Taiwan’s Trademark Act provides that sales of “genuine goods” (such as parallel import goods) in principle do not constitute an infringement of trademark rights. However, Taiwan’s Intellectual Property Court holds that to ensure the marketing cost paid by the trademark holder will not be easily exploited by others, the exhaustion of a trademark holder’s right only applies in the context of trading and circulating the “genuine goods per se” and shall not be extended to the situation that the “genuine goods” are used by someone else as a trademark of the trademark holder.

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In the Intellectual Property Court’s civil interlocutory judgment 109-Min-Shang-Su-Zi No. 27 rendered on February 2021, the plaintiff is the trademark holder of the well-known toy brand “LEGO.” The defendant stuck a genuine “LEGO” sticker sold by the plaintiff on a semi-truck imitating the plaintiff’s semi-truck toy model number 3221, and parked such a semi-truck by the entrance of the sales promotional event, and posted a genuine “LEGO” sticker by the entrance of the venue. With respect to such acts, the Intellectual Property Court held that, even if the “LEGO” stickers are genuine stickers sold by the trademark holder, the trademark holder is only not entitled to claim their rights to such a sticker. However, since the defendant used a “LEGO” sticker on a LEGO look-alike truck and posted a “LEGO” sticker by the entrance of the venue for its marketing purposes, the defendant turned the LEGO stickers into an advertisement to market toy merchandise. Such acts are no longer simple acts of trading or circulating “LEGO” stickers. Instead, the acts constitute the use of the trademark outside the exploitation of “genuine goods per se” and hence pertain to trademark infringement. The trademark holder may still claim its right against such acts.

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In addition, the court further held that since “LEGO” is a renowned brand, such acts of the defendant unfairly exploited the fruit of other’s endeavor and in turn affected the efficiency of market competition, constituting unfair practice sufficient to impact trade order and violating Taiwan’s Fair Trade Act.

(Author: Tim Tsai, Esq.)

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