Trademark Law Case Law: Parallel Import of Genuine Goods (Fred Perry) Heisei 14 (Ju) 1100
This is the "Fred Perry Case," which is famous as a Supreme Court precedent regarding the parallel import of genuine goods. Three criteria (requirements) for the parallel import of genuine goods to lack illegality (not be illegal) are presented.
The first requirement is that the parallel imported goods are genuine goods,
the second requirement is that the rights holders in the domestic and foreign countries are substantially the same,
and the third requirement is that the quality is substantially the same.
In the Fred Perry case, a Singaporean company that had acquired usage rights from the trademark holder had
subcontracted the manufacturing of polo shirts to a factory in China, which was outside the contract territory. Because of this, it was judged to be trademark infringement on the grounds that "the source indication function and quality assurance function are being harmed."
Furthermore, judging whether an act harms the source indication function or quality assurance function of a trademark and determining whether it constitutes infringement is called Trademark Function Theory.
In the trademark Fred Perry case, the principle is infringement, but in the patent BBS case, the principle is non-infringement.
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Issues
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(1) One of the features of the Fred Perry case is that it was considered sufficient that there is a "risk" of harming the quality assurance function, and this point has been criticized. Specifically, the question is to what extent a "risk" of harm is considered to exist.
(2) Does a violation of the contracted manufacturing quantity (exceeding the contract quantity) constitute a "risk" of harming the quality assurance function? If the contract quantity is 10,000 units, it seems reasonable to consider the 10,000th unit and the 10,001st unit to be of the same quality. If so, a violation of manufacturing quantity should not be considered trademark infringement.
(3) I believe that the price difference between domestic and foreign markets (the same product as in Japan being sold cheaply in Southeast Asia, etc.) is the cause of parallel imports. When parallel imports occur, it is also conceivable that "products not yet sold in Japan are brought into Japan from abroad" by parallel importers.
In such cases, the brand in Japan is left to parallel importers who have no responsibility for brand maintenance or brand damage. For example, even if an accident occurs due to different usage conditions of the product, the parallel importer will not take responsibility, so only brand damage occurs.
In particular, it is thought that parallel imports are likely to occur for companies that adopt the Gillette model (so-called consumable goods businesses). If such companies are subjected to parallel imports, it is thought that not only will they lose profits, but quality issues, brand issues, and future loss of sales opportunities (making it harder to sell items other than luxury goods) will occur.
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● Specific Judgment Text
http://www.courts.go.jp/app/files/hanrei_jp/352/052352_hanrei.pdf
● Conclusion of the Judgment
The act of a person other than the trademark holder importing goods to which the same trademark as the registered trademark is affixed, for the same goods as the designated goods of the trademark right in Japan, constitutes trademark infringement unless permission is received (Trademark Act, Article 2, Paragraph 3; Article 25).
However, even for the import of such goods, if (1)
the trademark was lawfully affixed by the trademark holder in a foreign country or a person who has received a license to use the trademark from said trademark holder, and (2) the
trademark holder in the foreign country and the trademark holder in Japan are the same person, or have a relationship that can be equated to being the same person legally or economically, so that the trademark indicates the same source as the registered trademark in Japan, and (3)
the trademark holder in Japan is in a position to directly or indirectly manage the quality of said goods, so that it is evaluated that there is no substantial difference in the quality guaranteed by the registered trademark between said goods and the goods to which the trademark holder in Japan has affixed the registered trademark, then it is understood as a so-called parallel import of genuine goods, and lacks substantial illegality as trademark infringement. This is because the purpose of the Trademark Act is to "contribute to the development of industry by maintaining the business reputation of persons who use trademarks through the protection of trademarks, and thereby protect the interests of consumers" (Article 1 of the same Act), and the so-called parallel import of genuine goods that satisfies the above requirements does not harm the source indication function and quality assurance function, which are the functions of a trademark, and does not damage the business reputation of the person using the trademark or the interests of consumers, and thus it can be said that there is no substantial illegality.