Mauritius: Mauritian Supreme Court Confirms National Exhaustion Of IP Rights

Last Updated: 17 April 2019
Article by Marius Schneider and Surishta Chetamun

The system of national exhaustion was first recognized by Mauritian courts in 2012 and since then right holders have consistently enforced their rights against parallel imports in different situations.

Legal context

Mauritius follows a system of national exhaustion whereby owners of trade marks and designs can take action against parallel imported goods. Unless a product bearing a trade mark or a design is placed on the market by the registered owner or with his consent, it will be deemed to infringe the rights conferred to the registered owner of the mark as provided by sections 32(3) and 40(5) of the Patents, Industrial Designs and Trade Marks Act 2002 (PIDTA 2002). The general misconception among traders is that they consider themselves free to import genuine goods into Mauritius, as those goods are often cheaper abroad.

The principle of national exhaustion was first confirmed, in relation to trade marks, in the case of Polo Lauren Co v Maudhoo 2012 SCJ 494, where the Supreme Court established that no person is free to import from any part of the world genuine products into Mauritius without the consent of the right holder, even after the trade mark owner has introduced that particular brand in Mauritius.

Even if the authorized distributor allowed the parallel importer to import goods in the past, this does not give the latter the required consent. This particular situation was addressed in Nissan Jidosha Kabushi Kaisha v Zario Ltd 2012 SCJ 494, where Customs detained spare parts imported by Zario. The defendant contended that the representative of Nissan had authorized the clearance of genuine products in the past and that the authorized distributor of Nissan in Mauritius even purchased spare parts from them formerly. However, the court held that the absence of objection to the importation of those spare parts in the past as well as dealings between the local authorized distributor and the defendant could not amount to implied consent of the trade mark owner. The trade mark owner could thus not be bound by acts or omissions of its local accredited dealers.

An efficient way for right holders to stop parallel imported goods is through a border protection application with Customs which allow the authorities to detain parallel imports, as well as counterfeit and pirated products, at the border upon importation and exportation. Customs has also recently acquired the authority to carry out inland detentions of parallel imported and counterfeit products (Amendment brought by section 12 of The Finance (Miscellaneous Provisions) Act 10 of 2017). However, goods which are in transit, transshipment and destined for re-exportation are not subject to customs procedures and cannot de detained by Customs.

Under Mauritian law and practice, the Supreme Court can be a court of first instance for civil cases where the damages sought exceed the prescribed amount for the lower courts. The appropriate jurisdiction in a civil matter is determined by the amount of damages sought: a plaintiff can seek up to MUR 50 000 (around 1200 €) in any District Court and up to MUR 500 000 (12 000 €) in the Intermediate Court. The Supreme Court has jurisdiction to hear matters for damages exceeding MUR 500 000 (12 000 €).  Since the first publication of this article, the civil jurisdiction of the different courts have been amended such that it is now possible to claim MUR 250 000 (6 250 €) at District Court level and up to MUR 2 000 000 (50 000 €) at Intermediate Court. The Supreme Court is competent in claims exceeding MUR 2 000 000 (50 000 €).

Facts

Mauritian Customs suspended the clearance of a container of beauty products, bearing different trade marks owned by Unilever PLC, which were imported by the Mauritian company Matrix Impex. The goods were supplied by Unilever International, a subsidiary of Unilever PLC who is the registered owner of the trade marks in Mauritius. Matrix Impex Ltd contended that it obtained authorization from Unilever International to import the goods and that in any case, the products were not destined for the local market but for re-export. However, no evidence was put forward to support this averment.

The plaintiff sought MUR 2 000 000 as damages and thus the Supreme Court heard the matter as a court of first instance.

Analysis

The Supreme Court had to decide whether Matrix Impex had obtained the consent of the right holder to import the goods in Mauritius. The court stressed that the PIDTA clearly provides that no party is entitled to deal with products bearing a registered mark unless duly authorized to do so by the trade mark owner. It is thus the trade mark owner and no one else who can give the requisite consent. In case of the beauty products, the registered owner of the trade marks in Mauritius was Unilever PLC and not Unilever International. The court stated that although these two entities are commercially linked, they remain two separate entities whereby Unilever International cannot bind Unilever PLC or give authorization on behalf of the latter. No proof was produced by the defendant to show that Unilever International could bind Unilever PLC. The court thus confirmed that the defendant Matrix Impex had breached the rights of Unilever PLC under the PIDTA, confirming a very strict approach of the system of national exhaustion followed in Mauritius. This judgment asserts that the importation of products bearing a trade mark is only possible with the express or implied consent of the trade mark owner and under Mauritian law and practice the burden is on the parallel importer to prove that they have obtained the consent of the trade mark owner.

Another interesting aspect is that Unilever PLC sought an order of destruction of the impugned goods. The court however pointed out that there is no provision in the law which would allow an order for destruction. As a matter of fact, section 52 of the PIDTA provides that the court may, notwithstanding any other enactment, order the forfeiture of any article or thing that was used in or gave rise to an act of unfair practice as the court thinks fit. Likewise, section 11 (2) of the Protection Against Unfair Practice Act (PAUPA) does not contain clear provisions enabling the court to order the destruction of infringing goods. The Supreme Court concluded that, as the law stood, only an order for forfeiture was allowed under Mauritian law.

Practical significance

The shortcoming in the law has been rectified through the Judicial and Legal Provisions Bill (No 1 of 2018) which was voted on 24 April 2018 and received the President's assent on the 4 May 2018. The Bill was published in the Government Gazette on the 5 May 2018 and once the President issue the proclamation, the Act shall come into effect, which will allow courts to order the forfeiture and destructionof infringing products.

In Mauritius, right holders have the possibility to act against parallel imports and they can protect their interests and those of their local distributors through border measures as well as inland detentions with Customs.

The PIDTA will soon be replaced by the Industrial Property Bill but the system of national exhaustion shall prevail. Section 98(1) of the Industrial Property Bill reproduces section 40 (1) of the PIDTA which provides that 'no person, other than the registered owner, shall use a registered mark in relation to any goods or services for which it has been registered, except with the agreement of the owner'.

Mauritius with its 1.3 million inhabitants is a very small market and the system of national exhaustion is a blessing for local distributors since it helps to safeguard their investments in negotiating distributorships and bringing internationally renowned products to Mauritius. On the other hand, it is not certain that the system is always beneficial for consumers, who will sometimes pay a higher price for certain products.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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