After Trademarks, it is now time for Copyright to decide on Parallel Imports

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Proviso to Section 2(m)

It is significant to note that this major initiative comes in the wake of the efforts by the Ministry of Human Resource Development Department-Related Parliamentary Standing Committee to insert the following proviso to Section 2(m)(dealing with “infringing copy”) of the Copyright act 1957.

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.

The Committee had received several comments/suggestions on the proposed amendment including objections from several well-known organizations like the Indian Broadcasting Foundation, the Indian Motion Picture Producers’ association. It is quite interesting to note that the ‘The Authors Guild of India’ was the only body that welcomed the proposed amendment. However the said proviso was dropped from the Copyrights (Amendment) Act 2012 and instead was sent to NCAER for examination and report.

The NCAER Report

The report itself appears to be quite comprehensive and interesting, laden with statistics (churned out of surveys and research) which seem to indicate (directly or indirectly) the pros and cons of allowing parallel imports. The views of both the publishers and consumers also find a place in the report. While the publishers naturally feel that the proviso would only obliterate the copyright integrity of India and the chances of exclusive Indian editions, the consumers consider the proviso to be a blessing for India. But what is truly interesting from the consumers’ perspective is their confidence that a separate proviso to expressly recognize ‘international exhaustion’ is not necessary as Indian IP laws, according to them, had always recognized this principle.

Certain highlights of the said survey and research reveal the following

  • Around INR 700 crore (≈ USD 122 million) worth of business is done through local publishing while around INR 3,500 crore (≈ USD 564 million) worth of business is done through selling imported books.
  • A review of the prices of around 53 books in two law libraries indicate that the prices of these books are equivalent to or higher than prices quoted in United states.
  • A study of around 226 books sold through online portals indicate that 26% of books available in India are outdated versions and the average difference in version (in India and US) is around two! But when it comes to price, the price at which an online portal sells these books in India is much lower than the price it is sold in US.
  • Other important aspects pivotal to the issue and rightly taken up are the availability of the latest edition (or the lack of it) and the time lag between the edition published in India and abroad. It was found that around 11% of the sampled books (amounting to 632 books) were found to have a later edition abroad and around 17.3% books are published with a time lag of more than three years.

Summarizing its research, the Committee has expressed that the publishers primarily import educational titles while they also have reprints and Indian versions. As far as prices are concerned, they have found the publisher’s prices to be competitive with the prices around the globe. But what is to be noted is that majority of the titles are clearly importable by them or their authorized agents.

The report, apart from books, also focuses on the film, music and software spheres and the views of these fraternities on the proposed amendment. Quite naturally, these fraternities have only expressed their dissent, as already mentioned above.

Parallel Imports & TRIPS

The Committee, leaving no stones unturned, has also examined the proposed amendment in light of the provisions of TRIPS. Specific reference has been made to Part I Article 1 and Article 6 of TRIPS. For everyone’s ease, Part I Article 1 states

Members shall give effect to the provisions of this Agreement. Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement’ and Article 6 of TRIPS states ‘For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.’

The Committee drawing inference from the above provisions and other relevant provisions, has opined that though TRIPS has prescribed suggestions on international trade in copyrighted goods, nowhere has it expressly formulated any strict principles on exhaustion of rights.

What the Committee recommends

The concluding remarks in the report indicate that the Committee leans towards the proposed amendment, though not before suggesting an exchange of dialogue between the two warring sides, viz. the producers and consumers. However the Committee has also been quick to add that if such a platform is not possible, the proposed proviso should be inserted with the requisite safety valves (what the safety valves are or could be, do not appear to be prescribed though).

Thoughts?

As everyone is aware, the issue of parallel imports is a raging debate in the Indian scenario and I’m sure this article would certainly have brought the case of Samsung Electronics (Kapil Wadhwa & Ors vs Samsung Electronics Co. Ltd. & Anr) to everybody’s mind where a division bench of the Delhi High Court had recognized the principle of international exhaustion. Samsung has of course appealed to the Supreme Court and we are yet to see the outcome.

From what I can perceive, the proviso allows importation only with the authorization of the author and the object of the proviso itself, as the report never ceases to point, is to facilitate copyrighted works, which are otherwise sold at higher prices, at affordable costs. But of course, at this point, it is quite premature to determine or speculate the course, this issue of proposed amendment would take and we will have to wait and watch out for the outcome of the proposed meet. Meanwhile if any of you out there, wish to express your concerns, feel free to do so, in this forum and to the Copyright Office as well!

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