The LEHMAN, Lee & Xu China Trademarks Newsletter keeps you up to date on recent developments in
China Trademark law and practice
Fighting the China Grey Market
Foreign companies are often concerned about China counterfeit products and trademark infringement, but what happens when authentic trademark products are purchased overseas, and resold in China? These “parallel imports” are not prohibited by Chinese laws, but they can still effect an international brand’s sales and reputation in China.
Many of these online stores claim to be “authorized” dealers or resellers. A trademark infringement claim wont’ work because China views the trademark rights to be exhausted after the original sale overseas. However, a brand owner may be able to succeed against the sellers based on claims of unfair competition and consumer protection.
Often these cases will also include situations in which the parallel importers have not obtained all required licenses and registrations for sale of the products in question. China takes public health and consumer safety relatively seriously, so this can be a valuable avenue of attack.
Even when the products themselves are not strictly counterfeit, if the seller uses the brand owner’s trademarks on its own online store or other advertisements; the seller may still be liable for trademark infringement, and for creating a false impression through untrue advertisement.
Where brand owners have failed to stop such parallel imports in China, the seller had purchased genuine products abroad, distributed them through standard channels, and sold the products without creating any connection between the seller and the brand.
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