Parallel Import is Not a Defense
for Trademark Infringement If the Product
Sold Is Altered Without Consent
According to both Taiwan’s judicial practice and administrative opinion, parallel importation without the prior consent from a domestic intellectual property owner does not necessarily constitute trademark infringement since it involves the sale of a genuine product in that product’s original package. As such, the source-indicating function of the trademark to which the product is associated is not compromised. This practice does not either injure trademark owner or its licensee’s commercial goodwill.
Precedent notwithstanding, parallel importation could be interpreted to be an infringing act in instances in which an imported product is not sold in the same condition as it was when it was acquired. In the recent case, 2017-IP-Sum-52, the Taipei District Court ruled that the sale of a genuine product which has undergone unauthorized processing, modification or alteration constitutes an infringement of trademark rights.
The accused party in 2017-IP-Sum-52 was a company whose scope of business includes the importation of printers, office machines and peripheral equipment thereof from the Japanese company Brother Industries. The accused party also engaged in the online sale of replaceable toner cartridges for a particular model of printer manufactured by Brother Industries. The packaging of these cartridges was affixed with a label reading “our imported BROTHER products are of the best quality; sealed and boxed in the USA and now sold in Taiwan.” However, Brother designs and manufactures its printers with different and distinguishable mechanical features depending on the country to which the printers are being sold, entailing that one model sold in one country could possess different features than the same model sold in another. As such, a toner cartridge acquired in the United States is not compatible with a printer sold in Taiwan. To overcome this problem, the accused party instructed an employee to mold the plastic casing of the toner cartridge in such a fashion as to render it compatible with a Brother printer of the same model sold in Taiwan.
The Court’s reasoning was consistent with precedent, which entails that the resale of a genuine product acquired from a legitimate foreign source does not necessarily injure the commercial goodwill of the domestic trademark owner or its licensee. Furthermore, parallel import may positively impact the market. Furthermore, imported genuine products may be priced differently or lower than the same product sold by the trademark owner. The sale of these products also may decrease the likelihood of exclusivity and monopoly in the market by encouraging competition, thus benefiting consumers who benefit from lower prices and an increased range of choice.
In analyzing the facts of the case, the Court held that if an imported product is sold after processing, modification or alteration and still bears the same mark on its advertisements or packaging as if it had not undergone processing, modification or alteration, such an action is sufficient to cause a likelihood of confusion to the consumer. The consumer may wrongfully believe a sale conducted in the aforementioned manner as being authorized or permitted by the trademark owner. As such, the importer’s use of the mark constitutes an infringement and an act of bad faith.
By molding the exterior of the cartridge, the accused party created a different product than that which was being advertised. By using the mark on a different product for sale without having obtained Brother’s consent, the accused party’s actions constituted trademark infringement.
The Court found the accused party guilty and liable to criminal detention for 50 days, convertible to NTD 1,000 per day pursuant to Article 95 of the Trademark Act.
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