The ‘parallel import’ debate between publishers and civil society is slowly but steadily losing any semblance of decency and is anything but ‘civil’. Clearly the gloves are off! I’m going to refrain from lending my two bits to this debate. However I want to briefly clarify a few points regarding the so called ‘parallel exports’ issue i.e. whether it would be legal or not to export low-priced Indian books to markets like the U.S.A. and the U.K. Image from here.
The John Wiley cases before the Delhi High Court last year, which we have discussed over here, had temporarily restrained Indian re-sellers from exporting low-priced Indian editions to the foreign markets in the U.S.A. There have been some comments to the effect that the appeal against the order of the Single Judge, has been dismissed by the Delhi High Court. This is not entirely true. The Defendants had filed FAO (OS) No. 439 of 2010 before the Division Bench of the Delhi High Court. They subsequently withdrew the appeal because both parties decided to expedite the trial and settle the matter once in for all. In relevant part the order of the Delhi High Court states After arguing for some time, learned counsel for the appellants does not press the appeal as he submits that the appellants would like to invite a judgment post-trial in the suit……………. The appeal and the application are accordingly dismissed as withdrawn with the aforesaid observations. The matter is now posted for the cross-examination of the Plaintiff’s evidence on the 14th of March, 2011. The following are the issues as framed by the Court:
1. Whether the Defendants are entitled to offer for sale, sell the books of the Plaintiffs outside the territories mentioned on the cover and/or copyright page of each book? OPP
2. Whether the Plaintiffs are entitled to the relief of permanent injunction? OPP
3. Whether the Plaintiffs are entitled to claim of damages against the Defendants? If yes, to what amount? OPP
4. Whether the Plaintiffs are entitled to rendition of accounts of profits? OPP
5. Whether the suit filed by the Plaintiffs is not maintainable and is liable to be dismissed for lack of territorial jurisdiction? OPD
6. Whether the suit filed by the Plaintiffs is not maintainable being contrary to the established legal principles ‘First Sale Doctrine’ and ‘Rule of Exhaustion’ under Section 14(a)(ii) read with the Explanation of the Copyright Act, 1957? OPD
7. Whether the condition printed on the books regarding the sale of books only in the particular countries mentioned is unlawful, against the public policy and is not binding upon the Defendants? OPD
8. Whether the condition printed on the books regarding the sale only in particular countries imposes restraint of the trade and is in violation of the provisions of the Contract Act, 1872? OPD.
9. Relief.
As already pointed out in my earlier post, the interim Order by Justice Manmohan Singh is replete with legal fallacies and hopefully these will be corrected when the matter is posted for final arguments before a different judge.
Another point that I would like to briefly touch on is this piece by Divya Dubey where she defends the ‘publisher’s right to protect their territory’. While her piece focuses on the ‘attitude’ of the IPR lawyers supporting Section 2(m), she also makes an argument linking the proposed amendment to an increase in the so-called ‘parallel exportation’. In brief she argues that if parallel imports are allowed, it will increase the so-called parallel-exports to the U.K. & the U.S. because this will now become legal. As a result she concludes that foreign publishers will cancel their licences for low-priced Indian editions.
There could not be a more misguided argument. As noted by Dubey herself, the U.S. & the U.K. do not allow parallel imports, therefore any ‘flood’ of books from India to the U.S. or the U.K. would be illegal under the laws of those countries. There have been several cases where U.S. Courts have restrained the import of such books. To put it in brief, its their head-ache and they are pretty good at tackling the problem.
As for Dubey’s assumption that ‘parallel exports’ are illegal, she fails to notice that the legal position on this is hardly conclusive. The John Wiley judgments are the first such cases where the Delhi High Court has given publishers a hitherto unknown right, which they do not enjoy in any other country. I will reconsider my position if anybody can show me a similar position of law in any other country. Moreover as stated above, the main issues in the Wiley case are pending trial before Court. Even in the U.S. and the U.K., although parallel imports may be illegal, resellers in those countries are free to export goods to any other country. It is for the law of the importing country to decide the legality of such action because copyright law is a territorial law, dependant on the laws of individual countries. Moreover the rights of resellers are linked to the Doctrine of ‘First Sale’ and not the theory of ‘parallel imports’.
The doctrine of ‘first sale’ enshrined in Section 14 of the Copyright Act ensures that the copyright owner loses all rights in a physical copy of a book after the first sale, save for those statutory rights under the Copyright Act. Therefore unlike a video CD, whereby the owner can control certain rights such as the right of broadcast and the right to rent, the publisher loses all rights in the physical copy of the book. Thus if you have bought a book, you can legally re-sell it but you cannot make photocopies of the same as this violated the publisher’s rights under the Copyright Act, 1957.
On a concluding note I have to point out that although it has been almost a year since the proposed Bill was introduced in the Parliament, we are yet to see any fancy reports from the Federation of India Publishers putting down scary numbers and implications of the parallel imports provision. Right now it is their word against the government’s word. Of course the government could be accused of the very same folly but right now it’s the publishers who are screaming bloody murder, the burden of proof is therefore on them.
For more on the parallel exports issue read this by Pranesh Prakash.
Dear Mr Reddy
It is a matter of opinion on whom the burden of proof lies to argue the case for or against parallel imports. None of the reasons cited in the last standing committee report are in fact based on any actual evidence.
For example, this statement has no basis: “The present practice of publishers publishing books under a territorial license, resulting in sale of books at very high rates cannot be considered a healthy practice.” A book published under Indian territorial license will ALWAYS be cheaper. There would not be a single instance when this would not be the case. Also, to understand the merit of the publishers’ argument, one has to understand the international rights market in publishing.
Earlier on, the report mentions, “the Committee is of the view proposed inclusion of the proviso in the definition of the term ‘infringing copy’ seems to be a step in the right direction, specially in the prevailing situation at the ground level…” There is nothing written in the report which qualifies what is the prevailing situation.
The existing law in India has in fact allowed publishers to bring books at affordable prices to the Indian market. What is the basis for thinking that the situation is otherwise?
Dear Anon,
I completely agree with you!!! Unfortunately that’s the way policy is made in India. Now that the Publisher’s industry has had a year to prove the Government wrong, why haven’t they come out with a nice publication proving the government wrong.
They just need to commission a consulting agency to carry out such a study.
Best,
Prashant
Dear Prashant,
I would take a different view regarding parallel importation in the United States.
Quoting from the CIS blog:
“In the United States, the legality of a segment of parallel importation of copyrighted goods reached the United States Supreme Court in Quality King v. L’anza in 1998, in which the court held in favour of the importer.
“The question reached the US Supreme Court again last year in Costco v. Omega, but the court split on it 4-4, and did not deliver a binding precedent on parallel importation. Thus, for all intents and purposes, under copyright law, the United States is an open market.” That is, except in the states where the circuit decisions against parallel importation are still binding.
From my comments on Nilanjana Roy’s blog:
2. On reciprocity
That the United States doesn’t allow for parallel importation seems to be a popular opinion. I disagree. This issue has gone to the United States Supreme Court twice. Once (in the Quality King case) the Court held the parallel importation activity to be legal. The second time (in the Costco case) the Court split 4-4 (Kagan having recused herself), and no precedent was set on the law. So on a nation-wide scale, there is no ban on parallel importation in the US. (To get a bit more technical: it now depends on which Circuit you fall under, and how that Circuit has ruled.)
See: http://www.patentbaristas.com/archives/2010/11/01/costco-v-omega-parallel-importation-and-its-implications/
and
http://copyright.columbia.edu/copyright/2010/12/16/costco-omega-libraries-and-copyright/
See also the Pearson v. Liu case order:
http://scholar.google.com/scholar_case?case=3357164752919737781&hl=en&as_sdt=2&as_vis=1&oi=scholarr
and
@Nilanjana
Your reading of the law makes it seem much more clear-cut than it is. (If it was that clear-cut, why would the case have gone all the way to the Supreme Court?)
Section 602(a)(2) of the US Copyright Act is clear insofar as *infringing* works are concerned. That is, books that were produced abroad *without* the permission of the author. Those clearly cannot be imported because of the bar under Section 602(a)(2). However, the question before the Supreme Court in the Costco case was whether that bar also applies to goods produced *with* the permission of the owner.
Section 602(a)(1) talks of copies that are “acquired”, not necessarily upon purchase after entry into commerce. So one way of reading it would be that an exclusive licensee cannot reroute it into the United States. It doesn’t say that a buyer from the exclusive licensee cannot export it to the United States. After all, section 602(a) makes it makes it clear that violation of it is a violation of section 106. And section 109 (the first sale doctrine) overrides section 106 after first sale has occurred.
If you’re interested in these legal minutiae, I would suggest looking at the SCOTUS Blog, as it provides all the briefs (including amicus briefs), summaries of the arguments, etc.:
http://www.scotusblog.com/case-files/cases/costco-v-omega/
For a helpful “recap” of the arguments in the case:
http://www.scotusblog.com/?p=108438
For a transcript of the arguments themselves (which in the US Supreme Court are always of a very high quality):
http://www.supremecourt.gov/oral_arguments/argument_transcripts/08-1423.pdf
BTW, some judges (such as Justice Ginsburg) seemed to have problems with this narrow interpretation of section 602. Others (such as Justice Breyer) seem to use the reasoning I illustrated above. However, the final verdict was split 4-4. In any case, there is no definitive position of law on this matter as some in India seem to think there is.
And reading through the amicus briefs makes it clear that parallel importation of copyrighted works into the United States happens at very large scale.
Hey Pranesh,
Just saw this, sorry for the delay.
I’ll have a look at it and get back.
Cheers,
Prashant