Prior User Rights and Parallel Imports
Introduction: The case of M/s Products and Ideas (India) Pvt. Ltd. v. Nilkamal Limited and Ors. before the High Court of Delhi engages with the fundamental principle that the sale of genuine goods by an authorized reseller or importer does not amount to trademark infringement. This principle is anchored in the doctrine of international exhaustion, which permits parallel imports and resale of genuine products sourced from the trademark owner. At the heart of this dispute lies the tension between the rights of a registered proprietor claiming exclusivity over a mark and the legitimate right of others to trade in genuine goods sourced from the same original manufacturer.
Factual Background: The plaintiff, M/s Products and Ideas (India) Pvt. Ltd., is engaged in selling commercial induction cooktops in India under the mark ‘STELLADEXIN.’ The mark was originally adopted by Stella Industrial Co. Ltd., a Chinese company (defendant no. 5), which has been manufacturing electromagnetic household appliances since 1983. The plaintiff claimed to have obtained registrations for the ‘STELLADEXIN’ mark in classes 7, 9 and 11 in India with the consent of defendant no. 5. Initially, the plaintiff and defendant no. 5 entered into an Exclusive Agency Agreement in 2017, subsequently renewed, under which the plaintiff became the exclusive agent for distributing induction cookers under the brand ‘STELLA’ in India. The plaintiff asserted that it has built substantial goodwill in the mark ‘STELLADEXIN’ in India, with an annual turnover exceeding Rs. 16.27 crores for the year 2022-2023.
In June 2024, the plaintiff discovered that the defendants, including Nilkamal Limited (defendant no. 1) and Cambro-Nilkamal Pvt. Ltd. (defendant no. 2), were selling induction cooktops under the mark ‘STELLA,’ which it alleged was deceptively similar to its registered mark and amounted to infringement. Defendant no. 5, however, asserted it had prior rights in the marks ‘STELLA,’ ‘DEXIN,’ and ‘STELLADEXIN,’ and had been selling goods in India since at least 2013 through various distributors, including M/s Mittal International. The plaintiff, according to defendant no. 5, was merely one of the resellers.
Procedural Background: The suit was filed by the plaintiff seeking a permanent injunction against the defendants to restrain them from selling products under the mark ‘STELLA’ or any mark deceptively similar to ‘STELLADEXIN.’ On 27 August 2024, the Court granted an ex parte ad interim injunction restraining defendants from using the impugned marks and appointed a Local Commissioner to seize goods bearing these marks. Defendant no. 5 later moved an application and was impleaded as a party to the proceedings. Defendant no. 2 also sought vacation of the injunction. After detailed hearings concluding on 13 May 2025, the judgment was reserved and ultimately pronounced on 1 July 2025.
Legal Issue: The central issue before the Court was whether the sale of original products bearing the mark ‘STELLA’ by defendants, who sourced them directly from defendant no. 5, the prior adopter and manufacturer, amounted to trademark infringement against the plaintiff’s registered mark ‘STELLADEXIN.’?
Discussion on Judgments: The Court examined the scope of Section 30(3) of the Trade Marks Act, 1999, which recognizes the principle of international exhaustion, allowing the import and sale of genuine trademarked goods without infringing the trademark. Reliance was placed on the Division Bench decision in Kapil Wadhwa v. Samsung Electronics Co. Ltd., 2012:DHC:6136:DB, where it was held that the import and sale of genuine goods sourced from the trademark owner abroad does not amount to infringement under Indian law. The Court also referred to Seagate Technology LLC v. Daichi International, 2024:DHC:4193, which applied the same principle, confirming that sale of genuine products by an authorized importer or reseller falls outside the ambit of infringement.
The defendants argued that defendant no. 5 had prior user rights in the marks ‘STELLA,’ ‘DEXIN,’ and ‘STELLADEXIN,’ with documented sales in India since 2013, well before the plaintiff’s first claimed use or trademark registration. They contended that both the plaintiff and defendant no. 2 were merely resellers importing goods from the original manufacturer, defendant no. 5. Defendant no. 5 further argued that its sales were supported by invoices and documents, demonstrating continuous and prior use.
The plaintiff, on the other hand, argued that it had secured trademark registrations in India with defendant no. 5’s consent and that the defendants’ use of ‘STELLA’ was deceptively similar to its registered mark, thereby constituting infringement.
Reasoning and Analysis of the Judge: Court examined the documentary evidence and concluded that defendant no. 5 was indeed the prior adopter and user of the marks since at least 2013, predating the plaintiff’s use and trademark registrations. The Court noted that the plaintiff’s own first agreement with defendant no. 5 was in 2017 and the earliest invoice produced by the plaintiff was also from 2017. Thus, the prior user defence under Section 34 of the Trade Marks Act, 1999, was available to defendant no. 5.
The Court observed that the plaintiff was only one of several resellers authorized to sell defendant no. 5’s products in India. Similarly, defendant no. 2 had documented authorization from defendant no. 5 to import and sell these products. Since the goods being sold by defendant no. 2 and others were genuine and originated from the trademark owner itself, this sale did not constitute infringement.
The Court underscored the settled law that the import and sale of genuine goods by an authorized reseller or importer falls under the principle of international exhaustion recognized in Section 30(3). Consequently, the use of the marks ‘STELLA,’ ‘STELLADEXIN,’ and related marks by defendants did not amount to unauthorized use. The balance of convenience favored the defendants, as an injunction would effectively grant the plaintiff an unjustified monopoly over marks to which it had no exclusive right against the original manufacturer.
Final Decision: The Court vacated the ex parte interim injunction granted earlier, holding that the plaintiff had failed to establish a prima facie case for restraint. The defendants were permitted to sell goods under the marks ‘STELLA,’ ‘STELLADEXIN,’ and related marks in India, being genuine products originating from defendant no. 5, the prior user and manufacturer.
Law Settled in This Case: The judgment reaffirmed that the sale of original goods in India by an authorized reseller or importer, when the goods are sourced from the genuine trademark owner or prior adopter, does not amount to infringement. The principle of international exhaustion under Section 30(3) protects such import and resale, and mere trademark registration in India by a reseller cannot override the rights of the original manufacturer and other authorized distributors.
Case Title: M/s Products and Ideas (India) Pvt. Ltd. v. Nilkamal Limited and Ors.:Date of Order: 1 July 2025:Case Number: CS(COMM) 715/2024:Neutral Citation: 2025:DHC:5052:Name of Court: High Court of Delhi at New Delhi:Name of Judge: Hon’ble Mr. Justice Amit Bansal
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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