A trademark owner’s exclusive right to use a mark is not a right to control every later dealing in goods that carry it. Once genuine goods have been put on the market by the proprietor or with the proprietor’s consent, the law in most jurisdictions recognises that the proprietor has received the reward the trademark was meant to secure. Subsequent resale by a purchaser does not infringe the mark merely because the proprietor would prefer to control it. This is the doctrine of exhaustion. Its practical consequence is the legality, in appropriate circumstances, of parallel imports: genuine goods bought lawfully in one country and imported into another without the consent of the local trademark owner or its authorised distributor.
The question of how far trademark rights are exhausted, and whether exhaustion operates only within India or across borders, has significant commercial consequences. It determines whether a brand owner can partition world markets, charge different prices in different countries and prevent cheaper genuine goods from entering India through channels it does not control. For consumers and importers, it determines whether grey market goods remain available. For brand owners, it determines how far a registered mark can be used to protect distribution networks, warranty structures and pricing strategies.
In India, the Trade Marks Act, 1999 addresses exhaustion through Section 30(3) and Section 30(4), read with Section 29. This article examines these provisions, the judicial interpretation that has established India’s position on international exhaustion, the limits imposed by the “legitimate reasons” exception, and the recent decisions on refurbished goods, effaced marks and online resale.
The Concept of Exhaustion and Parallel Imports
Exhaustion is generally classified into three models. Under national exhaustion, the proprietor’s rights are exhausted only when goods are first sold within the territory of the country concerned, so the proprietor may still prevent the import of genuine goods first sold abroad. Under regional exhaustion, as in the European Economic Area, rights are exhausted by first sale anywhere within the region, but not by first sale outside it. Under international exhaustion, rights are exhausted by the first authorised sale anywhere in the world, so genuine goods lawfully placed on any market may be imported and resold freely.
Parallel imports, often called grey market goods, are genuine and not counterfeit. The goods are manufactured by or under the authority of the proprietor and bear the proprietor’s mark with its consent. What makes them “parallel” is the channel: they enter the country outside the proprietor’s authorised distribution system. They are typically cheaper because of price differentials between markets, and they commonly lack the local warranty or after-sales support the authorised distributor provides.
The TRIPS Agreement does not resolve the question. Article 6 provides that, for the purposes of dispute settlement, nothing in the Agreement shall be used to address the exhaustion of intellectual property rights. Each member is therefore free to choose its own exhaustion regime, and this is the space in which Indian law operates.
The Statutory Framework
Section 29 of the Trade Marks Act, 1999 is the provision that defines infringement of a registered trademark. Section 29(6) provides that, for the purposes of the section, a person uses a registered trademark where, among other acts, that person imports or exports goods under the mark. Importation of goods bearing a registered mark can therefore, in principle, fall within the statutory definition of infringing use.
Section 30 then provides limits on the effect of a registered trademark, and these operate as defences to an otherwise established infringement. Section 30(3) is the exhaustion provision. In substance, it provides that where goods bearing a registered trademark are lawfully acquired by a person, the sale of those goods in the market, or other dealing in them, by that person or by anyone claiming under or through that person is not infringement by reason only of two circumstances. The first is that the registered trademark has been assigned by the registered proprietor to another person after the acquisition of the goods. The second, clause (b), is that the goods were put on the market under the registered trademark by the proprietor or with the proprietor’s consent. Clause (b) is the operative source of the exhaustion principle.
Section 30(4) then limits the protection. It provides that Section 30(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 provision thus creates a carefully balanced scheme: genuine goods lawfully acquired may be resold, but the proprietor retains the power to object where the goods have been altered in a way that affects the mark’s function or the proprietor’s legitimate interests.
Two features of the scheme deserve emphasis. First, Section 30(3) is a defence, not a source of infringement. It becomes relevant only where the impugned conduct first satisfies the ingredients of infringement under Section 29. Second, Section 30(4) does not itself create infringement. It merely removes the protective shield of Section 30(3), and the proprietor must still establish infringement under Section 29.
The Central Question: What Does “The Market” Mean?
The decisive interpretative issue is the meaning of the expression “the market” in Section 30(3). If it means the Indian market, the proprietor’s rights are exhausted only by sale within India, and parallel imports would remain open to challenge. If it means the international market, a first authorised sale anywhere in the world exhausts the right, and parallel imports of genuine goods are permissible.
The question was squarely addressed in the litigation between Samsung and Kapil Wadhwa, an importer who had imported genuine Samsung printers from foreign markets and sold them in India at prices lower than those of Samsung’s authorised channel. At the interim stage, the single judge of the Delhi High Court accepted Samsung’s case and restrained the importation, treating the case through the lens of national exhaustion. Samsung’s argument was that the importer was not an authorised distributor, that the imports were without its consent, and that the goods lacked the warranty and support Indian consumers would expect.
On appeal, the Division Bench of the Delhi High Court took a different view in Kapil Wadhwa v. Samsung Electronics Co. Ltd. (2012 (194) DLT 23 (DB)). The Court held that India follows an international exhaustion regime under Section 30(3), so that a proprietor’s rights are exhausted once goods are lawfully placed on the market anywhere in the world by or with the proprietor’s consent. The Division Bench read “the market” in Section 30(3) as the international market and considered this consistent with the legislative scheme, noting that the Patents Act, 1970 already adopts international exhaustion in Section 107A(b), which permits the importation of patented products from a person duly authorised under the law to produce and sell them. The Court also drew support from parliamentary materials, including the view of a Rajya Sabha committee that “the market” in Section 30(3) is the international market.
The Division Bench did not, however, allow parallel imports to proceed without safeguards. It required prominent disclosure that the parallel-imported products carried no Samsung warranty or after-sales service and that any such support came from the importer. This condition reflects the Court’s concern that consumers not be misled into believing that grey market goods carry the same assurances as goods sold through the authorised channel. The disclosure requirement is an important practical qualification: parallel importation is lawful, but not a licence to misrepresent the status of the goods.
The Division Bench further held that the right under Section 30(3) is subject to the exception in Section 30(4). The Court accordingly treated the two sub-sections as a single, integrated scheme in which exhaustion is the rule and legitimate reasons for objection are the exception.
The Status of International Exhaustion
The Kapil Wadhwa decision is the leading authority on international exhaustion of trademark rights in India. Its status deserves careful statement. The Supreme Court has not delivered an authoritative pronouncement on the interpretation of Section 30(3) and Section 30(4). The Supreme Court did not set aside the High Court judgment and did not specifically address the sections of the Trade Marks Act, 1999 that were in issue. The doctrine therefore rests on a Division Bench decision of the Delhi High Court, which has since been followed in subsequent Delhi decisions and is widely treated as the settled position, but it has not been conclusively confirmed at the apex level. Commentators and practitioners have noted that different benches of the High Court have at times approached the concept differently, and the matter is regarded as one on which the last word has not been spoken.
For practical purposes, however, an importer or brand owner in India must proceed on the footing that international exhaustion is the prevailing law, at least in the jurisdiction of the Delhi High Court, which hears the largest share of Indian trademark litigation.
The Meaning of Section 30(4): Legitimate Reasons and Impairment
Exhaustion is not absolute. Section 30(4) preserves the proprietor’s ability to oppose further dealings in the goods where there exist legitimate reasons, and identifies changed or impaired condition of the goods as the paradigm example. The words “in particular” make clear that impairment is an illustration and not an exhaustive definition, so other circumstances may also constitute legitimate reasons.
The rationale for the exception is the origin and quality function of a trademark. A mark tells the consumer that the goods come from, or are under the control of, a particular source and are of the quality associated with that source. Where goods are altered after being put on the market, whether by repackaging, relabelling, tampering, deterioration or removal of the mark, the consumer who sees the mark may be misled about the condition of what is being bought. The proprietor has a legitimate interest in preventing its mark from being attached to goods that no longer correspond to what it placed on the market.
Cases on repackaging, relabelling and refurbishment have therefore been the principal arena for Section 30(4). The question in each is whether the defendant’s handling of the goods has changed or impaired their condition in a manner that gives the proprietor a legitimate reason to object, and whether the consumer is likely to be deceived about the origin or nature of the goods.
Refurbished Goods, Effaced Marks and the Recent Delhi Decisions
The most significant recent development concerns the resale of used or refurbished goods imported into India. In proceedings brought by Seagate Technology and Western Digital against importers of used hard drives, the Delhi High Court considered whether the defendants could invoke Section 30(3) where the goods had been refurbished and the original marks removed or effaced. At the single judge stage in 2024, the Court held that the effacement of marks amounted to impairment of the goods, so that a harmonious reading of Sections 30(3) and 30(4) meant that the defendants could not take the benefit of the Section 30(3) defence. The Court permitted sale in certain circumstances, subject to appropriate disclosures on the packaging that the goods were used and refurbished.
The Division Bench revisited the issue in Western Digital Technologies Inc. v. Geonix International Pvt. Ltd. (2025 DHC 1908-DB). The Bench emphasised that Section 29 is the only provision in the Act that defines infringement, and held that unless the impugned conduct first satisfies the ingredients of Section 29, there is no occasion to invoke Section 30(3) or Section 30(4). It reaffirmed that the expression “market” in Section 30(3) refers to the international market, in line with Kapil Wadhwa. The Bench also held that Indian trademark law does not recognise a cause of action based on reverse passing off, and, in the alternative, found the requirements of Section 30(3) satisfied and Section 30(4) inapplicable on the facts. Importantly, the Court clarified that Section 30(4) does not on its own make an act infringing; it only removes the shield of Section 30(3), and the act must still independently meet the requirements of infringement under Section 29.
The significance of this decision is twofold. It reaffirms international exhaustion as the governing principle, and it corrects the sequence of analysis by requiring courts to begin with Section 29 rather than treating Sections 30(3) and 30(4) as freestanding grounds of liability. A related line of reasoning in the Delhi High Court recognises that a person in India has the right to import genuine second-hand goods bearing a trademark and sell them, with the Court observing that although import falls within Section 29(6), it is subject to the defence in Section 30(3).
Resale of Genuine Goods, Online Marketplaces and Former Dealers
The exhaustion principle is not confined to imports. It applies equally to domestic resale of genuine goods lawfully acquired, including on e-commerce platforms. In the dispute between TTK Prestige and Hiveloop, the Delhi Commercial Court considered resale on an online marketplace and the Court’s reasoning reflects the principle that a trademark owner cannot ordinarily use trademark rights to prevent the resale of genuinely acquired goods on an online marketplace. Sellers who acquire genuine branded goods lawfully may therefore list and resell them online, subject to the exceptions discussed above and to the general law on misleading advertising and passing off.
The position of former authorised dealers illustrates the boundary of the doctrine. In MRF Ltd. v. Conveyo Belt Centre, the Madras High Court considered a former dealer who continued to use the proprietor’s marks after the termination of the dealership. The proprietor was able to restrain the continued use of its marks as infringement and passing off, while the former dealer remained free to sell its genuine remaining stock. The distinction is critical. Exhaustion protects the resale of genuine goods; it does not authorise the reseller to use the mark in a manner that suggests a continuing commercial connection with the proprietor, such as in signage, letterheads or advertisements implying authorised status.
Genuine Goods Only: Exhaustion Does Not Protect Counterfeits
Exhaustion applies only to goods that have in fact been put on the market by the proprietor or with its consent. Counterfeit goods, goods manufactured without authority and goods bearing misused marks fall wholly outside the doctrine, since there has been no first authorised sale to exhaust anything. An importer or seller who invokes Section 30(3) bears the burden of establishing that the goods were lawfully acquired and were placed on the market under the mark by or with the consent of the proprietor. Failure to establish lawful acquisition defeats the defence regardless of the international or national character of the market.
Importers should therefore maintain a clear documentary trail of procurement, tracing the goods to an authorised first sale. Absent such documentation, a defendant faces the risk that the court will not accept that the goods are genuine, and the exposure then extends beyond civil infringement to the criminal provisions of the Act dealing with false trademarks.
Comparative Perspective
India’s approach is notable when set against other major jurisdictions. The European Union follows regional exhaustion, as established by the Court of Justice in Silhouette International v. Hartlauer (Case C-355/96), so that rights are exhausted only by first sale within the European Economic Area, and parallel imports from outside the region may be prevented. The United States, for trademarks, applies a “material differences” approach under which gray market goods that differ materially from those authorised for the domestic market may be excluded, while for copyright the Supreme Court in Kirtsaeng v. John Wiley & Sons (2013) adopted international exhaustion. India’s adoption of international exhaustion in trademark law places it among the more import-friendly jurisdictions, consistent with the policy of keeping markets competitive and prices accessible for consumers.
Practical Implications for Brand Owners and Importers
For brand owners, the legal position means that the registered mark is not an instrument for blocking all grey market goods. A proprietor seeking to restrain parallel imports must show something beyond the fact of import: that the goods are not genuine, that their condition has been changed or impaired, that the importer is using the mark in a way that misleads consumers about warranty, service or authorised status, or that another legitimate reason under Section 30(4) exists. Brand owners should consider contractual restrictions in distribution agreements, the careful design of warranty and service terms, recording of marks with customs, and monitoring of grey market channels for unauthorised alterations and misleading claims.
For importers and resellers, the position offers meaningful but conditional protection. The prudent course is to ensure that goods are demonstrably genuine and lawfully acquired, to retain procurement records, to avoid altering, repackaging or relabelling the goods, to disclose clearly that the goods are parallel imports without the Indian warranty or after-sales support of the authorised distributor, and to avoid any use of the mark that suggests an affiliation with the proprietor. For used or refurbished goods, prominent disclosure that the goods are used or refurbished is advisable.
Conclusion
Sections 30(3) and 30(4) of the Trade Marks Act, 1999 establish the framework for exhaustion of trademark rights in India. Section 30(3) permits the resale of genuine goods lawfully acquired and placed on the market by or with the consent of the proprietor, and the Delhi High Court has read “the market” in that provision as the international market, so that parallel imports of genuine goods are not infringing. Section 30(4) preserves the proprietor’s right to object where legitimate reasons exist, especially where the condition of the goods has been changed or impaired.
The decision in Kapil Wadhwa remains the cornerstone of this position, and the more recent Delhi decisions on refurbished goods and effaced marks have refined its application, most importantly by insisting that infringement under Section 29 be established first. While the Supreme Court has yet to speak authoritatively on the issue, the prevailing approach strikes a considered balance: it protects consumers’ access to genuine goods at competitive prices and limits the ability of brand owners to partition markets, while preserving the trademark’s core function of guaranteeing the origin and condition of the goods that bear it.
References
- The Trade Marks Act, 1999, Sections 29 and 30 – https://ipindia.gov.in/trade-mark.htm
- The Patents Act, 1970, Section 107A(b) – https://ipindia.gov.in/patents.htm
- TRIPS Agreement, Article 6 – https://www.wto.org/english/docs_e/legal_e/27-trips.pdf
- Kapil Wadhwa & Ors. v. Samsung Electronics Co. Ltd., 2012 (194) DLT 23 (DB) (Delhi High Court)
- Western Digital Technologies Inc. v. Geonix International Pvt. Ltd., 2025 DHC 1908-DB (Delhi High Court) – https://www.verdictum.in/app-lite/court-updates/high-courts/delhi-high-court/western-digital-technologies-inc-v-geonix-international-private-limited-2025dhc1908-db-1609612
- Seagate Technology LLC v. Daichi International (Delhi High Court, 2024), CS(COMM) 191/2024 and 192/2024 – https://www.mondaq.com/india/trademark/1492804/effacement-of-trademarks-amounts-to-impairment-delhi-high-court
- Silhouette International Schmied GmbH v. Hartlauer Handelsgesellschaft mbH, Case C-355/96 (Court of Justice of the European Union, 1998)
- Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519 (2013)
- Trade Mark Rights and the Resale of Genuine Goods in India (MRF v. Conveyo Belt Centre, Kapil Wadhwa, TTK v. Hiveloop) – https://www.legal500.com/intelligence/india/intellectual-property/trade-mark-rights-and-the-resale-of-genuine-goods-in-india-the-limits-of-a-brand-owner%E2%80%99s-control-from-mrf-v-conveyo-belt-centre-to-kapil-wadhwa-and-ttk-v-hiveloop
- Exhausting Control: Judicial Approaches to Trademark Exhaustion and Parallel Imports in India – https://chambers.com/articles/exhausting-control-judicial-approaches-to-trademark-exhaustion-and-parallel-imports-in-india
- India: Legality of Parallel Imports vis-à-vis Trade Marks Law – https://ssrana.in/articles/india-legality-of-parallel-imports-vis-a-vis-trade-marks-law/
- Any Person Has Right to Legally Import Second Hand Goods Bearing Trademark and Sell Them: Delhi High Court – https://www.livelaw.in/amp/high-court/delhi-high-court/any-person-in-india-has-right-to-legally-import-second-hand-goods-bearing-trademark-of-an-entity-and-sell-them-delhi-high-court-292465
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