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India: Parallel Imports Are Legitimate

In another twist to the ‘parallel imports’ saga, the Central Board of Excise and Customs (CBEC) has issued a circular dated May 8 2012 that aimed to dispel the uncertainty resulting from the conflicting views that emerged from the Samsung and Dell cases in relation to the import of genuine goods procured without the consent of the registered trademark owner.

The circular clears the decks for the free movement of parallel-imported goods in India, stating that they are genuine goods that are allowed under the Trademarks Act 1999. The Customs Department, which comes under the Ministry of Finance, sought clarification from the Department of Industrial Policy and Promotion (DIPP), which comes under the Ministry of Commerce (the entity responsible for operational and policy matters in relation to the Trademark and Patent Office), and the latter seems to have interpreted the relevant section of the Trademark Act as meaning that parallel imports are allowed, in sharp contradiction to the ruling in Samsung.

The main points that emerge from the circular are as follows:

  • When deciding whether a particular consignment of imported goods infringes the rights of an IP rights owner, the Trademarks Act 1999, the Designs Act 2000, the Patents Act 1970, the Geographical Indication of Goods Act 1999 and the Copyright Act 1957 are to be taken into consideration.
  • These acts are broad and do not exclusively deal with imported goods. Therefore, only those provisions which have been expressly mentioned in the Intellectual Property (Imported Goods) Enforcement Rules 2007 and subsequent notifications are to be taken into consideration. In this regard, the provisions of the Trademarks Act that are mentioned in the 2007 Rules are Sections 102 (goods bearing a false trademark) and 2(i) (goods bearing a false trade description). Therefore, consignments can be seized only if the conditions under either of these two provisions are satisfied.
  • In its comments on the issue of parallel importation, the DIPP – the nodal authority with regard to all matters pertaining to the Trademarks Act, the Designs Act and the Patent Act – has held that Section 107A(b) of the Patent Act allows parallel imports in relation to patents. In addition, Section 30(3) of the Trademarks Act provides for the principle of international exhaustion of rights, and suggests that parallel imports are allowed as long as the goods are genuine and have not been materially altered or impaired. In relation to designs, parallel imports are expressly prohibited under Section 22 (1)(b) of the Design Act.
  • Field officers should follow the above principles when deciding whether a particular consignment is to be stopped or released.

The circular brings clarity as to Customs’ position on parallel imports, highlighting that the authorities will no longer stop such consignments. However, this does not augur well for brand owners, who might argue that parallel imports render locally-produced goods less attractive from a price point of view. Encouraging parallel imports seems counterproductive, as local manufacturing generates employment and taxes. In addition, imported products do not take into account local preferences and demand, and do not carry warranty.

In terms of enforcing IP rights, the circular should thus make the situation more difficult for brand owners: they will need to monitor parallel imports and gather intelligence at the market level to seek redress from the courts on the basis of the Samsung ruling.

Originally published in World Trademark Review May 24 2012

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Original article here: http://www.mondaq.com/india/x/208942/Trademark/Customs+Circular+Parallel+Imports+Are+Legitimate

Parallel imports industry in Australia

If your business sells parallel imports in Australia you must be aware of and understand your obligations to consumers.

What are parallel imports?

Parallel importing, also known as grey or direct importing, occurs if your business sells products directly to consumers or businesses in Australia outside of the formal manufacturer distribution channels. That is, when your business decides to buy genuine products to import and sell in Australia without authorisation from the manufacturer.

The following indicators may suggest that the product your business intends to sell is a parallel import:

  • it has been purchased from a supplier other than the manufacturer or its authorised distributor
  • the particular model/range is not made for the Australian market
  • the product is not otherwise available in the Australian market
  • the price you intend to sell it for is cheaper than a consumer would ordinarily expect to pay for the product in Australia
  • the product is refurbished rather than brand new.

Example: Cheep Wines sources its wines from a well-known supplier who is based in France. The French supplier is only authorised to sell these wines in the French market. Cheep Wines sells the wine online to Australian consumers. Cheep Wines has not been authorised by the original manufacturer as the supplier of the wines in Australia, therefore any wine sold by Cheep Wines would be parallel imports.

Your obligations as a seller of parallel imports

You need to:

  • be aware of, and comply with, product safety and labelling requirements
  • provide accurate information to consumers about the products you sell
  • ensure that you do not mislead consumers about their refund, return and warranty rights, and
  • understand your general obligations under the Australian Consumer Law (ACL) when selling these products.

You may also want to establish a formal record keeping system (compliance system) to ensure you are meeting your obligations and can appropriately address any consumer concerns or complaints.

ACCC view of parallel imports

The ACCC recognises the potential benefit to consumers of access to parallel imports which may be cheaper or otherwise not available in Australia. However, consumers may sometimes be disadvantaged when purchasing parallel imports as opposed to purchasing the same products from an Australian authorised supplier. This is particularly the case if they experience problems with these products.

Refunds, returns and warranties

When you sell parallel imported products to Australian consumers, you will be responsible if something goes wrong with these products. For example, if a product develops a fault, you will be responsible for addressing the problem including providing a repair, replacement or refund within a reasonable time under the consumer guarantee provisions of the ACL.

You will be responsible for providing an appropriate remedy, not only as a supplier of the product but also potentially as the deemed manufacturer/distributor, placing additional responsibilities on you. There is no obligation on the local manufacturer or authorised distributor as they will not be considered connected to the supply of the products in Australia.

Example: Krazy Electronics sells parallel imported Apel tablets online to Australian consumers. Krazy Electronics has not been authorised by the original manufacturer as the supplier of these tablets in Australia. Susie buys an Apel tablet from Krazy Electronics and after three months the tablet won’t switch on. Krazy Electronics would be responsible for providing Susie with a remedy under the ACL consumer guarantee provisions. There is no obligation on Apel Australia (the local manufacturer) to provide Susie with a remedy, product support or spare parts.

It’s also important to remember that as the person who sells the products in Australia you not only have obligations to consumers but also to other businesses who have on-sold products, purchased directly from you, to consumers.

See: Fixing something that is the manufacturer’s fault

Tips for good business practice
  • Make it clear upfront that the product you are selling is a parallel import.
  • Highlight that the manufacturer’s warranty may not apply in Australia, or depending on the terms and conditions may not apply to products sold as parallel imports – if this is the case ensure customers understand they may still be protected under the ACL consumer guarantees if something goes wrong.
  • Consider honouring the manufacturer’s warranty – happy customers are good for business.
  • Point out that the local manufacturer of the product is not obliged to provide any product/technical support or repair/spare part facilities in Australia for that particular product (unless there is a specific agreement in place). This will be your responsibility.
  • Where relevant, highlight that the product may be different to the typical Australian model/range, such as not be adapted for the local environment in Australia (an example of this could be software that is not configured for the Australian market).

 

Original article here: https://www.accc.gov.au/business/treating-customers-fairly/selling-parallel-imports

Parallel Imports permitted on patented products in Singapore

Parallel importation refers to the import of goods outside the distribution channels contractually negotiated by the manufacturer. Because the manufacturer/IP owner has no contractual connection with a parallel importer, the imported goods are sometimes referred to as “grey market goods”. This desciption in fact is somewhat misleading, as the goods as such are original, being manufactured by the owner of the IP rights or its licensee, but the distribution channel in which the goods are sold are not controlled by the manufacturer/IP owner[1].

There are two primary reasons why parallel importation occurs. The first reason is that different versions of a product are produced for sale in different markets. The second reason is that companies, either the manufacturer or the distributor, set different price points for their products in different markets. Parallel importers ordinarily purchase products in one country at a price lower than the price in which the products are sold in the second country. Parallel importers will then import the products into the second country and sell the products at a price between the prices offered in the first and the second country.

Singapore can be said to view parallel imports favorably. There are in fact three provisions under the Singapore Patents Act (“the Act”) that deal with parallel imports, namely, Sections 66(2)(g), which applies to any patented invention other than a pharmaceutical product, and 66(2)(i) and 66(3), which both apply to pharmaceutical products.

Section 66(2)(g) of the Act provides as follows:

“An act which, apart from this subsection, would constitute an infringement of a patent for an invention shall not be so if it consists of the import, use or disposal of, or the offer to dispose of, any patented product or any product obtained by means of a patented process or to which a patented process has been applied, which is produced by or with the consent (conditional or otherwise) of the proprietor of the patent or any person licensed by him, and for this purpose “patent” includes a patent granted in any country outside Singapore in respect of the same or substantially the same invention as that for which a patent is granted under this Act and “patented product”, “patented process” and “licensed” shall be construed accordingly.”

The legislation thereby puts into practice the exhaustion of rights principle, where the intellectual property rights of commercial exploitation over a given product are considered exhausted once the product has been sold by their rights owner or with his consent in any part of the world. The exhaustion here refers to one of the limits of intellectual property rights. This limitation is also called the “first sale doctrine”, in which the rights of commercial exploitation for a given product end with the product’s first sale. Subsequent acts of resale, rental, lending or other forms of commercial use by third parties can no longer be controlled or opposed by the proprietor.

Three (3) features about the principle of exhaustion of patent rights in Singapore are worth noting.

First, importation is permitted even if the proprietor of the patent in Singapore is different from the proprietor of the patent in the country of manufacture. For example, an inventor X obtains a patent for his invention in Singapore and in Malaysia. Then X assigns his rights in Malaysia to Y. The products made by Y, which are indeed genuine products, can be legally imported to Singapore without X having to stop or oppose to the importation.

Secondly, “use” of a patented process in Singapore will constitute a patent infringement as Section 66(2)(g) of the Act only covers importation of a patented product, or a product obtained by means of a patented process or to which a patented process has been applied and not the “use” of the patented process.

Lastly, for the purposes of determining if the product was produced by or with the consent of the proprietor of the patent, any condition imposed by him restricting the resale of the product outside the territory of manufacture/first sale must be disregarded. This is called the “deemed consent” concept. For example, a product in Malaysia having a label “Not for sale outside Malaysia” cannot prevent the importation of this product into Singapore. Accordingly, if the proprietor grants a license to a party in Malaysia to make and sell the product only in Malaysia, the proprietor is nonetheless deemed to have given his consent to the making of any product made by this licensee in spite of such a condition.2

Hence, under section 66(2)(g) of the Act, it is not an act of infringement if a patented product, or a product that is obtained by means of a patented process or to which a patented process has been applied, is imported to Singapore so long as it the product concerned was produced by or with the consent (conditional or otherwise) of the proprietor of the patent or any person licensed by him.

In summary, the policy reasons for allowing parallel importation of patented product is based on the principle that parallel imported products are genuine products and that the public Singapore should benefit from competition and the lower prices resulting from the availability of parallel imports.

[1] From WIPO website (http://www.wipo.int)

[2] Law of Intellectual Property of Singapore

Original article here: https://www.mirandah.com/pressroom/item/82-parallel-imports-permitted-on-patented-products-in-singapore/