INDIA FOLLOWS NATIONAL EXHAUSTION ????

YES, the Delhi High Court in John Wiley v. Prabhat Chander (CS (OS) 1960/2008) had to decide whether exporting books whose sale and distribution was subject to territorial restrictions could amount to copyright infringement or not. The Delhi High Court answered in the affirmative, and rejected an application by the Defendants to set aside an earlier ex-parte injunction operating in favour of the copyright owner.  The Court held that India follows the principle of national exhaustion, not international exhaustion.

Facts of the case

The Plaintiffs were all international publishing houses, who publish special low price editions of text books for school & college students in India. These Low Price Editions (LPEs) were published with the rider that they were meant for sale/re-sale only in the Indian sub-continent and not in any other parts of the world. The Plaintiffs contended that they published LPEs so that the same international level books which are otherwise quite costly might be made available to Indian and other Asian students in a cost-effective manner at rates befitting the Asian markets.

The Defendants were a company and its directors who were engaged in the business of online book selling. The Defendants would offer the LPEs for sale worldwide in breach of the territorial notice.

The Plaintiffs' grievance arose because the LPEs, which are much cheaper than their international counterpart editions, were replacing the latter in international markets and thus affecting the Plaintiffs' income.

Arguments of the Defendants

Arguing that the earlier ex-parte injunction was erroneous, the Defendants contended that their act of re-selling legitimately purchased copies of the LPEs outside the Indian sub-continent could not be construed as copyright infringement. The Defendants sought to protect themselves by raising the defence of first sale doctrine. The Defendants urged that once the Plaintiffs had sold a particular copy of the LPEs, they could not control its further re-sale.

Relying on the earlier judgment of Warner Bros v. Santosh VG, the Defendants further contended that it was clear that India applies the principles of first sale doctrine on literary works and that once a work was "already in circulation", it could not be further controlled by the copyright owner.

The Defendants contended that India follows the principle of international exhaustion; therefore, the Plaintiffs exhausted their rights in the LPEs worldwide when they first sold their publications in India.

The Defendants also submitted that their act of exporting LPEs was not prohibited by the Indian Copyright Act, 1957 (the Act). They submitted that the Act only prohibited the import of infringing articles into India; the Act was silent as far as export is concerned and the court should not add words to the legislation.

Arguments of the Plaintiffs

The Plaintiffs contended that the Defendants were in violation of their copyright as they had engaged in re-selling of the LPEs to territories beyond those prescribed in the notices. They submitted that the Act exclusively empowered them to "issue copies of the work to the public" worldwide. This prerogative of the Plaintiffs was being violated by the Defendants when they re-sold LPEs to territories beyond those prescribed in the notices.

The LPEs had not been put into circulation by the Plaintiffs in any territory other than those prescribed in the affixed notices (Indian sub-continent). Upon first sale their rights in the LPEs were exhausted only in reference to Indian sub-continent and not the rest of the world. Hence, the Defendants were in direct contravention of their distribution right under the Act.

It was immaterial that the Act did not expressly provide for prohibition of export. Since the acts of the Defendants were without any licence and in contravention of the exclusive rights of the Plaintiffs, the courts had the power and authority to prevent them.

Decision of the Court

The Delhi High Court after carefully examining various provisions of the Act affirmed and stressed that the Act gives a copyright owner the right to exploit his copyright by assignment and licensing. Such an assignment or licence could be limited by way of period or territory, and could be exclusive or non-exclusive. Therefore, a copyright owner could exhaust its rights in some territories while protecting its right in respect of others. Accordingly, the Plaintiffs could prevent the Defendants from re-selling and exporting their LPEs to territories where their right of distribution and sale had not been exhausted.