Syed Emran Hossain :
“Parallel imports” has become a proverbial term in the recent time in Bangladesh. Before going to elaborate the legality of parallel imports in our country I would like to shed some light on the definition of “Parallel imports”.
According to Cambridge Online Dictionary parallel of imports of branded goods mean “products that are bought in one country in an unofficial way and then sold more cheaply than usual in a different country”. From the legal perspective we can say parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. The common example of this parallel import in our country is importing mobile handsets and other consumer electronics goods like TV, Monitor, Printer, etc. in an appropriate channel and selling them at a predatory lower price without any warranty from the brand owner. The reason for such lower price is evasion of customs duties. For example customs duty for TV is 94% and for mobile handsets it is 27%. These parallel imports are also called grey market goods.
Different countries in the world have different measures and legal proposition for parallel imports. It is not illegal in every jurisdiction in the world. For example in Hong Kong and New Zealand parallel import is legal till date. On the other hand in Australia, Malaysia, Brazil unauthorized parallel import has been declared illegal. The European Court though acknowledge “doctrine of exhaustion” between the Member States but EU legislation for trademarks, design rights and copyright prohibits its application to goods put on the market outside the EU/EEA.
In recent times this issue of parallel import has been address by the Courts of Bangladesh in several cases. Parallel import has been explicitly declared illegal by the High Court Division of the Supreme Court of Bangladesh in Writ Petition No. 11163 of 2014. In this case the petitioner used to import branded product from different countries without intellectual property certificate from the trademark owner. Upon receiving complaint from the original owner the Customs refused clearance.
The petitioner filed this Writ Petition challenging the refusal to issue custom clearance.
The Court held that as per Article 6(Ga) of the Import Policy Order 2012-2015 the Customs did not commit any wrong by asking for certificate.
It was further held that without such certificate goods of the petitioner cannot be released. Furthermore, in Writ Petition No. 7592 of 2015 the High Court Division of the Supreme Court of Bangladesh issued Rule and directed the concerned government authorities to confiscate/restrain such parallel imports. However, the last nail in the coffin of parallel importers was put by District Judge, Dhaka by considering the act of parallel import not only illegal but also as an act of infringement of trademarks in two recent cases filed by Samsung Electronics Co. Ltd and another being Title Suit No. 38 and 48 of 2015.
The instigating factor behind filing of these suits is the swamp of parallel imported mobile handset and consumer electronic goods like TV, Monitor, etc. within the market. The parallel importers bring huge quantity products in an inappropriate manner by evading customs duties and without consent of original intellectual property/brand owner. They deprive the government to earn huge revenue and consumers from their legitimate right of warranty. Among many other brand owners “Samsung” was mostly affected by these parallel importers. Their mobile handsets, TV, printer, monitor are most selling electronic devices in Bangladesh and hence their products are enormously targeted by the illegal parallel importers. In respect of mobile handsets these parallel importers are selling handsets without registering their IMEI/EMID number with BTRC causing a threat to the national security of this country.
In order to prevent such parallel importers Samsung filed two suit being No. 38 and 48 of 2015 before the Court of District Judge, Dhaka. For clear and better understanding of the legal propositions I also quote some relevant laws relating to infringement of trademarks and parallel import.
Section 25(2) of the Trade Marks Act 2009 provides that “no person other than the registered owner of a trademark in relation to any goods or services, as the case may be, shall use that trademark without the consent of the registered owner”. Section 25(3)(c) provides that “a registered trademark is infringed or is deemed to be infringed by any person who, not being the registered proprietor of the Trademark or registered user thereof uses in the course of trade a Mark where the trademark has a reputation in Bangladesh and the use of the mark, being without due course, takes unfair advantage of, or is detrimental to, the distinctive character of the repute of the trademark”. According to section 26(4)(c) a person uses “a registered mark” means imports or exports goods under the mark.
Apart from that Article 6(Ga) of the Import Policy Order 2012-2015 provides that “in case of import of branded goods registered under any law related to intellectual property in Bangladesh copy of intellectual property certificate in favour of concerned branded goods certified by the intellectual property right holder of the exporting country, shall be submitted to the Customs Authority”. Moreover, prior approval of BTRC is required to import mobile handsets.
This act of parallel import also comes within the ambit smuggling which is criminal offence. Section 2(s) of the Customs Act 19696 defines the said offence as to “bring into or take out of Bangladesh in breach of any prohibition or restriction for the time being in force, or evading payment of customs-duties of takes leviable there-on”. Section 25B(1)(b) of Special Powers Act provides “whoever, in breach of any prohibition or restriction imposed by or under any law for the time being in force, or evading payment of customs duties or taxes leviable thereon under any law for the time being in force, brings into Bangladesh any goods, shall be punishable with death, or with imprisonment for life, or with rigorous imprisonment for a term which may extend to fourteen years and shall not be less than two years, and shall also be liable to fine”. Section 25(B)(2) provides “whoever sells, or offers or displays for sale, or keeps in his possession or under his control for the purpose of sale, any goods the bringing of which into Bangladesh is prohibited by or under any law for the time being in force shall be punishable with imprisonment for a term which may extend to seven years and shall not be less than one year, and shall also be liable to fine”.
Besides such explicit statutory provisions cases of different jurisdiction like UK, Australia, India, Malaysia, and Brazil were cited before the court in which superior courts of these countries held that parallel import and sale of branded goods without consent from the trademark owner is illegal and will also constitutes infringement of trademark.
Moreover, the Court held a consistent view with Section 25 of the Trademarks Act 2009 which explicitly provides that the registered trademark owner has the exclusive right to use his trademark. He can authorize any one to use his trademark but no one can use his trademark without his consent. The District Judge also acknowledged that courts and legislators have long afforded protection to trade-mark owners by prohibiting this type of unfair competition the defendants are liable to be injuncted.
Therefore, the Hon’ble Court came into the conclusion that unauthorized parallel import is illegal and constitutes an act of infringement of trademark and restraining the illegal parallel importer will safeguard the interest of the ordinary people, government, legitimate entrepreneurs and the registered owners of the trademark. However, complete extinction of this so called grey market will not be possible without a combined endeavor of the government authorities and every citizen of the country. The government authorities are required to act with utmost caution and vigilance to out-root the parallel importers and every conscious law abiding citizen must refrain themselves from purchasing such parallel imported goods.
(Syed Emran Hossain, Barrister-at-Law (Lincoln’s Inn) is an Advocate of Supreme Court of Bangladesh)
