Paragraph 2, Article 36 of the Trademark Act provides: "For goods bearing a registered trademark that have been distributed in the domestic or international market by the trademark owner or with the trademark owner's consent, the trademark owner shall not claim trademark rights over such goods. However, this shall not apply where there is a legitimate reason, such as the goods having deteriorated, been damaged, or been altered or processed without authorization after entering the market." This reflects Taiwan's adoption of the international exhaustion doctrine: trademark owners may not enforce their rights against goods legally distributed in the market with their consent, regardless of whether the goods were first sold domestically or abroad, unless one of the exceptions applies.

 

Article 25 of the Fair Trade Act provides: "Unless otherwise provided in this Act, no enterprise shall engage in any deceptive or obviously unfair conduct that is sufficient to affect trading order." The Fair Trade Commission's principles for handling cases under Article 25 of the Fair Trade Act indicates that Article 25 of the Fair Trade Act is a supplementary and general provision, which can serve as a complementary regulation to other existing types of unlawful conduct under the Fair Trade Act. The aforementioned principles also indicate that "manifestly unfair conduct" includes situations such as obstructing competition with the intent to harm competitors, exploiting the efforts and achievements of others, improperly soliciting customers, abusing relative market dominance, taking advantage of information asymmetry, supplementing the restrictions on competitive conduct under the Fair Trade Act, impeding consumers from exercising their lawful rights, and engaging in unfair practices through standardized contracts. In the aforementioned principles, the fifth example under "exploiting the efforts and achievements of others" refers to genuine parallel imports accompanied by proactive actions that cause people to mistakenly believe the goods were imported and sold by the authorized agent.

 

In the Intellectual Property and Commercial Court's Civil Judgment Ming-Shang-Shang-Zi No. 57 dated April 30, 2025, the court held that although the defendant's use of the plaintiff's registered trademarks in physical storefront signage and advertisements did not constitute trademark infringement under the exhaustion doctrine, such use may still violate the Fair Trade Act.

 

 

The plaintiff had registered the "POLO RALPH LAUREN" trademarks (hereinafter the "disputed trademarks") in both Taiwan and the United States. The defendant operated a physical retail counter in a department store, displaying and selling parallel-imported goods of the plaintiff's brand, and prominently displayed the words "POLO RALPH LAUREN" on its signage, walls, marketing materials, and advertisements.

 

 

1. Trademark Act Issue

 

The court found that the defendant used the words "POLO RALPH LAUREN" prominently on counters, display windows, and its website in a manner highly visible to consumers. The font style and size closely resembled the disputed marks, clearly indicating use as a source identifier and thus constituting trademark use.

 

The court citing the Supreme Court's Civil Judgment Tai-Shang-Zi No. 397, the court noted that even though trademark registrations in different countries represent different territorial rights, when the designs are identical and the rights are held or authorized by the same entity, the exhaustion of rights applies across jurisdictions. As the defendant sourced the goods from the plaintiff in overseas markets, and no issues of product quality had caused negative consumer associations, the court held that the defendant's acts did not constitute trademark infringement.

 

2. Fair Trade Act Issue

 

The court held that both parties were clothing retailers and therefore in a competitive relationship under Article 4 of the Fair Trade Act. The defendant had set up a counter highly similar to the plaintiff's in terms of layout and product arrangement. Although the counter bore the defendant's English name, it was displayed in a much smaller font than "POLO RALPH LAUREN. The court found that the defendant's acts could mislead consumers into believing the products were sold by the plaintiff or its agents, thereby exploiting the plaintiff's marketing efforts, in violation of Article 25 of the Fair Trade Act.

 

Accordingly, considering the fame of the disputed trademarks, the defendant's willful conduct, and the defendant's business heavily relied on selling the disputed trademark products, the court determined that the defendant had free-ridden on the plaintiff's efforts and avoided advertising costs. The damages were calculated based on a 25% gross profit margin standard for the industry. The court ordered the defendant and its responsible person to jointly pay NT$480,000 in damages and prohibited the defendant from using identical or similar marks in physical counters, online stores, commercial documents, advertisements, digital media, or any other medium.

 

As for the department store that rented space to the defendant, the court held that it had no authority over the counter setup and had explicitly stipulated in the contract that the defendant bore full responsibility for legal compliance. Since no evidence showed the store failed to exercise due diligence, the court found it had not violated the Trademark Act or Fair Trade Act. The plaintiff's claims for injunction, prevention of infringement and joint liability were therefore dismissed.