Parallel imports in Taiwan: the NEFFUL case and group-held trademarks

1. The short answer

If your group’s brand is registered in Taiwan by one company and in other countries by related companies, the Taiwan registration will not stop genuine goods that the group, or someone with its consent, has already put on the market abroad, unless one of the situations in the statutory proviso applies. That is the effect of Article 36(2) of the Trademark Act. In a judgment of June 27, 2024 (113 Tai-Shang No. 882), the Supreme Court of Taiwan held that “consent” here is not limited to express consent. Where the rights in different countries essentially derive from the same right holder, and the companies are linked by a license or distribution agreement, a group or parent-subsidiary relationship, exclusive sales, a single global brand image or a common trademark marketing strategy, goods sold abroad under the mark count as goods put on the market with the Taiwan owner’s consent.

The judgment dismissed the appeal. It was the third-instance judgment, and civil procedure provides no further level of appeal; a judgment from which no appeal may be taken becomes binding when it is announced or, if it is not announced, when it is published (Code of Civil Procedure, Art. 398(2)).

For a foreign brand owner, the first practical step is this: before treating gray-market resellers in Taiwan as infringers, check who first sold the goods and how that company is related to the Taiwan registrant. If the answer is “a company in our own group,” a trademark action is likely to fail, and the losing party bears the litigation costs (Code of Civil Procedure, Art. 78).

2. What Article 36(2) says

Article 36(2) of the Trademark Act has two parts.

The rule. Where goods bearing a registered trademark have been put on the domestic or foreign market by the proprietor or with the proprietor’s consent, the proprietor is not entitled to claim trademark rights over those goods. The words “domestic or foreign” make this international exhaustion: once genuine goods have been released with consent anywhere in the world, the Taiwan registration cannot, unless the proviso applies, be used to control their resale or import into Taiwan. The Intellectual Property and Commercial Court noted in this case that the phrase “domestic or foreign” was added to the provision by the amendment of June 29, 2011, and the Supreme Court referred to that amended text.

The proviso. The rule does not apply where the proprietor’s claim is to prevent the goods from deteriorating or being damaged after they have been put on the market, or from being processed or altered by others without authorization, or where there are other legitimate reasons.

The words on processing or alteration by others were added to the proviso by the amendment promulgated on May 24, 2023, which took effect on May 1, 2024. The version in force from July 1, 2012 to April 30, 2024 named only deterioration, damage and other legitimate reasons.

The wording sets two limits. First, the rule covers only goods released by the proprietor or with its consent; counterfeits are outside it, and so are goods that no one entitled to the mark ever put on the market. Second, the proviso is the proprietor’s way back in, and what counts as “other legitimate reasons” is for the court to decide on the facts.

3. The NEFFUL case and its route through the courts

The plaintiff was the Taiwan branch of the NEFFUL group’s Singapore holding company, and it relied on several Taiwan registrations for NEFFUL, including word marks. The defendants, two individuals, offered NEFFUL-branded goods for sale on a personal page on an online shopping platform and described them as brought back from Japan. They did not dispute that the goods had been imported from Japan and sold in Taiwan; their defense was that the goods had been lawfully bought in Japan and were lawful parallel imports. The plaintiff sued for damages, relying among other things on Articles 69(3) and 71(1)(iii) of the Trademark Act; the latter calculates damages as a multiple, capped by statute, of the unit retail price of the infringing goods seized.

The case went through five judgments:

Court	Judgment	Date	Result
Intellectual Property and Commercial Court, first instance	110 Min-Shang-Su No. 41	January 6, 2022	Claim dismissed
Intellectual Property and Commercial Court, appeal	111 Min-Shang-Shang No. 4	August 18, 2022	Appeal dismissed
Supreme Court	112 Tai-Shang No. 836	April 28, 2023	Reversed and remanded
Intellectual Property and Commercial Court, on remand	112 Min-Shang-Shang-Geng-Yi No. 2	February 1, 2024	Appeal dismissed
Supreme Court	113 Tai-Shang No. 882	June 27, 2024	Appeal dismissed; final

The first appeal judgment had compared the packaging with the plaintiff’s composite NEFFUL device mark, found the two not identical and only remotely similar, and treated the listing text as a description of where the goods came from. In 2023 the Supreme Court sent the case back because that court had not dealt with the plaintiff’s argument based on its NEFFUL word mark, which matched the six letters on the packaging. The Supreme Court called this an important line of attack and held that leaving it unaddressed meant the judgment gave insufficient reasons.

On remand, the Intellectual Property and Commercial Court accepted much of the plaintiff’s case on use and similarity: the NEFFUL wording on the packaging was trademark use, it was identical or similar to the registered mark, the goods (clothing, socks and shawls) were identical or similar to the goods in Class 25, and there was a likelihood of confusion. It still dismissed the appeal, because the goods came from the Japanese company, with which the plaintiff had an economic or legal relationship, and were genuine parallel imports under Article 36(2). It added that the first-instance judgment, although reasoned differently, had reached the same result, and upheld it.

4. What the Supreme Court held

The Supreme Court’s own reasoning comes down to three points.

1. International exhaustion. Under Article 36(2), as amended in 2011, Taiwan adopts international exhaustion. Absent a proviso situation, the proprietor cannot assert its rights over goods released with its consent, whether they were first put on the market in Taiwan or abroad, and the provision expressly accepts genuine-goods parallel imports.
2. Consent includes relationships, not only express permission. Trademarks registered in different countries are separate rights under the principle of territoriality. But where the exclusive rights essentially derive from the same right holder, and the parties have a license or distribution agreement, belong to the same group or affiliated enterprise, stand as parent and subsidiary, have exclusive sales arrangements, or market under a single global brand image or a common trademark strategy, that falls within “consent.” The court gave two reasons: such a marketing strategy is apt to confuse consumers, which the proprietor should be aware of and has still chosen to adopt; and the companies are in a position to control the quality of genuine goods and how the mark is used, which can keep the use of the mark in order and protect the related goodwill of the owner in the importing country.
3. Application to the facts. As found by the lower court, the websites of the plaintiff and of its Singapore head office stated that the business derives from a Japanese company founded in 1973 in Shizuoka, Japan, and they all used the NEFFUL wording to market and identify the source of their goods; the plaintiff also accepted that the goods of the Japanese company, itself and the Singapore company were connected. The lower court’s conclusion that the goods were genuine parallel imports, against which the plaintiff could not assert its trademark, was therefore free of legal error.

In our reading, what weighed most against the plaintiff was the brand group’s own public history pages, together with its admission that the goods were connected. Neither the Supreme Court nor the remand court cited any agreement between the companies as evidence; in the Supreme Court’s reasoning, a license or distribution agreement is only one example of a qualifying relationship.

5. What the proviso still covers

Neither the Supreme Court’s 2024 judgment nor the remand judgment records either party arguing a proviso situation, and both courts mentioned the proviso only in their general statement of the rule. So the judgments tell us nothing new about how far the proviso reaches. The statute’s own words point to the situations a proprietor can still raise: goods that deteriorated or were damaged after they were put on the market; goods processed or altered by someone else without authorization; or another legitimate reason. In our reading, a brand owner who wants to rely on the proviso needs evidence about the particular goods in the reseller’s hands, not a general objection to unauthorized channels; whether a given reason is “legitimate” depends on the court’s view of the facts.

6. What to do in practice

For brand owners and their in-house counsel

1. Map who owns the mark where. List the registrant in Taiwan and in each country where the goods are first sold, and how those companies are related. If they are in one group, or linked by license or distribution, start from the assumption that exhaustion applies, and do so before you send a demand letter.
2. Check whether the goods are genuine. Article 36(2) applies only to goods put on the market by the proprietor or with its consent. If the goods are counterfeit, or were never put on any market by someone entitled to the mark, the infringement provisions (Arts. 68, 69 and 71) remain available.
3. Look for a proviso fact, specific to the goods. The proviso names deterioration or damage after the goods were put on the market, and processing or alteration by others without authorization; whether repackaging or relabeling falls under it, or counts as another legitimate reason, is for the court to decide on the facts. Before relying on it, collect test purchases and records about the actual items; without that evidence, do not count on the proviso.
4. Read your own websites as a court would. Here, the group’s history pages, describing a business founded in Japan that later set up branches in Taiwan and Singapore, were used as evidence against the plaintiff. What you write for marketing can be used as evidence in litigation.
5. Weigh the cost of losing. The plaintiff in this case went through five judgments and was ordered to bear the costs of the second instance and of both Supreme Court appeals. Where exhaustion clearly applies, the money is better spent on distribution terms and channel management than on a trademark action that cannot succeed. That is a business call, and you should make it before filing.

For resellers and cross-border sellers

Keep purchase records that show where and from whom you bought the goods, and do not alter, repackage or relabel them. The defense depends on showing that the goods are genuine and were put on the market by the brand group or with its consent; the proviso is where a reseller who changed the goods becomes exposed.

For filing strategy, ownership structure and enforcement in Taiwan, see our trademark practice page.

7. Related pages

Our Taiwan patent and trademark deadlines page lists the trademark time limits, including opposition and renewal. Timing figures for TIPO examination are on how long a Taiwan patent or trademark takes. If a group restructuring changes which company should hold the Taiwan registration, our page on the power of attorney covers the document a registrant with no domicile or business establishment in Taiwan signs to act before TIPO through an agent.