Round 2 Champion

In a much awaited landmark judgment, a Division Bench of the Delhi High Court has cleared all the ambiguities with respect to the parallel imports in the recently pronounced ruling on October 3. The division bench in the case of Kapil Wadhwa, director, Champion Computers; v/s Samsung Electronics has given a ruling that parallel importation is authorized under Indian trademark laws and does not infringe the trademark of the rights-holder. The Bench of Justices Pradeep Nandrajog and Siddharth Mridul overruled the findings of a Single Judge, who had gone against Champion Computers in February 2012.

VERDICT BRINGS AFFIRMATION FOR IMPORTERS
The Division Bench verdict comes as a real shot in the arm for the parallel importer of IT hardware and peripherals. This verdict simplify and clear all the confusion, which have been misrepresented by the principal vendors like Samsung and Dell. In an immediate cascading effect in the market, Dell, another major IT brand owner had filed suits against parallel importers, issued nation-wide alerts and attempted to stop imports.
For the traders, this is an affirmation of the legality of their profession and therefore gave them immeasurable benefit of sustaining their livelihood, and also for their consumers, who will benefit from a free market which diversifies choice and increases price competition in genuine products.

THE BACKGROUND OF CASE
The suit was initially brought by Samsung Electronics and its Indian subsidiary Samsung India in June, 2011, against Champion Computers, under which it was claimed that the company was unauthorizedly selling Samsung printers imported directly from foreign markets into India. In the first order by the Single Judge held Champion Computers guilty of trademark violation.
In its detailed judgment, the Division Bench observed that the learned Single Judge had followed an ‘erroneous approach' to conclude that import of goods into India needed the consent of the registered trade mark owner.
It is to be noted that the case took a total of 32 hearing by the Single Bench and 14 hearings by division Bench; to have arrived to the conclusion. However, there are possibilities that Samsung may challenge this Division bench judgment in the Supreme Court.

INDIA SUPPORTS INTERNATIONAL
EXHAUSTION
This verdict has clearly resolved the bone of the contention which was creating confusion all the while. The simple question before the Division Bench was whether a reading of Sections 29 and 30 of the Trademarks Act, 1999 supports international exhaustion of rights (first sale anywhere in the world exhausts the trademark rights of the proprietor) or national exhaustion of rights (trademark rights of the proprietor are only exhausted on first sale in India.
In overruling Samsung's stand (which had been vindicated by the Single Judge in February 2012) the Division Bench unequivocally stated that India does not follow the policy of national exhaustion in its trademark statute, but it recognized the principle of international exhaustion under the Trade Marks Act, 1999.

BINDING FOR CHAMPION COMPUTERS
However, the court has instructed Champion Computers that they will not metatag or hyperlink their websites with Samsung's site; and they will carry prominent signage in their store for the benefit of customers, which signage will indicate that the product sold by them have been imported from abroad and that Samsung does not give any warranty on the quality of the goods and after sales service.
Speaking of the reversal, Wadhwa said, "The printers were being imported by us in due regard to all laws and policies, in the spirit of open and free trade. We are happy the Hon'ble Court has upheld our point of view and cleared the confusion and fear spread in the market by MNCs which were using trademark law as a tool to thwart competition and protect their own pricing and profit margins."
He further divulged his next plan of action and said, "It took us more than one and half years to get this judgment in our favor. This judgment is in the favor of consumers of India and the genuine importers who have been victimized by the principal company Samsung. Hence our next plan of action is to restart parallel import of Samsung printers as per the court judgment."

INDUSTRY REACTION
This much-awaited judgment has been a victory for the entire channel community. Puneet Singhal, president, Computer Media Traders Association(CMDA) Delhi, "We are happy with the judgment as it clears the stand on legitimacy of parallel import. Moreover, with this verdict, we will purse our case which was first bring to the notice by our association in 2007 against Samsung at the MRTP commission, which has been now renamed as competition forum. Our case has not been able to register as we were waiting for this landmark judgment to arrive."
Swarn Singh, joint secretary ADCTA added, "Ultimately, the judgment has to benefit the consumers. This decision will help consumers who are paying a premium of 30% or more for IT products purchased directly through brand owners in the name of warranty."