To be or not to be: Parallel imports of publications

In an era of free trade, restrictions on parallel international trade in copyrighted materials seem anomalous. India sought to correct the anomaly by amending section 2(m) of the Copyright Act, 1957, to expressly legalize parallel imports. The proposed amendment however created a furore in India’s publishing industry with major publishing houses claiming that parallel import restrictions are sine qua non for their survival and any change would dismantle the very fabric of creative writing in English in India.

The government backtracked. The Copyright (Amendment) Act, 2012, was passed without the proposed amendment and the National Council of Applied Economic Research (NCAER) was asked to study what harm would ensue to copyright-based industries if restrictions were removed. With the release of the NCAER’s report in March 2014, a decision on parallel imports is expected soon.

Legality and current status

Parallel importation occurs when a lawfully made and legitimately acquired copyrighted product is subsequently imported into a different country without the permission of the copyright owner. The legality of parallel imports depends on the scope of the exhaustion doctrine followed in a particular territory. The doctrine stipulates that once the “first sale” of a copyrighted product has been lawfully made, the owner’s rights are exhausted insofar as sale or distribution of the legitimately sold copyrighted work is concerned, though all other exclusive rights remain intact.

In a country that follows international exhaustion, a first sale anywhere in the world would exhaust the right of the copyright owner in respect of that country as well. Whereas in the case of national or regional exhaustion, the right of the copyright owner is exhausted only if the first sale has been made in that country or region. Parallel imports are feasible only where international exhaustion is followed.

As for India, while the Copyright Act does not expressly specify the scope of exhaustion, Delhi High Court in John Wiley & Sons v Prahabhat Chander Kumar Jain (2010) held that the act can only be taken to mean national exhaustion, thus making parallel imports to India illegal.

Manisha Singh Nair is a founding partner of LexOrbis, where Priya Anuragini is an associate.