First-sale argument fails in export of Indian editions

By Abhai Pandey, Lex Orbis IP Practice
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In Pearson Education & Ors v Prabhat Chander Kumar Jain & Ors Delhi High Court discussed an interesting question on infringement of copyright under the Indian Copyright Act, 1957.

Abhai Pandey Lex Orbis IP Practice
Abhai Pandey
Lex Orbis IP Practice

The plaintiffs, which are foreign publishing houses, and their exclusive licensees sell low-priced editions of educational books in the Indian sub-continent. While the content of the Indian and US editions of these books are the same, the quality of paper used, the printing and the accompanying online features are notably different. With the Indian edition of some books being up to US$150 cheaper, the two editions are also priced differently.

The defendants, which are companies incorporated in India, set up a web site to sell the low-priced Indian editions to customers in the US. This triggered the present lawsuit in India that sought to shut down the defendants’ business and website.

Hitting back in the US

The plaintiffs also filed a lawsuit against the defendants in the United States District Court, Southern District of New York. A search of that court’s docket reveals that the plaintiffs have collectively pursued and won several such actions against defendants in identical situations.

However, as clarified by the same court in an identical case, Pearson Education & Ors v Vinod Kumar & Ors, the first-sale doctrine does not extend to works manufactured outside the US. Therefore a low-priced edition put together in India will not be protected by US law.

Action in the Indian courts

Delhi High Court disregarded the applicability of the first-sale doctrine within India when it restrained the defendants from exporting the books bought from the plaintiffs. The judgment deals with several different arguments in coming to this conclusion.

Multiple arguments

The plaintiffs argued that the acts of the defendants of diverting the low-price editions of the books to countries outside the ones indicated on the books amounted to infringement of copyright. They relied on section 14 of the Copyright Act, which provides the meaning of copy right and includes the right of the owner to issue copies of the work to the public.

The plaintiffs also stated that as it was the copyright owner’s prerogative to issue copies of a work to the public the defendants, by putting into circulation the copies of low-price editions meant for specific territories, are violating the right of the copyright owner and thus causing infringement of the copyright. The plaintiffs also referred to section 51 of the Copyright Act to state that infringement is deemed to be done by a person who does, without licence or permission, any acts which are conferred on the owner of the work.

It was further contended that even the export of the goods is treated as infringement within the meaning of the Copyright Act if it violates the rights of the owner.

Lastly, the plaintiff countered the applicability of the first-sale doctrine by stating it would be inapplicable in the present case as the Indian low price editions are not already in circulation in the territory where they are exported.

Defending resale

The defendants contested the case on the grounds that the case of the plaintiffs does not fall under any of the provisions of the Copyright Act. There was no provision under either section 51 or section 14 whereby export of books would tantamount to infringement. It was contended that the words “already in circulation”, under section 14(a)(ii) of the act, clearly recognize the first-sale doctrine whereby once the owner of copyright has exercised his right to issue the copies, the owner loses all future rights to control the subsequent sales of the same work.

Final reckoning

However, Delhi High Court observed that even if the doctrine of first sale is applicable it does not curtail the rights of the owner.

As the exclusive licensee makes the first sale, the doctrine will at best apply to its rights and not those of the copyright owner. As such, the court held that the copyright owners will continue to have a cause of action against the defendants.

The court held that the defendants’ acts of selling books from India or offering for sale from India through a website, and thereafter accepting money and couriering the books to an unauthorized territory amounted to infringement of the copyright of the owners.

In view of the above reasoning, the argument of applicability of first-sale doctrine defeating the rights of the owner fails. The doctrine cannot abridge the rights of the owner to complain of infringement.

Abhai Pandey is an attorney-at-law with New Delhi-based Lex Orbis IP. He has extensive experience in civil and criminal enforcement of trademarks and copyrights.

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