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Sale of Altered Parallel Imported Goods Constitute Trademark Infringement



Parallel imports of trademarked goods, also known as grey market goods, basically will be deemed legitimate and will not constitute trademark or violate the Trademark Act according to prevailing court opinions.

 

The reason why the courts take the view that parallel imports of the trademarked goods is not per se unlawful is due to the "first-sale doctrine", which provides that once a trademark owner releases its goods into commerce, it cannot prevent the subsequent re-sale of those goods by others.  However, parallel imports can be unlawful when "material differences" exist between such imports and the authorized goods based on the core principle in trademark protection of preventing consumer confusion according to the majority of the courts.

 

The Taipei District Court, when reviewing a case in 2018 that the parallel importer altered the trademarked goods without any consent or license from the trademark owner, and then sold these altered goods, held that since the quality of the altered goods have materially differed from the goods previously authorized for sale, sale of such altered goods should constitute trademark infringement in violation of the Trademark Act though imports of the trademarked goods are deemed legitimate.

 

Unlike the Trademark Act, the Copyright Act that the sale and distribution in Taiwan of goods manufactured and first sold abroad that feature copyrightable subject matter can constitute copyright infringement without consents or license from the copyright holder or its exclusive licensees in Taiwan.  The courts also held in specific copyright infringement cases that the first sale doctrine does not extinguish a copyright owner's ability to prevent the importation of gray market goods first manufactured and sold abroad.
 



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