This case revolves around the enforcement of trademark rights under the Trade Marks Act, 1999, in the context of the international exhaustion principle. It concerns the importation of hard disk drives (HDDs) bearing the registered trademarks of Western Digital by the defendant, Hansraj Dugar, who was importing second-hand goods from overseas Original Equipment Manufacturers (OEMs).

The plaintiffs sought an injunction against such imports, claiming infringement of their registered trademarks. The Court was called upon to adjudicate whether such imports of second-hand genuine goods violated trademark rights or were protected under the principle of international exhaustion embedded in Section 30 of the Trade Marks Act.

• Detailed Factual Background: Western Digital Technologies Inc. and its subsidiary, Western Digital UK Ltd., collectively referred to as the plaintiffs, are globally recognized manufacturers of data storage solutions, including HDDs, solid-state drives (SSDs), routers, software, and other digital storage devices. They have used the trademark "WESTERN DIGITAL" since 1997 and "WD" since 1999. The trademarks are registered in India under Class 9, and the plaintiffs own multiple domain names reflecting these marks.
  • The plaintiffs discovered that the defendant, Hansraj Dugar, operating through his sole proprietorship M/s Supreme Enterprise, had imported a large quantity of hard disk drives into India bearing the plaintiffs' trademarks without authorization.
  • The goods were intercepted by the Customs Department in Kolkata in September 2019 under the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007.
  • Upon investigation and sample testing, it was found that the drives were second-hand, with some being damaged or unreadable.
  • The plaintiffs claimed that such goods, when sold as new or genuine products under their mark, would mislead consumers and tarnish their goodwill.
• Detailed Procedural Background: The plaintiffs filed CS(COMM) 586/2019 before the Delhi High Court seeking a permanent injunction, damages, and other reliefs.
  • On 21 October 2019, the Court passed an ex parte ad interim injunction, restraining the defendant from importing or dealing in goods bearing the marks "WESTERN DIGITAL" and "WD."
  • A Local Commissioner was appointed to inventory the seized goods, which amounted to around 7500 HDDs, and placed them in the notional custody of Customs Authorities.
  • The matter was referred to mediation but remained unresolved.
  • In 2024, the defendant filed I.A. 38495/2024 seeking vacation of the injunction order, citing a significant change in law based on the judgment of the Delhi High Court in Seagate Technology LLC v. Daichi International, 2024:DHC:4193.
  • This application was heard and decided along with the plaintiffs' earlier interim application I.A. 14659/2019.
• Issues Involved in the Case:
  • Whether the import of second-hand genuine goods bearing registered trademarks amounts to infringement under Section 29(6) of the Trade Marks Act, 1999, or is exempt under the principle of international exhaustion under Sections 30(3) and 30(4).
  • Whether the defendant, having not sold the goods in India, could be held liable for misrepresentation and infringement.
  • Whether the disclosure norms laid down in previous precedents were applicable to such imports.
• Detailed Submission of Parties:
  • Plaintiffs' Submissions:
    • The HDDs imported were used, non-functional, and unauthorized for retail sale, having been tailored for specific OEMs abroad.
    • Selling these as "new and unused" would amount to consumer deception and dilute the plaintiffs' brand reputation.
    • Importation without full disclosure of their second-hand status violated the Trade Marks Act, particularly Sections 29(6) and 30(4).
    • They relied on Kapil Wadhwa v. Samsung Electronics Co. Ltd., 2012:DHC:6136:DB, arguing impairment of goods post-sale negates international exhaustion.
    • They distinguished Daichi International on the ground that the defendants therein were resellers, not importers.
  • Defendant's Submissions:
    • The HDDs were genuine products lawfully purchased from OEMs abroad and were neither tampered with nor rebranded.
    • They relied on Seagate Technology LLC v. Daichi International, 2024:DHC:4193, asserting international exhaustion applies to second-hand goods with full disclosure.
    • They emphasized that no misrepresentation occurred as the goods never entered the market due to seizure.
    • They expressed willingness to comply with disclosure norms from Xerox Corporation v. Shailesh Patel, CS(OS) 2349/2006.
• Detailed Discussion on Judgments Cited:
  • In Kapil Wadhwa v. Samsung Electronics Co. Ltd., the Court held that India follows the principle of international exhaustion and that resale of genuine goods does not amount to infringement unless their condition is impaired. Disclosure regarding warranty and servicing is crucial.
  • In Seagate Technology LLC v. Daichi International, the Court extended Kapil Wadhwa to refurbished goods, allowing their import and sale if they are disclosed as used, not covered by warranty, and independently refurbished. The Court held there was no statutory bar against importing discarded electronic goods.

Further, the Court referred to the consensual directions in Xerox Corporation v. Shailesh Patel, CS(OS) 2349/2006, where the defendant was allowed to sell imported second-hand Xerox machines with proper disclosures regarding their status, warranty, and source. These standards of disclosure were acknowledged as being in harmony with Kapil Wadhwa and relevant to the present case.

Detailed Reasoning and Analysis of Judge:
The Court after a detailed examination of the statutory framework and judicial precedents, concluded that the principle of international exhaustion permits the import and sale of genuine trademarked goods, including second-hand or refurbished ones, so long as their condition is not impaired, and full disclosure is made. The Court rejected the plaintiffs' contention that mere import without consent constitutes infringement under Section 29(6), noting that such a view is counterbalanced by Section 30(3), which allows lawful acquisition and resale. Since the HDDs in question had not been released into the Indian market and no misrepresentation had occurred, the defendant could not be held liable for infringement.

The Court also clarified that the applicability of the Daichi judgment was not limited to resellers alone, as the defendants in that case included importers. Furthermore, in the absence of any law prohibiting the import of second-hand HDDs, the plaintiffs could not assert exclusive control post-exhaustion. The Court acknowledged that the defendant had acted reasonably and showed willingness to comply with disclosure requirements.

Final Decision: The Court permitted the release of the seized HDDs to the defendant, subject to the condition that they be sold only as scrap after removal of the plaintiffs' marks. For future imports, the defendant was directed to comply with the disclosure norms laid down in Xerox Corporation v. Shailesh Patel if sold without refurbishment, and with the guidelines in paragraph 116 of Daichi if the goods are refurbished. The applications were disposed of accordingly, with the suit listed for further proceedings.

Law Settled in this Case: The judgment reinforces that under Section 30(3) of the Trade Marks Act, import of genuine goods by third parties is permissible in India under the principle of international exhaustion. There is no infringement under Section 29(6) if the goods are lawfully acquired and no impairment or misrepresentation occurs. Disclosure of the product's refurbished status, lack of manufacturer's warranty, and independent service responsibility is essential. The ruling harmonizes judicial precedents and aligns domestic trademark law with global exhaustion doctrines, ensuring consumer protection while balancing trademark proprietors' rights.

Case Title: Western Digital Technologies Inc. & Anr. v. Hansraj Dugar
Date of Order: 16 May 2025
Case No.: CS(COMM) 586/2019
Neutral Citation: 2025:DHC:3844
Name of Court: High Court of Delhi
Name of Judge: Hon'ble Mr. Justice Amit Bansal

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Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: ajayamitabhsuman@gmail.com, Ph no: 9990389539