Friday, June 8, 2012

Section 30(3) of Trademarks Act: What is “by reason only of”?

Section 30 of the Trademarks Act, 1999, deals with limits on effects of a registered trademark, which explains the object of the provision. Sub-section 3 of Section 30 reads as follows:

“(3) Where the goods bearing a registered trade mark are lawfully acquired by a person, the sale of the goods in the market or otherwise dealing in those goods by that person or by a person claiming under or through him is not infringement of a trade by reason only of----
(a) the registered trade mark having been assigned by the registered proprietor to some other person, after the acquisition of those goods: or
(b) the goods having been put on the market under the registered trade mark by the proprietor or with his consent.
(4) Sub-section (3) shall not apply where there exist legitimate reasons for the proprietor to oppose further dealings in the goods in particular, where the condition of the goods has been changed or impaired after they have been put on the market.”

The limited idea of this post is to understand the meaning of the phrase “is not infringement of a trade by reason only of”. Obviously, for unconsented use of the mark to be deprived of the benefit/exemption spelt out in the sub-section and to be accused of infringement, the user of the mark (not being the owner or his licensee) must do something beyond merely dealing with goods which have been legitimately placed in the market by or with the consent of the owner.

Apart from the scenario mentioned in sub-section 4, what could those situations be where the user of the mark goes beyond merely dealing in such legitimate goods? One situation could be where such a party starts representing himself as an “authorized dealer of the goods of the trademark owner”.

Although he may be rightfully dealing in goods which have been put in the stream of commerce by or with the consent of the trademark owner i.e. “authorized goods”, he may not represent himself as an “authorized dealer” under any circumstances.

Simply put, a dealer of authorized/genuine goods is not an “authorized dealer”. The false representation as an “authorized dealer” would amount to passing off in a limited sense since the distributor would claim false association with the trademark owner to enhance his visibility/profile. Even if he deals solely in legitimate goods of the trademark owner thereby causing no “real” pecuniary injury in the short term, his representation would be false, and would result in dilution of the mark.

For now, I can’t think of other situations which could be precluded from the exemption of Section 30(3). I welcome comments and inputs from readers.

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