Parallel Imports: Trademark Infringement Or Unfair Competition?

Parallel imports involve importing legally manufactured original products into China from other countries without authorization from the IPR holder. Until now, Chinese laws, regulations and judicial interpretations have not clearly defined the legitimacy of this practice. But now the Guangzhou Intellectual Property Court has ruled that parallel imports of non-counterfeit products do not constitute trademark infringement and unfair competition.

The case: Germany OBO, the largest manufacturer of lightning protection equipment in Europe, signed a trademark licensing agreement with the Chinese company Oubao Electric. The agreement stipulated that Oubao would be, authorized by OBO through an exclusive trademark license, the only Chinese company authorized to carry out marketing, sales and distribution activities with the OBO brand. In 2017, however, a competitor appeared on the scene: Guangdong Shifu Electric imported original OBO lightning protection devices from Singapore and sold them in China. Oubao then filed three lawsuits against Shifu in 2018.

This case focused on the question of whether the parallel import constituted an infringement of the brand. The second instance intellectual property court in Guangzhou found that the products in this case were originals and that Shifu had not damaged the brand logo or altered the quality and packaging of the products. The interests of consumers have therefore not been adversely affected and there has been no infringement of trademark rights.  

Although the Guangzhou Intellectual Property Court has recognized the legitimacy of parallel imports in this case, the judge considers that parallel import disputes should be assessed on a case-by-case basis. It is not excluded that trademark infringements or unfair competition may exist.

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