Author: Siddharth Varshney
‘Parallel imports’ mean imports of genuine goods from one market into another market without authorization from the proprietor of the intellectual property. Legality of such parallel imports depends on whether the importing market follows national or international doctrine of exhaustion of rights. This article examines the statutory provisions in the Copyright Act, 1957 (“Act”) involving the doctrine of exhaustion and its impact on the legality of parallel imports vis-à-vis literary works in India.
Principle of Exhaustion as per Copyright Act
Section 14 of the Act provides that the owner of the copyright in literary works has various rights such as right to reproduce, to perform work in the public, etc. Further, Section 14(a)(ii) of the Act provides the right to “issue copies of the work to the public, not being copies already in circulation” (emphasis supplied). The explanation to section 14 clarifies that the expression ‘copies already in circulation’ means “…a copy which has been sold once shall be deemed to be a copy already in circulation”.
Section 14 of the Act and explanation attached to it fail to elucidate where such copies are deemed to be in circulation, and thus, it has been left open for interpretation by the Courts as to whether national, regional, or international principle of exhaustion applies. This leads to the question if parallel importation of literary works is allowed in India. Section 14 of the Act can be interpreted in various ways. For instance, a plain reading of the expression “copies in already in circulation” can be interpreted to mean copies in circulation anywhere in the world, which means that the Act permits parallel imports. However, another possible interpretation is that the expression could mean copies in circulation in India only, thus parallel imports would not be permitted under the Act.
It is also pertinent to note that the Copyright Amendment Bill, 2010 (“Bill”), which was passed by the Parliament in 2012, originally sought to add a proviso to Section 2(m) of the act as –
“Provided that a copy of a work published in any country outside India with the permission of the author of the work and imported from that country into India shall not be deemed to be an infringing copy.” (emphasis supplied)
The Parliamentary Standing Committee for Review welcomed the proviso to Section 2(m) and noted that “…proposed inclusion of the proviso in the definition of the term ‘infringing copy’ seems to be a step in the right direction…” . However, it was deleted from the final version of the Bill which was passed by the Parliament.
This proviso can also be interpreted in various ways to support either national or international principle of exhaustion. One interpretation is that the aim of introducing such proviso was to clarify that the Act follows the principle of international exhaustion. While another argument which stems from is that such proviso was included to change the position of law from national exhaustion to international exhaustion of rights, as otherwise a specific provision for international exhaustion would not have been proposed in the Bill.
The issue of parallel import of literary works was taken up for consideration by the High Court of Bombay (“Court”) in Eurokids International Pvt. Ltd. v. India Book Distributors Egmont[2005 (6) Bom CR 198], wherein a Single Judge Bench [Dharmadhikari S.C., J.] injuncted the defendant from importing the plaintiff’s books from the USA and selling in India without a license. The Court came to such a conclusion on the basis that the plaintiff has an exclusive license to sell its books in India and import of such books by the defendant would be in contravention and amount breach of such license. The Court also relied on the earlier case of Penguin Books Ltd v. India Book Distributors[AIR 1985 Del 29], where a Division Bench [A Rohatgi, G Jain, JJ.] of the High Court of Delhi ruled that “…It is also an infringement of copyright knowingly to import into India for sale or hire infringing copies of a work without the consent of the owner of the copyright…”. However, the Court failed to take into consideration that the Penguin Books judgment was prior to the 1994 amendment of the Act which took away the right of publication from the owners of literary works and replaced it with the present Section 14(a)(ii) containing a right “…to issue copies to the public not being copies already in circulation”. It is important to note that while reaching to this conclusion the Court did not take into consideration the doctrine of exhaustion and validity of parallel import under Section 14(a)(ii) of the Act and ruled on the basis of breach of license contract (between the plaintiff and a third-party).
This issue came up again before the High Court of Delhi in Warner Brothers  case, where it acknowledged the applicability of doctrine of exhaustion in the Section 14(a)(ii) of the Act. However, it fell short of stating whether such exhaustion was national or international. Thus, as of now the question of parallel imports under the Copyright Act is far from being settled.
As discussed above, the principle of exhaustion vis-à-vis Section 14(a)(ii) of the Act has not yet been interpreted by the courts. Resultantly, the prevailing position of law considering Eurokids case is that the principle of national exhaustion is applicable till the time this issue is taken up for further consideration by the courts. An attempt was made to clarify this ambiguity by introducing a proviso to Section 2(m) of the Act, however it was aborted before it could have been debated in the Parliament. It is to be seen whether this ambiguity will be addressed by the Parliament or Copyright Office in the next amendment of the Act.
 Department – Related Parliamentary Standing Committee on Human Resource Development, available at <http://126.96.36.199/newcommittee/reports/EnglishCommittees/Committee%20on%20HRD/227.pdf>, last accessed on December 30, 2020.
 Warner Brothers Entertainment Inc. v. Santosh V.G., MIPR 2009 (2) 175.
 Eurokids International Pvt. Ltd. v. India Book Distributors Egmont [2005 (6) Bom CR 198].
 Penguin Books Ltd v. India Book Distributors [AIR 1985 Del 29].
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