【Trademarks】A case related to the trademark “德可立爾” selected by TIPO for recent years
Selling goods without maintaining their original packaging and a defense to trademark infringement
| Trademark at issue | |
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Registered No. 01519170 Class 5: Western medicine |
【Decision No】Criminal Judgement of the Intellectual Property Court, 2018
Xing Zhi Shang Su Zi No. 44
【Date】February 21, 2019
【Issue】The application of Article 36.2 of the Trademark Act regarding the defense of exhaustion of trademark rights
【Relevant statutes】Articles 36.2 and 95 of the Trademark Act
【Decision Highlight】
Xing Zhi Shang Su Zi No. 44
【Date】February 21, 2019
【Issue】The application of Article 36.2 of the Trademark Act regarding the defense of exhaustion of trademark rights
【Relevant statutes】Articles 36.2 and 95 of the Trademark Act
【Decision Highlight】
- The offense of illegal sale of trademark-infringing goods stipulated in Article 97 of the Trademark Act targets the goods on which counterfeit trademarks are used. If the trademarks were legally attached to the goods for sale, the quality is the same as the identical goods sold by the proprietor of the trademark rights, and there is no likelihood of causing confusion and deception among relevant consumers, the commercial reputation of the proprietor of the trademark rights and the interest of consumers are not going to be damaged. Moreover, the distribution of this kind of goods can function to prevent the proprietor of the trademark rights from monopolizing the market or controlling the prices of the goods, promote price competition, and provide more options of identical goods for consumers. By doing so, consumers can enjoy the benefits of free competition, which is not contrary to the purpose of the Trademark Act.
- In contrast, if the goods for sale have been processed, reformed, or changed without consent, i.e. the goods are not sold with their original packaging, or the result of displaying and disseminating advertisements and some other documents, in relation to the goods on which the trademark has been attached, is likely to make consumers feel confused and erroneously believe that the goods are promoted by the proprietor of the trademark rights or its authorized users, appointed commercial agents or dealers, these kinds of conducts belong to using another person’s trademark in bad faith. Since the intent to infringe another person’s trademark rights is obvious according to the circumstances of the specific case, criminal provisions of the Trademark Act shall be applied to penalize those conducts (Criminal Judgement of the Supreme Court, 1993 Tai Shang Zi No. 5380).
- In this case, the defendant bought packaged drugs from the Taiwan company A and opened their original packaging to repackage them in smaller quantities. The defendant also asked a contract manufacturer, who didn’t know aforementioned conducts done by the defendant, to produce packing boxes with the name of company A and its trademark on them, which is enough to make consumers to erroneously believe that the packaging of the drugs sold by the defendant is the original one accomplished by company A and cause likelihood of confusion. Accordingly, the defense of exhaustion of the trademark rights cannot be sustained.
[Learning point]
The parallel import is in principle allowed by the Trademark Act, and the purpose is to allow free-trading of genuine goods on the market, so consumers would be able to purchase them from multiple sources, which could encourage price competition. However, if a third party further processes, changes or alternates such goods, it can affect the quality or other characteristics of the goods, which can have impact on the rights of the trademark proprietor. Therefore, in court practices, it is considered that the exhaustion defense is not applicable to actions such as repacking or altering the package of the goods from the original manufacturer. Thus, for businesses conducting parallel import, we would suggest just maintaining the original condition of the goods without any alteration, to avoid the risk of infringing trademark rights.
The parallel import is in principle allowed by the Trademark Act, and the purpose is to allow free-trading of genuine goods on the market, so consumers would be able to purchase them from multiple sources, which could encourage price competition. However, if a third party further processes, changes or alternates such goods, it can affect the quality or other characteristics of the goods, which can have impact on the rights of the trademark proprietor. Therefore, in court practices, it is considered that the exhaustion defense is not applicable to actions such as repacking or altering the package of the goods from the original manufacturer. Thus, for businesses conducting parallel import, we would suggest just maintaining the original condition of the goods without any alteration, to avoid the risk of infringing trademark rights.
