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Court Allows Parallel Import, Citing No Injury to TM Owner and Consumers

Nansha District People's Court in the Guangdong Free Trade Zone recently announced its first- instance judgment on the initial group of cases on parallel- import- related trademark infringement and unfair competition. The Court held that the products involved are based on parallel import and the defendant's acts of importing and selling the products are not against the law. In this connection, the Court rejected all the clams of the plaintiff, OBD Bettermann (Shenzhen).

Parallel import is defined as "import a legally- manufactured product without the IP owner's consent" by the World Trade Organization (WTO). Regarding trademark- related parallel import,, There is no provision in the Chinese Trademark Law neither for nor against it, making relevant IP disputes always open for discussion in court practices.

OBD Bettermann (Shenzhen), a wholly owned subsidiary of the Germany- based OBO Bettermann GmbH&Co.KG, was authorized to useNo.3214870 'OBO' trademark and No. G663678 ' ' trademark,respectively registered in 2006 and 2011 in China,exclusively here in China as well as enforcing these trademark rights in its own name.

OBD Shenzhen held that all of its lightning protectors were imported from Germany and sold either by itself or by authorized dealers. In December, 2017, the company found that the lightening protectors labeled with the trademarks in question were sold by Guangdong Shifu Electric Industry Co.Ltd and used in a large construction project and neither itself nor its dealers was part of the transaction. The company claimed that Shifu has infringed its exclusive trademark right and breached unfair competition. It then brought three separate cases to Nansha District People's Court.

Shifu argued that the products involved were produced by enterprises authorized by OBO Germany and imported from Singapore dealers after clearing customs formalities. The products are genuine and authorized by the trademark owner. Having provided a series of evidence proving the legitimacy of the above- mentioned products, Shifu denied both charges of trademark infringement and unfair competition. After hearing, the Court held that the imported products sold by Shifu were produced by OBO Germany and were genuine products. In court practices, they were deemed as parallel import goods. Shifuwas importing products manufactured by OBD or manufactured with OBD's authorization and clearing customs formalities for these products. It did not violate any public policy and legal restrictions in China and should not be assessed negatively. In addition, Shifu's parallel import did not damage or distort the choices of market players and consumers, thus unfair competition was not in place.

In this connection, the court dismissed the claims of OBD Shenzhen, who has appealed the decision as of publication.

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