Import and Sale Second-Hand Branded Goods Is Legal – Subject to Disclosure
In a landmark judgement that reinforces the principle of international trademark exhaustion, the Delhi High Court has confirmed that any individual or business in India has the legal right to import second-hand goods bearing registered trademarks and sell them in the Indian market. This right, however, is subject to mandatory transparency and disclosure requirements, particularly regarding the condition of the goods and the lack of manufacturer warranty or after-sales support.
This significant judgement came in the case titled Western Digital Technologies Inc. & Anr. v. Hansraj Dugar, where the plaintiff alleged unauthorized import of its branded hard disk drives (HDDs). The court’s decision has major implications for parallel imports, intellectual property enforcement, and the second-hand goods market in India.
Case Overview: Trademark Dispute Over Imported Hard Drives
The plaintiff, Western Digital Technologies Inc., a prominent global manufacturer of data storage devices, filed a legal suit against the defendant, alleging trademark infringement. According to the company, the defendant had imported HDDs bearing the Western Digital trademark into India without obtaining prior authorization from the rights holder, thus violating its intellectual property rights under the Trade Marks Act, 1999.
In defense, the respondent argued that the goods were genuine and lawfully procured from the Original Equipment Manufacturer (OEM) abroad. The defendant further relied on a 2012 Circular issued by the Central Board of Excise and Customs (CBEC), which permits parallel importation—the practice of importing genuine branded goods without the consent of the trademark owner, provided the products are legally acquired.
Legal Stand on Second-Hand Trademarked Goods in India
Presiding over the case, Justice Amit Bansal emphasized that there is no statutory ban or legal restriction in India that prohibits the import of second-hand or used goods that carry the trademark of a registered proprietor, as long as the integrity and condition of the goods remain intact.
The court made it clear that such imports do not violate trademark law if the reseller:
- Fully discloses that the goods are second-hand or refurbished
- Clearly states that no original manufacturer warranty or authorized after-sales service is available
This decision provides clarity on the legality of selling imported goods in India, especially used or refurbished products that are lawfully purchased overseas.
International Exhaustion of Trademark Rights: Legal Foundation
The court reaffirmed the legal doctrine of international exhaustion, which limits the control of a trademark owner over a product once it is legally sold in any market. This principle is firmly embedded in Sections 30(3) and 30(4) of the Trade Marks Act, 1999.
The court ruled that once a product is sold legally outside India, the trademark owner loses exclusive rights to control its subsequent resale, even in India, provided:
- The goods are not altered or tampered with, and
- Full disclosure is made to the end consumer
This interpretation aligns with global trademark practices and supports free trade and consumer choice, especially in the electronics and technology sectors where refurbished products are widely circulated.
Key Judicial Precedents Referenced
The Delhi High Court referenced two critical decisions to support its judgement :
- Kapil Wadhwa v. Samsung Electronics Co. Ltd. (2012)
In this case, the court upheld the legality of parallel imports involving Samsung printers. The judgement allowed sales by resellers, provided the goods were clearly marked as imported and the lack of official warranty was disclosed to customers. - Seagate Technology LLC v. Daichi International (2024)
Here, the court extended the Kapil Wadhwa precedent to refurbished products, affirming that there was no legal restriction on importing and reselling “end-of-life” hard drives, as long as disclosure norms were strictly followed.
These precedents confirm that parallel importation of genuine goods, even if second-hand or refurbished, is legally acceptable under Indian law.
Trademark Infringement Allegations Under Section 29(6)
Western Digital had alleged that the defendant’s actions amounted to infringement under Section 29(6) of the Trade Marks Act. The provision states that unauthorized use of a registered trademark in connection with the import of goods can be considered infringement.
However, the court emphasized that Section 30(3) of the Act serves as a valid defense to such claims. If the goods are genuine and the seller adheres to required disclosure conditions, no infringement occurs. Thus, the intellectual property rights of the trademark holder are considered exhausted, once the product enters commerce through lawful channels globally.
Final Judgment and Court Directions
Noting that the HDDs imported by the defendant were confiscated by the Customs Department and never reached the defendant’s possession, the court directed the release of the goods and issued the following instructions:
- If the defendant intends to sell the goods without refurbishment, they may proceed with import and resale, provided full disclosure is made regarding their second-hand status and lack of warranty.
- If the goods are refurbished before resale, the defendant must comply with the disclosure norms set in the Daichi case, ensuring buyers are fully informed about the condition and origin of the products.
This judgment promotes consumer transparency, reseller accountability, and a fair balance between intellectual property enforcement and legitimate trade.
Conclusion: Major Boost to Parallel Imports and Refurbished Goods Market
The Delhi High Court’s decision significantly strengthens the legal framework supporting parallel importation of genuine, second-hand goods in India, including those that carry internationally recognized trademarks. By recognizing international exhaustion and validating resale rights, the judgment opens the door for growth in India’s refurbished electronics market, while ensuring consumers are adequately informed.
This judgement not only protects consumer rights but also provides clarity to importers, retailers, and legal practitioners navigating the complex landscape of trademark law in India.
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Understand in FAQ
1. Is it legal to import second-hand goods with a registered trademark in India?
Yes, the Delhi High Court has ruled that importing second-hand goods bearing a registered trademark is legal in India, provided full disclosure is made to the buyer.
2. What is parallel import in India?
Parallel import refers to the importation of genuine branded goods into India without the authorization of the trademark owner, typically when the goods are lawfully acquired abroad.
3. Does Indian law recognize international exhaustion of trademark rights?
Yes, Indian law recognizes international exhaustion under Sections 30(3) and 30(4) of the Trade Marks Act, 1999, meaning a trademark holder cannot control resale after the first legal sale.
4. What disclosures must be made when selling second-hand imported goods in India?
Sellers must clearly inform buyers that the goods are second-hand or refurbished and not covered under the original manufacturer’s warranty or after-sales service.
5. Can refurbished electronic items be sold in India under a foreign brand?
Yes, refurbished items can be sold legally if they are genuine and full disclosure about their condition and lack of manufacturer support is provided.
6. Which court case confirmed the legality of selling second-hand trademarked goods in India?
The case is Western Digital Technologies Inc. & Anr. v. Hansraj Dugar, decided by the Delhi High Court.
7. What role does the CBEC Circular of 2012 play in parallel imports?
The 2012 CBEC Circular supports the legality of parallel imports by allowing genuine goods to be imported and sold in India without the trademark owner’s consent.
8. Can the trademark owner sue for infringement in case of parallel imports?
Not necessarily. Under Section 30(3) of the Trade Marks Act, if the importer adheres to disclosure norms and the goods are genuine, it does not amount to infringement.
9. What was the court’s stance on importing “end-of-life” or discarded goods?
The Delhi High Court held that there is no legal prohibition on importing discarded or end-of-life goods, as long as resale conditions are met.
10. Are there any restrictions on the resale of imported second-hand goods in India?
There are no statutory restrictions, but resale must follow transparency rules and not alter the condition of the original goods.
11. What is the significance of the Kapil Wadhwa v. Samsung case?
This case laid the foundation for allowing parallel imports in India and emphasized that trademark owners cannot restrict further resale of genuine goods.
12. Does the Trade Marks Act allow the use of a registered trademark for imported goods?
Yes, the Trade Marks Act allows it under Section 30, as long as the goods are genuine and the use does not mislead the consumer.
13. What happens if a seller refurbishes goods before resale?
The seller must follow additional disclosure norms outlined in the Daichi International judgment to inform consumers about the refurbished status.
14. Can customs authorities seize second-hand imported goods with trademarks?
Customs may initially seize such goods, but courts can order their release if the import is proven legal and disclosures are fulfilled.
15. Is consumer awareness mandatory in second-hand goods resale?
Absolutely. Consumer transparency is essential, and sellers must clearly state that the products are imported, second-hand, and without manufacturer backing.
Read Judgement WESTERN DIGITAL TECHNOLOGIES versus HANSRAJ DUGAR
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