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Q2. Parallel Imports involving Trademark Rights

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Q. We sell products in Japan and another country under the same trademark which we own in Japan and that country. Our products are sold at a lower price in the other country than in Japan. A certain importer imports our products from the other country to Japan and sells them in Japan. Do the acts by the importer constitute trademark infringement?

A.
A trademark owner is the party which exclusively owns rights to use the trademark registered in Japan. Under the past prevailing theory, the importer in question would have technically been deemed to be importing designated products bearing a registered trademark without any license from the trademark owner, and the import and sale of such products would have been deemed to constitute trademark infringement.

However, under the current practice, if such acts fall under "parallel import of genuine goods," they do not constitute trademark infringement, even if no trademark license has been obtained from the trademark owner. As an example, the general requirements of "parallel import of genuine goods," as presented by the Supreme Court in its February 27, 2003 judgment, are as follows:

  1. The trademark on the parallel import goods was duly affixed thereto by the trademark owner in the exporting country or a licensee thereof;
  2. The trademark owners in the exporting country and in Japan are the same party, or may legally or financially deemed to be the same party, such that the trademark on the parallel import goods is deemed to indicate the same origin of goods as the origin indicated by the registered trademark in Japan (i.e., no damage on the origin indication function of the trademark); and
  3. The parallel import goods and products bearing the registered trademark affixed by the trademark owner in Japan are not deemed to substantially differ in the quality guaranteed by the trademark (i.e., no damage on the product quality guarantee function of the trademark).

Importation of products satisfying these requirements will be deemed "parallel import of genuine goods" since it does not preclude a trademark's functions, and therefore will not constitute trademark infringement.

The products in question imported into Japan by the importer are genuine goods sold by your company in such foreign country, and the trademark affixed thereto by your company in such country is identical to the Japanese trademark. Although the importer does not seem to be related to your company, its importation does not affect the trademark's indication of origin to be your company, or the implication of the quality guaranteed by the trademark. Accordingly, the case is deemed to satisfy all requirements 1 through 3 above, and the import and sale by the importer in Japan does not constitute trademark infringement.

On the other hand, in an exceptional case in which the products were sold at a lower price in such country since they were substantially different in quality compared to products sold in Japan, the import and sale thereof by the importer in Japan will constitute trademark infringement, on the grounds of importation of products not substantially meeting the quality guaranteed by the registered trademark in Japan. In addition, although it is not clear from the question, if the product quality may have been damaged due to repackaging or repacking for sale in Japan, it will constitute trademark infringement.

Ever since the February 27, 1970 judgment by the Osaka District Court ruling that parallel import does not constitute infringement, the customs deems that parallel import of genuine goods involving trademark rights does not constitute trademark right infringement.

Division in Charge

Office for Intellectual Property Right Infringement and International Trade, Manufacturing Industries Bureau
Tel: +81-3-3501-1701
Fax: +81-3-3501-6588

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Ministry of Economy, Trade and Industry
1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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