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CS Professional · Intellectual Property Rights - Law and Practice · Layout-Designs of Integrated Circuits

Tanvi imports 5,000 consumer devices containing chips that embody a registered layout-design of Arka Semiconductors. She bought them in good faith, with no knowledge and no reasonable ground to know that the chips incorporated a registered layout-design. After Arka serves notice, 2,000 devices are still unsold. What is the legal position for these 2,000 devices?

She may keep dealing with the stock on hand or ordered before notice, but must pay the proprietor royalty. The royalty is settled by negotiation or fixed by the Appellate Board having regard to the benefit she gains. Innocent dealing is protected only until notice, and only subject to this payment.

  1. AShe must destroy the stock immediately and has no right to sell it
  2. BShe may continue to deal with stock on hand or ordered before the notice, but must pay the proprietor a royalty fixed by negotiation or by the Appellate BoardCorrect
  3. CShe may sell the stock freely without any payment because her original purchase was innocent
  4. DShe is liable only for a fine, with no royalty and no right to sell

Explanation

Section 18(5) protects an innocent importer or seller. After receiving notice, she may continue with stock on hand or ordered before the notice, but must pay royalty determined by negotiation or by the Appellate Board having regard to the benefit she derives. Selling free of payment ignores the royalty duty.

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