Facts
The plaintiffs, Western Digital Technologies Inc. and its subsidiary Western Digital UK Ltd., are among the world’s largest manufacturers of hard disk drives (HDDs), using the trademarks “WESTERN DIGITAL” and “WD” since 1997 and 1999, respectively. They alleged that the defendant, Hansraj Dugar, operating through his proprietorship M/s Supreme Enterprise, had imported large quantities of infringing HDDs bearing their registered trademarks. The Customs Authorities alerted the plaintiffs about three consignments imported via Kolkata Port in September 2019. Upon inspection, some drives were found to be damaged or second-hand, though claimed to be new. The plaintiffs filed a suit for permanent injunction and related reliefs under the Trade Marks Act, 1999.
Procedural History
The Delhi High Court granted an ex parte ad interim injunction on 21 October 2019, restraining the defendant from dealing in the infringing products and appointed a Local Commissioner to seize the goods. Around 7500 HDDs were seized and held in customs custody. The matter was referred to mediation, which failed. The defendant filed an application in 2024 to vacate the injunction, relying on a recent judgment in Seagate Technology LLC v. Daichi International (2024:DHC:4193), which dealt with import and sale of refurbished HDDs. Plaintiffs opposed, distinguishing their case from Daichi, citing non-compliance with Indian laws and impairment of product quality.
Issue
The core issue was whether importation of second-hand genuine goods bearing the plaintiffs’ trademarks constituted trademark infringement under Section 29(6) of the Trade Marks Act, 1999, or was protected under Section 30(3) and (4), particularly in light of the principle of international exhaustion of rights.
Decision
The Court held that the principle of international exhaustion under Section 30(3) of the Trade Marks Act permits lawful importation and resale of genuine goods, including second-hand ones, as long as full disclosure is made regarding their refurbished nature, lack of original manufacturer warranty, and condition. Relying on Kapil Wadhwa v. Samsung Electronics Co. Ltd. (2012:DHC:6136:DB) and Seagate Technology LLC v. Daichi International, the Court ruled that the defendant had a right to import second-hand goods and that there was no misrepresentation, as the goods had not yet entered the market. It ordered release of the seized goods, subject to their sale as scrap after removing the plaintiffs’ trademarks. For future imports, the defendant must follow full disclosure norms as outlined in Xerox Corporation v. Shailesh Patel and Daichi.
