Exploring the parallel universe of legitimate trademarked imports

At the beginning of this year, the Swarovski brand issued a public statement claiming that it had not licensed any websites in China to sell its products. Subsequently, numerous international luxury brands like Louis Vuitton, Gucci, Coach, Prada, etc. followed suit, stating that they had not authorised e-commerce websites to sell their products. Certain e-commerce websites vigorously responded, claiming that all of the luxury goods they were selling were sourced through legitimate channels. For a time, both sides bickered about the issue of authorisation.

Such incidents relate to legal issues of the parallel import of trademarked goods and exhaustion of trademark rights. This column analyses the legal theories and practical issues relating to this type of trade.

Basis for debate

In international trade, the act where an importer, without the authority of the trademark rights holder, imports identical trademarked goods produced under a lawful licence and sells them in its home country is known as the parallel import of trademarked goods. Such imports have the following characteristics: (1) they involve two legal jurisdictions and the same trademark rights of the trademark rights holder are protected in both legal jurisdictions; (2) the imported goods come from a lawful source, i.e. they are “genuine goods”; and (3) the act by the importer has not been authorised by the trademark rights holder.

Wang Yadong is the executive partner and Hu Cuiqin is a lawyer at Run Ming Law Office