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Manage your Intellectual Property in South-East Asia

Case Study 25 - Enforcing IPR against Parallel Importation into Singapore

Background:

Samsonite IP Holdings Sarl (“Samsonite”) granted its Chinese subsidiary a license to use the SAMSONITE marks in China. Through a co-branding agreement with Lenovo PC HK Ltd (“Lenovo”), it was mutually decided that Samsonite would supply specific models of SAMSONITE backpacks to Lenovo. These backpacks were to bear at least one of the SAMSONITE marks as well as the LENOVO mark. Lenovo would then give away the backpacks in conjunction with the sale of certain models of LENOVO laptops, exclusively within China.

Some of Lenovo’s authorised dealers sold the backpacks without the Lenovo laptops to unauthorised retailers, who eventually sold these unbundled backpacks to An Sheng Trading Pte Ltd (“An Sheng”), a parallel importer into Singapore.

Action taken:

Samsonite brought a claim against An Sheng for trade mark infringement. It demanded a delivery of the co-branded backpacks, an inquiry as to the extent of damages or an account of profits, and the payment of all sums found due to Samsonite.

Outcome:

Consequently, An Sheng raised the defense that the backpacks were parallel imports (allowed in Singapore) for the purposes of section 29(1) of the Singapore Trade Marks Act, which states that the trade mark proprietor’s right to the goods marked with a registered trade mark are “exhausted” once the goods are “put on the market” in Singapore or anywhere else in the world by the proprietor himself, or with his “express or implied consent (conditional or otherwise)”. Therefore, the claim was that An Sheng was not infringing any trade mark by its actions and not committing any unlawful act.

The Court rejected the defense of An Sheng on the grounds listed below:

  • Whether backpacks were “put on the market” or not

“Put on the market” must involve the “realisation of the commercial and economic value of the trade mark”. In this case, the commercial value was intended to be realised through “gifting” the backpacks to increase awareness of the SAMSONITE brand by associating it with Lenovo laptops. This commercial value never became concrete because the backpacks did not reach any consumers in the retail market in China as they were sold independently to An Sheng. Furthermore, any profit received through sales by the authorized dealers was never passed on to Samsonite. As such, the backpacks had not been “put on the market” anywhere in the world.

  • Whether backpacks were put on market and whether this was done with Samsonite’s consent

Samsonite had at all times expressly prohibited the sale of the backpacks without the Lenovo laptops and had worked together with relevant parties at Lenovo to stop its distributors from selling the backpacks separately. The fact that they were unable to effectively enforce the terms of the co-branding agreement did not mean that they had given consent to putting the backpacks on the market. Therefore, the backpacks had not been put on the market with Samsonite’s express or implied consent.

IP Lessons:

  • Trade mark owners should be aware that parallel imports of products bearing their mark which have been put on the market, whether within or outside of Singapore, will not amount to infringement in Singapore, as long as they were put on the market by the trade mark owner or with its express or implied consent. (For example, a trade mark owner may have first sold products bearing their mark in Hong Kong. If a third party imports those products into the Singapore market for sale, this is generally not considered trade mark infringement).
  • Mark owners would not be able to prevent parallel importers from selling their goods after first sale was conducted with their consent, even if they authorized a distributor to only sell goods bearing the mark subject to express conditions on sale, e.g. restrictions on how the goods are to be packaged or which retail outlets they are to be sold at.
  • While this case represents a rare situation where a trade mark owner was able to enforce his rights against a parallel importer in Singapore, it does show that it is possible to successfully prevent parallel imports in exceptional circumstances once the lack of consent can be proved without a doubt.
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