Delhi High Court Sets New Guidelines for Selling Used Hard Disk Drives

The Delhi High Court recently issued directives for selling used and refurbished hard disk drives in Seagate Technology LLC v Daichi International.

Justice Anish Dayal ruled that packaging must clearly identify the original manufacturer without misleading customers into thinking it’s a new product. References to manufacturers should use word marks like “Seagate” or “WD” without logos to avoid consumer deception. Additionally, the packaging must state that the product has no manufacturer warranty or service.

Here’s what happened:

1. Compliance Requirements: Justice Dayal mandated that entities selling refurbished HDDs must follow specific directions in their promotional literature, websites, e-commerce listings, brochures, and manuals.

2. Legal Context: The directions were issued during the proceedings of suits filed by Seagate Technology LLC and Western Digital Technologies Inc. against multiple entities selling refurbished HDDs.

3. Defendant Companies: The companies involved were Daichi International, Consistent Infosystems Pvt Ltd, Geonix International Pvt Ltd, and Cubicor Information Systems Pvt Ltd.

4. Manufacturers’ Argument: Seagate and Western Digital argued that their HDDs, although unserviceable after a certain period, still retain functionality. These end-of-life HDDs are refurbished by various entities and sold to consumers.

5. Refurbishment Process: The end-of-life HDDs are imported into India, where refurbishers remove the original ‘Seagate’ or ‘Western Digital’ marks, refresh, repackage them under their own brand names, and sell them with an extended two-year warranty.

6. Legal Contention: Seagate and Western Digital claimed that selling these HDDs as refurbished products, after removing the brand names, amounted to impairment under Sections 30(3) and 30(4) of the Trade Marks Act, 1999.

7. Court’s Consideration: The High Court found that Seagate and Western Digital could not demonstrate any rule, regulation, or policy prohibiting the import of discarded HDDs into India.

8. Disclosure Requirement: Justice Dayal stated that refurbishers must fully disclose if they have changed or removed the original marks on the HDDs and ensure the product does not resemble the original, thus warning consumers about the nature of their purchase. The interim relief application filed by Seagate and Western Digital was consequently disposed of.

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