unless he was not aware and had no reasonable ground for believing that such
communication to the public would be an infringement of copyright; or,

(b) when any person—

(i) makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or
hire, or

(ii) distributes either for the purpose of trade or to such an extent as to affect prejudicially the
owner of the copyright, or

(iii) by way of trade exhibits in public, or

(iv) imports into India, into India," any infringing copies of the work [Provided that nothing in
sub-clause (iv) shall apply to the import of one copy of any work, for the private and domestic
use of the importer.]

Explanation. -For the purposes of this section, the reproduction of a literary, dramatic, musical
or artistic work in the form of a cinematograph film shall be deemed to be an “infringing copy”.

4
(1952)12 CB 177
 6. COPYRIGHT AND RELATED RIGHTS
 Article9
Relation to the Berne Convention

1. Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the
Appendix thereto. However, Members shall not have rights or obligations under this Agreement
in respect of the rights conferred under Article 6bis of that Convention or of the rights derived
therefrom.

2. Copyright protection shall extend to expressions and not to ideas, procedures, methods of
operation or mathematical concepts as such.

 Article10
Computer Programs and Compilations of Data

1. Computer programs, whether in source or object code, shall be protected as literary works under
the Berne Convention (1971).

2. Compilations of data or other material, whether in machine readable or other form, which by
reason of the selection or arrangement of their contents constitute intellectual creations shall be
protected as such. Such protection, which shall not extend to the data or material itself, shall be
without prejudice to any copyright subsisting in the data or material itself.

 Article11
Rental Rights

In respect of at least computer programs and cinematographic works, a Member shall provide
authors and their successors in title the right to authorize or to prohibit the commercial rental to
the public of originals or copies of their copyright works. A Member shall be excepted from this
obligation in respect of cinematographic works unless such rental has led to widespread copying
of such works which is materially impairing the exclusive right of reproduction conferred in that
Member on authors and their successors in title. In respect of computer programs, this obligation
does not apply to rentals where the program itself is not the essential object of the rental.
 7. JUDICIAL APPROACH

John wiley and sons Inc. and Ors. V. Prabhat Chandra Kumar Jain5

Facts- the plaintiff claimed infringement of their copyright by the defendant. The defendant sold
the plaintiff’s low-price edition books meant for sale in countries like India, Bangladesh, Nepal,
Pakistan, Sri Lanka Indonesia, Myanmar, Philippines and Vietnam in other countries/ territories.

The plaintiff’s main argument was that an attempt by anyone to sell, distribute or circulate the
books outside the territories prescribed by the owners of the copyright shall cause infringement of
the copyright. The defendant’s exporting the reprint edition meant for Indian and neighboring
territories to the western countries was the cause of plaintiff’s grievance. The plaintiff accordingly
filed a suit for the injunction. However, the defendant who sold online these LPE books in western
countries claimed that there was no act or covert act on their part which is actionable within the
meaning of copyright act, 1957. They further claimed the exhaustion of the rights, whereby the
rights of the copyright holder are lost once the first sale of the article is affected i.e., the owner’s
control over the article and rights therein are exhausted on the first sale and he/she can not control
every subsequent sale by enforcing rights over the same. The defendant also argued that while
import is considered in section 51 and section 2(m) which talks about infringing copies of an
article, export is not included and hence cannot be read into it.

Issue- was there any infringement?

Decision- Delhi high court while dealing with first sale doctrine and its impact observed that US,
by virtue of its laws, follows international exhaustion principle, where once copyright owner places
his product in the market, he loses his right to restrict or exercise domain or control over the copy,
anywhere globally. The UK and EU countries, on the other hand follows the regional exhaustion
principle which means that once an intellectual property owner places his product in the market,
in any EU country, he loses the right to exercise his control within the EU market. However, he
preserves the right to place restrictions on the use and further commerce in the product, outside
the Eu countries.

5
2010(44) PTC 675 (Del)
It was therefore held that since, express provisions for the international exhaustion is absent in our
Indian law, it would be appropriate to confine its applicability to regional exhaustion.

It was further observed by the court in para 106 thus:

“the owner has full right to enjoy the property and if the property is purchased from the owner
only then will the owner loses his right. The same is applicable in the present case. The purchaser
after purchasing from the exercise licensee cannot by claiming the principle of exhaustion or
extinguishment of rights defeats the rights of the owner. This is the only harmonious interpretation
possible by invocation of doctrine of first sale in the present case. The court therefore held that
defendant infringed the plaintiff’s copyright.

Critics- the john wiley judgment given by the Delhi high court has been critically evaluated in an
article by Prof. Ashwani Kumar Bansal published in Journal of Law Teachers of India, 2012,
volume 2. Which is as follows-

1. Copyright law of no country mingles in export of copyright content. In the same way
copyright act, 1957 of India does not have any provision dealing with export of any
product incorporating copyright content. The export of any copyright content product
cannot be infringement of copyright if the work is legally available in country of export.
Such export does not tinker with any of the rights granted in section 14 and 51 of the Act.
Export from India of copyrighted products even without the consent of the copyright
owner is perfectly legal.
2. International exhaustion is followed in India or not would be relevant only in case of
imports in India and it is just not relevant in relation to exports.
3. If the conduct of the bulk buyer in India conflicts with the stipulations made by the
publisher on the book’s cover or page(ii) known as the copyright page such a condition is
not to be enforced by the local courts under the copyright act. Such conditions are are
applicable only on licensees or traders who are a part of supply chain as part of their
contract. These stipulations for market segmentation do not have backing of laws. Page
(ii) stipulations cannot be treated as conditions on a buyer buying the books, it may be the
declaration of the intent of the publisher/ producer. Even if buyer was given books on
express understanding that he would use the books as per the concerned stipulation, still
refusal to follow such a condition would either be valid or at best be a breach of the
 condition of the contract between seller and buyer of the books without any implication
of the copyright act.
4. The movement of validly issued books in India including exports cannot be controlled by
any provision in the copyright law.
5. The conditions under section 14 have to be normal conditions considered fair and
reasonable in the market, business/circles and acceptable to users as per tradition or
convention. Many conditions, e.g., tied purchase, restricting sale to certain parties or other
profit maximization strategies including resale price maintenance will not be permitted
under section 14.
6. Once the licensee issues the copies in the market, such copies are issued by, for and on
behalf of copyright owner.
 8. CONCLUSION-

The principle of exhaustion is an established international legal doctrine. It provides that a

copyright owner’s right to control copies of their work “exhausts” on its first sale by the
copyright owner or with their consent. The principle prevents the copyright owner’s right to
control copies of their work from extending beyond the point at which they receive reasonable
remuneration for the copy. Further, it allows the purchaser to have control over their copy,
including the right to resell it free from interference by the copyright owner.

In Indian scenario though, there is no express provision regarding the validity of international
exhaustion it can’t be said that in India there exists only regional exhaustion. After the judgment
of the Delhi HC in john Wiley’s case, a regional principle was recognized but subsequently it fell
into the several critics. Hence in India it can be said that the principle of international exhaustion
is not prohibited and to exclude the confusion and the duality of the views a verdict of the apex
court is needed.
 BIBLIOGRAPHY/ REFERENCES

BOOKS:

 N.S. GOPALAKRISHNAN & T.G. AGITHA, PRINCIPLES OF INTELLECTUAL

PROPERTY, EASTERN BOOK COMPANY, LUCKNOW, 2014
 V.K. AHUJA, LAW RELATING TO INTELLECTUAL PROPERTY RIGHTS, LEXIS
NEXIS BUTTERWORTHS, NEW DELHI, 2007
 P. NARAYANAN, LAW OF COPYRIGHTS AND INDUSTRIAL DESIGNS,
EASTERN LAW HOUSE, KOLKATA, 2002
 DR. R.G. CHATURVEDI, SANJAY UPADHYAY, THE COPYRIGHT ACT, 1957,
BUTTERWORTHS INDIA, NEW DELHI, 6TH EDITION, 2000

INTERNET SOURCES:

 https://www.iilsindia.com/blogs/2017/07/05/doctrine-of-first-sale-in-copyright-law/
 https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_property_rights
 https://en.wikipedia.org/wiki/Kirtsaeng_v._John_Wiley_%26_Sons,_Inc.
 https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S._law
 http://copyright.lawmatters.in/2011/02/what-is-international-exhaustion.html
 https://spicyip.com/2010/05/guest-post-exhaustion-and-copyright-law.html
 https://blog.scconline.com/post/2016/09/22/section-14a-of-copyright-act-1957-cannot-be-
interpreted-to-mean-that-the-right-of-producer-of-sound-recording-to-communicate-his-
work-to-the-public-under-section-14eiii-of-the-act-is-lost/
 http://www.ip-watch.org/2013/01/22/development-in-indian-ip-law-the-copyright-
amendment-act-2012/