Kapil Wadhwa & Ors vs. Samsung Electronics Co. Ltd. & Anr1

Fact of the case

This is an appeal arising from IA No.10124/2011 filed by the appellants under Order XXXIX Rule 4 of the Code of Civil Procedure praying that the ex-parte ad-interim injunction granted be vacated and allowing IA No.7774/2011 filed by the respondents praying that during pendency of the suit, appellants be restrained from importing and selling printers and their ink cartridges/toners bearing the Trade Mark Samsung as also restraining appellants from using the Trade Mark Samsung in respect of promotional activities including website. The original defendant in the matter Kapil Wadwa (now Appellant) was accused by the respondents, Samsung Electronics Company Ltd. and Samsung India Electronics Pvt. Ltd., companies incorporated as per laws of Korea and India respectively; the latter being a subsidiary of the former of infringement of their trademark “SAMSUNG”. Respondents are a part of Samsung Group of Companies having 14 listed companies and 285 worldwide operations. The respondents manufacture and trade in electronic goods such as colour televisions, home appliances, washing machines, microwaves, airconditioners, computers, printers & cartridges etc. The business is done under the brandname/ corporatename using the Trade Mark SAMSUNG/Samsung. InIndia, the first respondent has licensed the use of the Trade Mark SAMSUNG/Samsung to the second respondent as per Trade Mark Agreement dated July 08, 2003 which has been filed for registration in the Trade Mark’s Registry.

The grievance of the respondents is that the appellants are purchasing, from the foreign market, printers manufactured and sold by respondent No.1 under the Trade Mark SAMSUNG/Samsung and after importing the same into India are selling the product in the Indian market under the Trade Mark SAMSUNG/Samsung and are thereby infringing the registered Trade Mark of the respondents in India. Respondents allege that the appellants operate their website by meta-tagging the same to the website of the respondents.

In the original case the Learned Single Judge held that the importing and selling of material in India is an infringement of the trademark of the owner and passed an injunction in favour of respondent.

Issue

  • Whether the Trade Marks Act 1999 embodies the International Exhaustion Principle or the National Exhaustion Principle when the registered proprietor of a Trade Mark places the goods in the market under the registered trade mark.
  • Whether meta-tagging the website of respondent by the Appellant is just or not.

Judgment

  • In reference to the first issue the High Court after taking into consideration all the contentions raised by both parties and the explanation provided by the single judge in the original suit for reaching the judgment held that “It is not the case of the respondents that the appellants are changing the condition of the goods or impairing the goods which are put in the foreign market by respondent No.1 or its subsidiary companies abroad. What is pleaded is that the physical features of the printers sold abroad are different from the features of the printers sold in India. But this is irrelevant as long as the goods placed in the International market are not impaired or condition changed. It is pleaded that the respondents have no control pertaining to the sale, distribution and after sales services of its goods which are imported by the appellants and sold in India. Now, the Principle of International Exhaustion of Rights itself takes away the right of the respondents to control the further sale and further distribution of the goods. With respect to after sales services, since the respondents do not warranty anything regarding their goods sold abroad, but imported into India and further sold, they not being responsible for the warranty of those goods, nothing turns thereon, as regards said plea. There may be some merit that the ordinary consumer, who is provided with warranties and after sales by the appellants, on not receiving satisfactory after sales service, may form a bad impression of the product of the respondents and thus to said extent one may recognize a possible damage to the reputation of the respondents pertaining to Samsung/SAMSUNG printers and Samsung/SAMSUNG products sold in India after importation. But, this can be taken care of by passing suitable directions requiring the appellants to prominently display in their shop that the Samsung/ SAMSUNG printers sold by them are imported by the appellants and that after sales services and warranties are not guaranteed nor are they provided under the authority and control of the respondents and that the appellants do so at their own end and with their own efforts. This would obviate any consumer dissatisfaction adversely affecting the reputation of the respondents, and thus if this is done, the respondents can claim no legitimate reasons to oppose further dealing in Samsung/SAMSUNG products in India” and finally held that the marketcontemplated by Section 30(3) of the Trade Marks Act 1999 is the international market i.e. that the legislation in India adopts the Principle of International Exhaustion of Rights.”
  • In reference to the second issue High Court held that “As regards the appellant’s meta-tagging their websites with those of the respondents, the learned Single Judge has correctly injuncted the appellants from so doing, which injunction we affirm. The argument by the appellants that how else would the appellants know about the working of the particular product hardly impresses us for the reason the appellants can design their website in a manner where they are able, on their own strength, without any meta-tagging, to display the relevant information.”