The precept of international exhaustion of intellectual property rights and the parallel importation following from it have been a contentious issue in worldwide trade.
Notably, the so-referred to as terms “parallel imports” and “exhaustion” have now not been expressly used in the Patents Act, 1970 (amended act). However, section 107A(b) of the act exempts certain acts associated with the import of patented products by way of any character from a person duly authorized below the law to produce and sell or distribute the product from being considered to be an infringement of the patent. Section 107A was introduced within the current act by using way of Patents (Amendment) Act, 2002, and became ultimately amended via manner of the Patents (Amendment) Act, 2005.
While section 107A(b) affords safety against patent infringement, an appropriate contour of this provision nevertheless remain uncertain. The provision, however, has no longer been difficulty to judicial scrutiny and there’s no case law in this area.
At first blush, it can seem that this provision refers to worldwide exhaustion or unauthorized parallel imports. But an evaluation of the principles of harmonious statutory interpretation and the pertinent legislative debates at the Patents Act (2005) coupled with the lack of a sturdy and unambiguous precedent recognizing worldwide exhaustion seems to sway the popular assumption the other way.
The doctrine of exhaustion of patent rights became these days addressed inside the instances of Koninklijke Philips Electronics NV v Rajesh Bansal, and Koninklijke Philips NV v Bhagirathi Electronics and Ors regarding infringement of well-known vital patents (SEP). Philips had filed the 2 fits alleging infringement of its crucial DVD video participant patent.
In determining the difficulty of infringement in favor of the plaintiff, Delhi High Court dismissed the alternative defense raised via the defendants that the plaintiff’s patent rights could not be exercised against them at the not unusual law doctrine of exhaustion because the plaintiff had already placed its product within the market. The defendants claimed that they assembled DVD gamers with chips purchased from buying and selling enterprise Shun Tak (Hong Kong) and Steenland Corporation, both of which had been legal vendors and for this reason have been now not liable for infringement.

The court, but rejected their plea and held that the defendants didn’t dis-fee the onus of proving that both Shun Tak and Steenland were the licensees of the plaintiff. The courtroom rejected the entire plea that they have been using MediaTek chips and conserving that it had neither been validated that MediaTek become plaintiff’s licensee nor that the hardware offered to them by using MediaTek become pursuant to a license.
However, an interesting question to remember is whether or not the judgment makes a clear difference between the “licensee” and “vendor” as the court clearly considered the definition of the time period “extraordinary license” determined in phase 2(1)(f) of the act for this purpose. The court docket, consequently, overlooked the possibility to address the overall scope of the exhaustion argument.
Another exciting component of the case would be if the court docket were faced with a scenario in which the defendants had put forward a powerful argument of being bona fide purchasers from the vendors or providers who had been legal underneath a foreign law to sell or distribute the impugned product, however had no permission to promote in India from the Indian patentee.
The issue of the applicability of segment 107A(b) defense became formerly addressed in the case of Strix Limited v Maharaja Appliances Limited, in which the defendant took a defense that it imported the impugned product (electrically powered kettles) from a Chinese supplier, who held a patent. However, inside the absence of well-timed evidence, the courtroom rejected the applicability of the defense staring at that the defendant becomes expected to import a product after first checking if the Chinese supplier held a legitimate patent or no longer. Unfortunately, the question whether the factum of life of a Chinese patent could have indeed legally justified the importation below the provisions of section 107A(b) changed into left unclarified inside the decision.
Section 107A(b) is particularly relevant and it is was hoping that a becoming case involving its interpretation will come up within the higher courts, offering relevant and thrilling jurisprudence at the issues involved.

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