TaxTMI 
TaxTMI 
2025 (6) TMI 34
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....gment was reserved. CASE SET UP IN THE PLAINT 3. The case set up by the plaintiffs in the plaint is as under: 3.1. The plaintiff no. 2, Western Digital UK Ltd., is a wholly owned subsidiary of the plaintiff no. 1, Western Digital Technologies, Inc. (hereinafter collectively referred to as "the plaintiffs"). The plaintiffs are one of the largest computer Hard Disk Drive (HDD) manufacturers in the world. 3.2. The plaintiffs have been using the trademark 'WESTERN DIGITAL' in India since 1997 and commenced the use of the trademark 'WD' in 1999. The plaintiffs manufacture and market storage devices, media players, routers/switches/bridges, comprising of Original Equipment Manufacturer (OEM)/ system manufacturer, desktop and enterprise, solid state drives (SSD), HDDs and software and mobile applications under their registered trademarks 'WESTERN DIGITAL', and/or 'WD' (hereinafter "the Western Digital trademarks"). 3.3. The plaintiff no.1 is the registered proprietor of the Western Digital trademarks under Class 9, the details of which are given in paragraph 10 of the plaint. 3.4. The plaintiffs also own and maintain several websites whose domain names contain 'WESTERN D....
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.... Digital trademarks of the plaintiffs. This Court also appointed a Local Commissioner to visit the Office of the Commissioner of Customs (Port), Custom House, Kolkata to inventorize the goods bearing the Western Digital trademarks and take the said goods in his notional custody. The relevant paragraphs 10 and 13 of the said order are set out below: "10. Consequently, until the next date of hearing, the defendant is restrained from importing, selling, offering for sale, or otherwise dealing in the products bearing the plaintiffs' registered trademark, "WESTERN DIGITAL" and/or "WD", under nos. 1345682, 1349235 and 1325732. *** 13. Consequently, Mr. Vidit Gupta, Advocate (Mob: 9910995511) is appointed as a Local Commissioner to visit the Office of the Commissioner of Customs (Port), Custom House, 15/1, Strand Road, Kolkata - 01, and take the goods bearing the plaintiffs' registered trademarks , "WESTERN DIGITAL" and/or "WD', which have been imported by the defendant under Bills of Entries No. 4048782, 4337816, and 4609440, make an inventory and take the goods into notional custody. The Local Commissioner is directed to visit the location designated by the de....
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....lly acquired the goods in question and has not in any manner changed or impaired the same. SUBMISSIONS ON BEHALF OF THE PLAINTIFFS 9. Ms. Shwetasree Majumder, counsel appearing on behalf of the plaintiffs, has made the following submissions: 9.1. The original underlying drives are not meant for consumer retail and have been made according to the specifications of the respective OEMs to whom they were sold. Hence, such tailor-made products may not be compatible with systems manufactured by other third parties. 9.2. The technical report by the plaintiffs' engineer revealed that many of the drives were not even readable (i.e. they were non-functional) and yet the defendant claimed that the drives were "new and unused" in its written statement and intended to sell them as "new and unused" products in the market. This was a clear deception of consumers at the cost of plaintiffs' goodwill and reputation. 9.3. Second hand goods under the plaintiffs' trademarks, which have not been "lawfully acquired", cannot be imported into India by the defendant. Such import and consequential sale amounts to infringement under Section 29 (6) read with Section 30 (4) of the Trade Marks Act....
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....on Xerox Corporation v. Shailesh Patel, CS (OS) 2349 of 2006 is misplaced. The defendant in Xerox (Supra) clearly represented that the goods were not new but second hand, both at the time of importation as well as at the time of subsequent sale. However, the said judgment is distinguishable on facts. SUBMISSIONS ON BEHALF OF THE DEFENDANT 10. Mr. Sidharth Chopra, counsel appearing on behalf of the defendant, has made the following submissions: 10.1. In Daichi (Supra), it has been clarified that genuine goods can be imported, refurbished and resold with 'full disclosure'. Right to import and sell such goods flows from the principle of international exhaustion under Sections 30 (3) and (4) of the Trade Marks Act. It emphasized that there is no statutory bar against the import of discarded or end-of-life goods into India and that import and resale thereof is permissible so long as there is no misrepresentation with respect to the goods' warranty, serviceability, life, etc. 10.2. Mere resale of second-hand goods does not constitute trademark infringement, and trademark rights do not extend to blocking lawful secondary markets. 10.3. The defendant herein has not tampered ....
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....d by the respondent no.1/plaintiff under the trademark 'SAMSUNG' and after importing the same into India, were selling the product in the Indian market under the said trademark. 14. Plaintiffs/ respondents (hereinafter referred to as "Samsung") filed the suit that this act of the defendants amounted to infringement of their registered trademark in India and also caused injury to the consumers in India who were led to believe that they were purchasing an authorized Samsung product in India, sold with the permission of Samsung. The learned Single Judge granted interim injunction in favour of Samsung. Thereafter, the matter was taken in appeal by the defendants. 15. In paragraphs 70 and 71 of Kapil Wadhwa (Supra), the Division Bench held that sub-Section (3) of Section 30 would cover sale in international markets and that Indian Trade Mark law adopts the principle of international exhaustion of intellectual property rights. The said paragraphs are set out below: "70. This is also an indication of India adopting the Principle of International Exhaustion of Rights in the field of the Trade Mark Law. 71. We accordingly conclude that 'the market' contemplated by Se....
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....nd 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. *** 75. The appeal is partially allowed. Impugned judgment and order dated February 17, 2012 is set aside insofar the appellants have been restrained from importing printers, ink cartridges/toners bearing the trade mark Samsung/SAMSUNG and selling the same in India. The appellants shall continue to remain injuncted from meta-tagging their website to that of the respondents. But, while effecting sale of Samsung/SAMSUNG printers and ink cartridges/toners, the respondents shall prominently display in their showrooms that the product sold by them have been imported from abroad and that the respondents do not give any warranty qua the goods nor provide any after sales service and that the warranty and after sales service is provided by the appellants personally. The appellants would prominently display in their showrooms: Samsung/SAMSUNG Products sold are imported into India and SAMSUNG (KOREA....
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....he plaintiffs are so aggrieved. It was evident from the submissions that the manufacturers had no control once their HDDs were embedded in the electronic equipment, since the integrated equipment itself along with the HDDs was sold with the composite integrated warranty by the OEM, or distributors/sellers down the line. It was not the plaintiffs' case that their warranty on the HDDs was held out to the ultimate consumer of the equipment, hence the umbilical cord of the manufacturer with the HDDs, would arguably sever at that stage of equipment integration." [Emphasis supplied] 21. The Court also held that there was no rule, regulation or policy that prohibited import of discarded HDDs into India. The relevant observations are set out below: "74. Notably, despite queries by the Court, counsel for the plaintiffs were not able to produce any rule, regulation or policy which prohibited import of discarded HDDs/equipment into India. While allusions were made to the fact this would be an undesirable importation, no document was adverted to in order to substantiate that indeed this importation would be illegal, or that these discarded HDDs are arriving in India throug....
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....s have entered into the market along with the registered mark but since its condition has been changed or impaired, which would include the removal of the original trademarks, Section 30 (3) could not apply. This interpretation of the third pre-condition of Section 30 (3) and the express provision under Section 30 (4), excepting out goods which are changed or impaired, settles into a sensible and logical construct." [Emphasis supplied] 24. Kapil Wadhwa (Supra) was not a case where the defendants were refurbishing the imported goods. In the said case, the imported goods were sold on an 'as is' basis. In Daichi (Supra), the Coordinate Bench extended the reasoning and rationale adopted in Kapil Wadhwa (Supra) to cases involving refurbishment of imported products (HDDs). The relevant observations of the Coordinate Bench with regard to sale of refurbished goods as given in paragraphs 111-114 are set out below: "111. Refurbished, second-hand, pre-owned goods exist in most countries of the world since it caters to a different market, that of a lesser paying customer. Originally manufactured goods, with their mint new warranty, are obviously sold at the maximum retail price ....
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....so expressly dealt with in both Champion Spark Plug (supra) and Kapil Wadhwa (supra). Ld. Amicus' submissions also suggests the "whole truth" principle and, therefore, informs our conclusion." [Emphasis supplied] 25. In light of the aforesaid conclusion, the Coordinate Bench passed the following directions in respect of sale of refurbished goods: "116. Basis this analysis and discussion, the Court deems it fit to pass the following directions for sale of refurbished goods by the defendants. The defendants will be permitted to sell the refurbished HDDs, provided they comply with the following: (i) Packaging to identify the source of the product: Packaging in which the refurbished product is sold, will clearly indicate that the HDD is manufactured by the concerned plaintiffs (Seagate or WD as the case may be). This may be displayed in a manner not to deceive the customer that the sale itself is of the original Seagate or WD i.e. it should be clear, but not dominating the packaging. (ii) Reference to the original manufacturer is to be made through their word mark and not the device mark: Reference to the plaintiffs should be through their word marks as....
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....riginal manufacturer's warranty. In terms of Daichi (Supra), even refurbished goods can be sold with proper disclosure. 28. Counsel for the plaintiffs has submitted that the import and consequential sale by the defendant amounts to infringement under Section 29 (6) of the Trade Marks Act. No doubt, in terms of Section 29 (6) of the Trade Marks Act, the use of a registered mark in the context of import would amount to infringement, however, this would be subject to defence available under sub-Section (3) of Section 30 of the Trade Marks Act, which permits a party to lawfully import goods from abroad bearing the trademarks of a registered proprietor and selling the same in India. 29. Applying the aforesaid legal position in the facts of the present case, it is an undisputed position that the defendant herein was an importer of second-hand goods from abroad, purchased from OEMs of the plaintiffs. It is not the case of the plaintiffs that the goods imported by the defendant were not genuine goods. Before the imported goods could be released to the defendant, the present proceedings were initiated by the plaintiffs which resulted in the goods being seized at the customs clearance ....
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.... been sold exactly as received by the importer / reseller. It has not been altered in any way or examined for operatibility or completeness by the importer / reseller. No part or any accessories have been added or removed by the importer / reseller. iv) This machine is not covered by any guarantee or warranty from Xerox Corporation or any of its affiliates. 2) The aforesaid disclosure shall appear prominently on each of the second hand machines at a prominent place in the front of the machines where the word Xerox appears on the machines so that the same can be easily viewed by customers. The disclosures shall be permanently affixed on the machines. 3) The same disclosure shall also be incorporated in publicity materials, manuals, advertising and other communications to the public by the defendants in respect of the said Xerox machines. 4) In case, after importation, any changes to the said machines are made by the defendants, the mark "Xerox" shall be removed from them before further sale / use so as to indicate to the purchasers / users that the machines are not Xerox machines. 5) Once the said disclosure has been affixed on the machin....