Govt jolts MNCs

The recent ruling of the Government of India on the controversial issue of importing of original/genuine products (not counterfeit or pirated) which are sold or acquired legally abroad and imported into the country, by person(s) other than the intellectual property right (IPR) holder, which in trade parlance is known as ‘parallel imports', has clarified that it does not infringe the right of the IPR.

According to trusted sources, this ruling has given a big blow to IT companies like Samsung and Dell who have been trying to dampen the spirit of parallel importers.

According to the Department of Industrial Policy and Promotion, which is a nodal authority for all matters relating to (i) Trade Marks Act, 1999 (ii) Patents Act, 1970 and (iii) Designs Act, 2000 stated that under (i) Section 107A (b) of the Patents Act, 1970, "Importation of patented products by any person from a person who is duly authorized under the law to produce and sell or distribute the product shall not be considered as an infringement of patent rights."

With no surprises, this notification has brought a big relief to parallel importers, who have been alleedly harassed by Customs department due to continuous insistence from MNCs for last the 3 months. The action of Customs department confused all importers of IT industry for importing genuine commodity from overseas market and due to this, importers stopped importing the consignment causing a steep decline in imports and subsequently affecting the overall sales figures of IT peripheral industry. As a bitter consequence, within 3 months, India suffered a huge revenue loss of an estimated Rs. 500 crore.

Speaking on this "big day", Delhi based parallel importer, Sandeep Kanwar, CEO, Momentum Technologies, said, "It is a win of war against MNC twisting laws of land to crush small business houses. This notification clears everything".

Echoing same sentiments, Mumbai based importer, Viren Bavishi, CEO of Sapphire Micro Systems, commented, "Factually, there is no change in law. Yesterday's circular was just a much needed, long-awaited clarification. Hopefully with the release of the circular, MNCs will have to look for newer harassment tactics, to dampen the spirit of importers, adhering to all the business ethics. We are offering genuine products at reasonable prices to the consumers, though MNCs may call it unethical imports".

Bavishi also asserted that for the last few months, some MNCs by "adopting all possible unethical, illogical and desperate actions successfully blocked parallel imports, by taking undue advantage of some circulars which were worded in such a manner that created confusion."

"Subsequently, increased sales prices earned several hundred crore extra on the top of it. Even the MNCs termed parallel imports as unethical. Even after considering all possible aspect of IPR and legality of the consignments of which clearing was suspended, competent customs authority passed the order which was self explanatory in all respect. Even that Customs order was challenged/appealed , with the help of the claims which are far away from the fact. Hence this government ruling is a timely action by the Finance Ministry, as it will have a far reaching effect", he added.

According to Mahinder Aggarwal, president, ADCTA, "Our ADCTA members approached the concerned ministries and requested to issue a clarification on the issue of parallel imports. All concerned officers were apprised about the importance of timely action as further delay in clarification could ruin several rightful importers. Accordingly all officers acted promptly and issued the clarification that import of genuine commodity does not infringe the rights of the right holder."

It would be interesting as well as dramatic to see how the MNCs would react to this ruling and the course IT hardware industry is poised to take this year after the "legalization" of imports.