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Parallel Imports

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3 views2 pages

Parallel Imports

Uploaded by

raghav sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PARALLEL IMPORTS

It is provided by the Indian legislature in clause (b) of Section 107 A of the Patents Act, 1970 which is:

"(b) 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]."

Section 107 A (b) of the Patents Act, 1970 is based on the concept of "Doctrine of Exhaustion"
enshrined in the Trade-Related Aspects of Intellectual Property Rights (TRIPS). We shall now discuss
the very aspect of this doctrine and parallel importation and their importance in the Indian Patent
Legislature:

Doctrine of Exhaustion

Doctrine of Exhaustion is defined as exhaustion of patentee's right after first sale of the patented
product. It means once the patentee has sold out his patented product, he cannot regulate its
movement after sale i.e., he cannot regulate its re-sale and redistribution of the sold patented
product as he has already exhausted his exclusive right vested in him. The patented product covered
under this doctrine broadly includes all the patented processes, or the product obtained using
patented process.

The Application of the doctrine of Exhaustion varies from countries to countries. It is because some
countries have adopted "international exhaustion", and some other countries have adopted either
"national exhaustion" or "regional exhaustion"

 National Exhaustion: Rights are exhausted only within the country of sale. Parallel imports
are not allowed.
 Regional Exhaustion: Rights are exhausted within a group of countries (e.g., European
Union).
 International Exhaustion: Rights are exhausted worldwide once sold by the patent holder.
Parallel imports are allowed.

The Indian legislature has not clarified the kind of exhaustion it has adopted by laying down the
clause of parallel importation.

Position in India

Section 48 of the Indian Patent Act confers upon the patentee the exclusive right to prevent third
parties from the act of making, using, selling or importing that product in India if the subject matter
of the patent is a product.

However, Section 107 A(b) of the Patents Act, states that 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 do not constitute an act of infringement.

There is not much judicial precedents in India regarding Section 107 A (b) of the Patents Act. The
expression "duly authorized under the law" is therefore subjected to various interpretations.

The said ambiguity was clarified by India in a trade policy review of India dated 14 September 2011
and 16 September 2011 undertook by the WTO. In the review meeting, Brazil and Japan raised the
question of parallel imports, international exhaustion regimen in India and also questions the law of
which country is being referred to in "duly authorized under the law". India replied:
Section 107A (b) allows parallel import of a patented product legally sold abroad with the patent
holder’s consent.

This means we follow the principle of international exhaustion.

Permissible: If the product is sold abroad with the authorization of the patent holder.
Not permissible: If the sale abroad was unauthorized or in violation of licensing terms.

Example: A pharmaceutical company holds a patent on a drug in both the US and India. It sells the
drug in the US at a lower price. An Indian importer buys the drug in the US and brings it to India to
sell. This is a parallel import, and under Indian law, it is generally legal if the US sale was authorized
by the patent holder.

Conclusion:

Prior to 2005 amendment, the third party could import only from a person "duly authorized by the
patentee" to manufacture and sell the product. With the 2005 amendment, any person can import
from a person duly authorized under the law without any authorization of the patentee. Since 107 A
(b) does not explicitly define the phrase "duly authorized under the law." It is believed that Section
107 (b) should be read in conjunction with Section 107 A (a) which clearly indicates that Indian
legislature follow International Exhaustion. The said is also evident from the WIPO's Questionnaire6
on Exceptions and Limitations to Patent Rights in relation to the Patent law in India, provided by the
Indian Patent Office, wherein it was submitted that the policy objective of following international
exhaustion regimen under Section 107(A) (b) is to allow importation of patented products in the
country from such markets where the product has been placed in duly authorized manner. However,
a clear interpretation of the provision under Section 107 A (b) by the Indian Courts are much
desired.

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