diff --git a/rules.bzl b/rules.bzl
index 03db4f5..741fec3 100644
--- a/rules.bzl
+++ b/rules.bzl
@@ -78,13 +78,48 @@ def _protoc_plugin_rule_implementation(context):
     ]
 
     _virtual_imports = "/_virtual_imports/"
+
+    # Remove duplicate proto files, if the proto file location is the same
+    # it won't break the `protoc` invocation, however we might have a
+    # generated proto file (for example we have to generate proto files when
+    # we have a Pydantic API) and if we have a `proto_library` which
+    # depends on that proto, it will create a copy of the same proto file
+    # inside `_virtual_imports` and that will break the build.
+    seen = {}
+    unique_proto_files = []
+    for proto_file in proto_files:
+        short_path = proto_file.short_path
+        if _virtual_imports in proto_file.path:
+            before, after = proto_file.path.split(_virtual_imports)
+            import_path = before + _virtual_imports + after.split("/")[0] + "/"
+            short_path = proto_file.path.replace(import_path, "")
+
+        if short_path not in seen:
+            seen[short_path] = True
+            unique_proto_files.append(proto_file)
+
+    proto_files = unique_proto_files
+
     for proto_file in proto_files:
         if len(proto_file.owner.workspace_root) == 0:
             # Handle case where `proto_file` is a local file.
-            args += [
-                "-I" + ".",
+            # This includes both source files in the workspace and files
+            # generated by custom Bazel rules. Generated files will be
+            # placed in the `bazel-out` directory, so we need to
+            # determine the import path correctly for that case. For
+            # files which are part of the workspace, the `import_path`
+            # will be empty and we will set it to `./`.
+            elements = proto_file.path.split("/")
+            import_path = proto_file.path[:-len(proto_file.short_path)]
+
+            if import_path == "":
+                import_path = "./"
+            args.append(
+                "-I" + import_path,
+            )
+            args.append(
                 proto_file.short_path,
-            ]
+            )
         elif proto_file.path.startswith("external"):
             # Handle case where `proto_file` is from an external
             # repository (i.e., from 'git_repository()' or