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Trademark Right is Exhausted Where the Source of the Exclusive Right is the Same, Even if the Foreign and Domestic Trademark Owners are Different
According to Article 36-2 of the Trademark Act in Taiwan, where goods bearing a registered trademark have been put on the domestic or foreign markets by the trademark owner or with its consent, the trademark owner is not entitled to claim trademark rights on such goods. The majority of the court judgments or rulings in Taiwan cited this Article as basis for the doctrine of trademark exhaustion for parallel imported goods.
In judicial practices, the definition of "trademark owner or with its consent" in Article 36-2 has been controversial and unsettled. In other words, in the situation where the foreign and domestic trademark owners are different but the trademark is identical, will the parallel imports still be considered as unlawful? In a recent civil litigation case regarding parallel imports, the Supreme Court made an important ruling regarding this issue.
In this case, the parallel importer bought goods from the U.S. trademark owner's official website and resold them on social media and e-commerce platforms. The Taiwanese trademark owner, which was the authorized retailer of the U.S. trademark owner, claimed trademark infringement against the parallel importer. Both of the courts of the first and the second instances held that the parallel imported of these goods are unlawful since the foreign and the domestic trademark owners are different.
Contrary to the holdings held by the courts of the first and the second instances, the Supreme Court explained in its judgment that even though foreign and domestic trademark rights function individually within its own territorial field, if the source of the exclusive right is the same, the trademark right should be exhausted for genuine parallel imported goods. The Supreme Court therefore cancelled the judgment from the court of the second instance court and demanded the court to review and make a new judgment for this case.