Authored By: Piyush Kumar
South Asian University
ABSTRACT
This term paper examines the intricate nexus between international trade law and intellectual property rights (IPRs) using the lens of parallel imports in the pharmaceutical industry in India. Parallel imports authentic products imported without authorization from the patent owner present important legal and policy issues, especially in developing nations where access to low cost medicines is a matter of great public concern.
India’s acceptance of international exhaustion under Section 107A(b) of the Patents Act, 1970, provides for parallel importing of patent pharmaceuticals under its flexibilities within Article 6 of the TRIPS Agreement, as strengthened by the Doha Declaration on Public Health. While this policy measures generate friction among patent holders who argue parallel imports infringe upon their exclusivity, detract from their margins, and subvert segmentation, it furthers public interests that are fundamental in nature and indispensable to maintaining confidence in international trading.
Drawing on a comparative legal and doctrinal analysis, this paper considers India’s regulatory role, important judicial interpretations (most importantly Strix Limited v. Maharaja Appliances andKapil Wadhwa v. Samsung), and lessons from the experience of countries like the European Union and the United States. This paper contends that there is a need for a more ordered and transparent regulatory system which balances trade liberalization, IPR enforcement, and public health concerns and reinforces India’s position as a global leader on access to affordable drugs in the international trade regime.
ACKNOWLEDGEMENT
I am writing to express my gratitude to Record Of Law for the insightful and enriching guidance during the internship.
I hereby acknowledge that this paper is my original and unpublished work. It has been prepared exclusively for submission as part of the requirements for this internship and has not been submitted elsewhere.
Introduction
In the changing dynamics of international trade law, the interface between free trade and intellectual property rights (IPRs) has emerged as an area of controversy for legal and policy arguments, especially in the framework of parallel imports in the pharmaceutical industry. Parallel imports are the phenomenon of importing authentic, patented medicinal products from markets where they are priced lower, without authorization from the patent owner. This custom usually arises in jurisdictions which accept the doctrine of international exhaustion of rights, and goods can then be resold once lawfully entered into any market.1
For a country like India being a developing economy with a vast population and heavy disease burden the access to affordable medicines is not only a matter of policy interest but also a constitutional requirement based on the right to life as enshrined in Article 212of the Indian Constitution. In this sense, parallel imports are a device to balance economic liberalization and public health imperatives. However, this tool also poses challenges to the territorial nature of patent rights and the commercial interests of pharmaceutical companies, many of which argue that parallel imports erode market exclusivity and diminish incentives for innovation.34
This paper aims to explore the legal foundations and practical implications of India’s policy on pharmaceutical parallel imports within the framework of international trade law. It also examines how India’s stance corresponds with its TRIPS Agreement obligations, drawing comparative lessons from the European Union and the United States. Employing a doctrinal and comparative legal approach, the paper seeks to answer a core question that is,
“What insights can India gain from global models of parallel import regulation such as the EU’s regional exhaustion and the USA’s sectoral approach to enhance its balance between free trade, intellectual property rights, and public health safeguards in the pharmaceutical sector?”
Research Methodology
For the purpose of this research article, Doctrinal legal research method is adopted, focusing on statutory interpretation and case law analysis. Further Analyzes landmark Indian judgments. Comparative study of Free Trade and Parallel Import regimes in the EU and USA. And Secondary sources like academic journals, WTO/WIPO/WHO reports etc. have also been analyzed.
Understanding Parallel Imports and Their Legal Dimensions
Parallel imports are defined as the importation into a nation of authentic, trademarked or patented goods without permission from the intellectual property owner, usually from an overseas market where the product is being sold at a cheaper price. Parallel imports differ from pirated goods in that they are legally manufactured and sold, and they do not constitute IP infringement in itself. The lawfulness of parallel imports, though, is subject to the particular exhaustion of rights policy pursued by a nation.
The theory of Exhaustion of rights touches on the issue when the IP owner ceases control over a product after sale. There are three major models of exhaustion:5
National Exhaustion: IP rights are exhausted within the territory of initial sale.
Regional Exhaustion: IP rights are exhausted within a collection of nations (e.g., the EU, SAARC).
International Exhaustion: IP rights are exhausted worldwide once the product is sold by or with the permission of the right holder.
The World Trade Organization’s TRIPS Agreement in Article 6 specifically reserves for member states the choice of regime on exhaustion. This allows countries to choose a regime that fits their public policy objectives, including public health ones. The Doha Declaration on TRIPS and Public Health (2001)6reaffirmed this freedom of choice, and it stressed that enforcement of IPs should not block access to cheaper medicines, particularly in developing nations.
Parallel imports are a legal method of allowing price competition, cutting monopolistic practices and enhancing access to medicines that are vital. At the same time, they are a cause for concern for patent owners, who frequently depend on regional pricing and selective distribution schemes to have the highest revenues and finance research. Therefore, the judicial treatment of parallel imports is at the nexus of trade liberalization, enforcement of IPRs, and public health policy a nexus that each nation addresses according to its economic and regulatory interests.7
India’s Strategy for Parallel Imports in Pharmaceuticals8
India has embraced the international exhaustion approach, permitting the parallel importation of patented goods into its local market. This strategy is enshrined under Section 107A(b) of the Patents Act, 1970, enacted via the Patents (Amendment) Act, 2002 and maintained in the 2005 amendment to align Indian law with the TRIPS Agreement. The section allows importation of patented goods by any individual from an individual “duly authorized under the law to make and sell or distribute the product,” thus legalizing parallel imports from international markets.
The logic for this model lies in India’s constitutional duty to ensure public health, as construed under Article 21 (Right to Life). Allowing lower-priced imports makes India improve access to critical medicines, lower the costs of healthcare, and fall in line with the Doha Declaration’s acknowledgement of TRIPS flexibilities. The model also accords with India’s general role as a Global South pharmacy, where medicine availability promotion is an overarching policy objective.
Judicial interpretation has also supported this position. In Kapil Wadhwa v. Samsung Electronics9, the Delhi High Court held that parallel imports of authentic goods are allowed under Indian trademark law, as long as the goods were not materially different from domestically sold goods. In another case Ajanta Pharma Ltd. v. Sunways (India) Pvt. Ltd.10, the Bombay High Court affirmed the validity of parallel importation of a patented medicine on the basis of the international exhaustion principle and highlighting the lack of material alteration or misrepresentation.
But challenges are still present. The phrase “duly authorized under the law” has been a source of legal uncertainty, especially in deciding whether the authorisation has to be under Indian law or exporting country law. Moreover, there is no over-all regulatory environment in India governing the monitoring of the quality, safety, and labelling of parallel-imported drugs putting consumer protection and regulatory control at risk. In the case Strix Limited v. Maharaja Appliances11, Strix Limited accused Maharaja Appliances of infringing its patent in India by importing kettles from a Chinese supplier. Strix argued this import violated its rights under Section 4812 of the Indian Patents Act, which grants exclusive rights to patentees for manufacturing, selling, or distributing patented products in India. The defendant, Maharaja Appliances, claimed the import was valid under Section 107A(b), which allows parallel imports if the product is authorized by the laws of the exporting country. However, they could not provide proof of their claim. The defendant failed to prove the existence of a Chinese patent. The ambiguity in Section 107A(b)13 and the lack of clear court precedents in India has led to multiple interpretations of Section 107A(b), The court dismissed the case. Later During a WTO review in 201114, Brazil and Japan questioned India about its stance on parallel imports and what “duly authorized under the law” means. India clarified that “law” refers to the laws of the exporting country, not India. India follows the international exhaustion of patent rights, meaning once a patented product is sold lawfully in one country, it can be imported into India without violating patent rights.
Therefore, although India’s legal strategy is to ensure affordability and accessibility, the lack of well-defined operational guidelines requires further clarification to guarantee safety and legal certainty.
Comparative Models of Regulation
To evaluate the efficacy of India’s strategy on parallel imports in the pharmaceutical industry, it is necessary to examine comparative models of regulation—more specifically, those of the European Union (EU) and the United States (US). These regimes both embody two divergent paradigms: the EU’s regional exhaustion model and the US’s sectoral/national regime, both influenced by their own trade, health, and IP policy regimes.
European Union: Regional Exhaustion and Market Integration15
The European Union follows a regional exhaustion approach, which allows parallel imports within its member states once a product is legally put on the market in any EU or EEA nation. This system facilitates the EU’s objective of economic integration, promoting free movement of goods, price competition, and consumer benefit. In the pharmaceutical industry, the European Court of Justice (ECJ) has repeatedly confirmed the legitimacy of parallel imports, as long as the product is similar in composition and quality and does not deceive consumers. The ECJ jurisprudence also requires justification and clarity for repackaging or relabelling of the imported product. This model harmonizes IP rights and public interest by making price regulation possible while assuring product safety with harmonized drug standards.
United States: National Exhaustion and Sector-Specific Controls16
The United States has traditionally had a national exhaustion regime in which patent rights are not treated as exhausted by sales outside the country unless statute or jurisprudence allows for it. In Kirtsaeng v. John Wiley & Sons (2013)17, the US Supreme Court allowed parallel imports under copyright law but its scope in patented drugs is still narrow. The US has strict controls on drug imports. Even if the product is authentic, it has to be approved by the Food and Drug Administration (FDA), properly labelled, and traceable. Notably, US law allows exceptions for personal importation under limited conditions, but commercial-scale imports are strictly regulated or banned.
Comparative Value
The EU system is characterized by market flexibility and geographic balance, whereas the US system is concerned with patent protection and consumer security via stringent control mechanisms. Both have valuable lessons to learn: the EU provides for affordability and access, whereas the US provides for quality and control. India, having the twin challenge of providing access to medicine and managing parallel imports, can take the best from both systems to create a hybrid, situation-fitted regulatory system.18
Lessons for India: Comparative Insights and Policy Implications19
India’s existing regime on parallel imports based on international exhaustion and bolstered by Section 107A(b) of the Patents Act, 1970 is evidence of its commitment to access and affordability. Comparative experiences from the European Union and the United States provide rich lessons for India to refine its approach and balance free trade, intellectual property rights (IPRs), and public health protections better.
Clarity in Legal Drafting and Definitions
A common problem in India is the vague words used in Section 107A(b), more specifically the term “duly authorized under the law.” This has been read liberally by courts to encompass authorization by foreign laws, yet the lack of statutorily defined terms creates confusion. India can borrow specific legislative terms from the EU model that clearly delineate the allowed sources and the standards of equivalency for foreign products.20
Regulatory Oversight and Drug Safety Mechanisms21
As in the case of the U.S. Food and Drug Administration (FDA), India can increase oversight through institutions such as the Central Drugs Standard Control Organization (CDSCO). Unambiguous guidelines regarding labelling, traceability, and pharmacovigilance would guarantee that parallel-imported drugs are up to safety and efficacy standards. Adopting the U.S. sector-specific approach, India may adopt import approval procedures for high-risk or life-saving drugs, without discarding the international exhaustion system.
Balancing Trade and IP Commitments
As experience in EU practice demonstrates, legal harmonization and regional coordination have not eroded IP protections but have enhanced transparency and predictability. India might follow similar paradigms within regional groupings such as SAARC or BIMSTEC, creating regional exhaustion zones to safeguard consumer welfare while being responsive to international obligations.22
Guarding Against TRIPS-Plus Pressures23
India needs to resist the inclusion of TRIPS-plus provisions in Free Trade Agreements (FTAs), which would limit its capacity to allow parallel imports. This was witnessed during negotiations with the EU and EFTA, where calls for data exclusivity and patent term extension were made. Preservation of policy space under TRIPS Article 6 is necessary to protect public health sovereignty.
Developing a Hybrid Model
Borrowing from both EU and U.S. systems, India can create a hybrid parallel import regime that permits the importation of legitimate, cheaper drugs, without compromising regulation to safeguard consumer health and quality.
Conclusion
The parallel import conundrum in the pharmaceutical industry stands at the intersection of three urgent priorities: trade liberalization, intellectual property rights, and public health. India’s existing policy, based on the doctrine of international exhaustion and enshrined in Section 107A(b) of the Patents Act, is a deliberate legal and policy decision to privilege access to low cost medicine, specifically for its massive, low-income population.
Though India’s framework is consistent with the flexibilities permitted under TRIPS Article 6 and the Doha Declaration on Public Health, it has not been free of challenges. Legal language uncertainties, weak regulatory control, and the lack of operational clarity have all worked to prevent the parallel import policy from being effectively implemented. Meanwhile, increasing pressure during trade negotiations to accept TRIPS-plus standards also reflects the weakness of this policy space. The comparative EU-US models are informative. The regional exhaustion principle in the EU advances fair access and price competition across an integrated market, while that of the United States highlights the value of drug safety, labelling, and market regulation. A hybrid regulatory framework that affirms access via parallel imports but enacts sector-specific protection is an appropriate and wise solution for India.
Therefore, India needs to hold its ground in using TRIPS flexibilities, but also needs to build stronger domestic regulatory institutions. An open, properly regulated parallel import regime can guarantee that free trade and IPRs are not mutually exclusive, but complementary that serve the greater public interest in health access and innovation.
Reference(S):
- Carlos M Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPS Agreement (2nd edn, Oxford University Press 2020)
- Constitution of India 1950, art 21
- Jagdish Bhagwati, In Defense of Globalization (Oxford University Press 2004) ch 10 4. D Gervais, The TRIPS Agreement: Drafting History and Analysis (4th edn, Sweet & Maxwell 2012
- World Trade Organization, Declaration on the TRIPS Agreement and Public Health (14 November 2001) WT/MIN(01)/DEC/2 (Doha Declaration)
- Frederick M Abbott, ‘Parallel Importation: Economic and Social Welfare Dimensions’ in Keith E Maskus and Jerome H Reichman (eds), International Public Goods and Transfer of Technology under a Globalized Intellectual Property Regime (Cambridge University Press 2005) 607–628
- Feroz Ali, The Law of Patents – With a Special Focus on Pharmaceuticals in India (2nd edn, LexisNexis 2011) 554–558
- Kapil Wadhwa v Samsung Electronics Co Ltd (2012) 194 DLT 23 (Del) 9. Ajanta Pharma Ltd v Sunways (India) Pvt Ltd (2015) Suit No 235 of 2015 (Bom HC) 10. Strix Ltd v Maharaja Appliances Ltd [2023] CS(COMM) 403/2018 (Del HC) 11. The Patents Act 1970 (India)
- World Trade Organization, Trade Policy Review: Report by the Secretariat—India (WT/TPR/S/249, 25 May 2011) para 232–235
- Case C-143/00 Boehringer Ingelheim KG and Others v Swingward Ltd and Others [2002] ECR I-3759
- Kirtsaeng v John Wiley & Sons, Inc 568 US 519 (2013)
- Christopher Stothers, Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law (Hart Publishing 2007)
- Jagdish Bhagwati, ‘Keep Free Trade Free’ (2008) Wired https://www.wired.com/2008/09/sl-bhagwati
- J.P. Associates, ‘Parallel Imports in India: Laws, Doctrine of Exhaustion, and Market Impact’ (2025) https://jpassociates.co.in/parallel-imports-in-india-laws-doctrine-of exhaustion-and-market-impact/
- homas B. Marleau, “Regulatory Oversight of Parallel Imports and the Role of National Drug Regulatory Agencies: Lessons from the FDA” (2010) 38 International Journal of Pharmaceutical Regulation 121-135
- Neil Wilkof and Shamnad Basheer (eds), Overlapping Intellectual Property Rights (Oxford University Press 2015)
- Andrew D. Mitchell, “TRIPS-Plus Provisions and the Future of Public Health: A Critical Analysis” (2007) 34 Journal of International Economic Law 75-97
1 Carlos M Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPS Agreement (2nd edn, Oxford University Press 2020)
2 Constitution of India 1950, art 21
3Jagdish Bhagwati, In Defense of Globalization (Oxford University Press 2004) ch 10 4 D Gervais, The TRIPS Agreement: Drafting History and Analysis (4th edn, Sweet & Maxwell 2012
5 Carlos M Correa, Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPS Agreement (2nd edn, Oxford University Press 2020) 96–102
6 World Trade Organization, Declaration on the TRIPS Agreement and Public Health (14 November 2001) WT/MIN(01)/DEC/2 (Doha Declaration)
7 Frederick M Abbott, ‘Parallel Importation: Economic and Social Welfare Dimensions’ in Keith E Maskus and Jerome H Reichman (eds), International Public Goods and Transfer of Technology under a Globalized Intellectual Property Regime (Cambridge University Press 2005) 607–628
8 Feroz Ali, The Law of Patents – With a Special Focus on Pharmaceuticals in India (2nd edn, LexisNexis 2011) 554–558
9 Kapil Wadhwa v Samsung Electronics Co Ltd (2012) 194 DLT 23 (Del)
10 Ajanta Pharma Ltd v Sunways (India) Pvt Ltd (2015) Suit No 235 of 2015 (Bom HC)
11 Strix Ltd v Maharaja Appliances Ltd [2023] CS(COMM) 403/2018 (Del HC)
12 The Patents Act 1970 (India), s 48
13 The Patents Act 1970 (India), s 107A(b)
14 World Trade Organization, Trade Policy Review: Report by the Secretariat—India (WT/TPR/S/249, 25 May 2011) para 232–235
15 Case C-143/00 Boehringer Ingelheim KG and Others v Swingward Ltd and Others [2002] ECR I-3759
16 Kirtsaeng v John Wiley & Sons, Inc 568 US 519 (2013)
17 Kirtsaeng v John Wiley & Sons, Inc 568 US 519 (2013)
18 Christopher Stothers, Parallel Trade in Europe: Intellectual Property, Competition and Regulatory Law (Hart Publishing 2007)
19 Jagdish Bhagwati, ‘Keep Free Trade Free’ (2008) Wired https://www.wired.com/2008/09/sl-bhagwati
20 J.P. Associates, ‘Parallel Imports in India: Laws, Doctrine of Exhaustion, and Market Impact’ (2025) https://jpassociates.co.in/parallel-imports-in-india-laws-doctrine-of-exhaustion-and-market-impact/
21 Thomas B. Marleau, “Regulatory Oversight of Parallel Imports and the Role of National Drug Regulatory Agencies: Lessons from the FDA” (2010) 38 International Journal of Pharmaceutical Regulation 121-135
22 Neil Wilkof and Shamnad Basheer (eds), Overlapping Intellectual Property Rights (Oxford University Press 2015)
23 Andrew D. Mitchell, “TRIPS-Plus Provisions and the Future of Public Health: A Critical Analysis” (2007) 34 Journal of International Economic Law 75-97
