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Rights under Parallel Importation

Parallel import is one of the most -‘iridescent and enigmatic phenomenon’- of international trade.[1] The term parallel importation refers to the production of goods that are first legally sold and then subsequently exported.


'Grey marketing or grey goods' is another way of describing this practice, which suggests some uncertainty about its legality. The products are original and initially placed on the market by or with the authorization of the manufacturer, and in that sense; there is nothing grey about the goods.[2] Nevertheless, they are subsequently exported.


There is an element of rising competitive practice existing under parallel importation, which results in motivating the traders to compete in the market and provide more varieties and alternatives to the consumers.[3]


However, manufacturers might face difficulties in situations where the prices differ in different regions, but this could be executed with mutual consideration as being done by the European Union.[4] Parallel importation also assists the manufacturers in some manner or other. The importer, generally speaking, customarily works as a distributor to the manufacturing company, and even intentionally or unintentionally, promotes the quality of the product and Intellectual Property of the manufacturing Company.


It is also quite interesting to observe the relation, which takes place between IP laws and parallel importation. Parallel Imports create a significant barrier for the trademark owner to claim trademark infringement as the owner loses all his rights over the product as soon as the product is sold in the market. Interestingly, this practice does not cover copyright under certain circumstances, as it was observed by the American Ninth Circuit Court that “Parallel Imports does not apply to copyright works manufactured and first sold Overseas”. [5]


It did not take long for manufacturers to take notice of this gap. They were able to recognize that Parallel Importation can operate differently in different segments of the Intellectual Property system.[6] This scenario of using copyright infringement instead of the trademark is quite explicit in numerous cases. [7]


The illegal usage of copyright in parallel importation by manufacturers occurs more frequently than anticipated. This practice needs to be curbed and must be given due attention by the authorities as there are instances where the courts are unable to distinguish between the purposes of Copyright and Trademark law, resulting in the exploitation of IP law.

Hence, in conclusion, it would suffice to suggest that the concerned authorities must notice this unfair practice. Such inter-changing usage of IP laws not only hampers the reputation of the traders, but it also harms the right of the society at large.


I would further like to recommend that Countries can take the example of the European Union which is almost on the verge of framing a system under which the prices of virtually all pharmaceutical products will be the same.[8] By following this, States could make sure that parallel importation does not hamper anybody's right. Other international organizations must also consider such an approach. It would further result not only in providing benefit to the consumer and the manufacturer, but will also help in the development of trade between nations.

REFERENCES:


  1. Christopher Heath, Parallel Imports and International Trade, Kluwer Law International 2004 <http://www.wipo.int/edocs/mdocs/sme/en/atrip_gva_99/atrip_gva_99_6.pdf> accessed in September 2019.

  2. [1996] RPC 441

  3. Darren E. Donnelly, Parallel Trade and International Harmonization of the Exhaustion of Rights Doctrine, (1997) 13 Santa Clara High Tech. LJ 445 <: http://digitalcommons.law.scu.edu/chtlj/vol13/iss2/4>accessed in October 2019.

  4. Dmitry A. Kuptsov, Parallel Trade in the European Union: Competition Law Aspects, (Lund University, 2013)

  5. Omega SA v. Costco Wholesale Corp Case Nos. 11-57137, 12-56342 (9th Cir. Jan. 20, 2015)

  6. Robert Tomkowicz, Intellectual Property Overlaps Theory, Strategies, and Solutions (Routledge 2012) 149.

  7. Omega SA v. Costco Wholesale Corp, (9th Cir. Jan. 20, 2015), Kraft Canada v. Euro Excellence 2007 SCC 37, [2007] 3 SCR 20.

  8. Gianni De Stefano and Hein Van Den Bos; The European Commission Is Considering Opening an Antitrust Probe for Parallel Imports in the Pharmaceutical Sector, HOGAN LOVELLS, FOCUS ON REGULATION, (2018)<https://www.hlregulation.com/2018/05/17/the-european-commission-is-considering-opening-an-antitrust-probe-for-parallel-imports-in-the-pharmaceutical-sector/> accessed on 30 Oct 2019.

ABOUT THE AUTHOR:


Arpit Vihaan is a Law Graduate of the 2018 batch of Dr. RMNLU. He pursued his Masters in Law from O.P. Jindal Global University, Sonipat. (2019)

You can contact him: https://www.linkedin.com/in/arpit-vihan-78512117b/

Edited by Drishti Saxena

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