By Luo Yanjie
In recent, Apply unveiled its new device iPhone 5, and that exited Apple fans around the world. Yet, as sad to Apples fans in mainland China, the region is not among the first launching zones.
Due to the arrangement, the retailer from the grey market is eagerly for their new fortune with the new device launch, and some have even made the preorder for the new iPhone by smuggling the Hongkong sold one to mainland China. Then, in addition to the strike back on taxation, could Apple prohibit such selling through the claim of trademark infringement, while considering all the imported ones are the true Apple phones? Here’re our opinions:
I. A parallel import with selling the smuggled phones in trademark law
The parallel import shall refer to the import of the products selling in other countries or regions by the right holder or licensed by the right holder to, with the arrangement of an unlicensed import, an unlicensed or unintended country or region. The selling of smuggled iPhone5 is following that definition. Therefore, to determine the possible infringement of smuggled-phone-sale, it shall first examine whether it will violate the law to conduct a trademark parallel import.
II. Standards to examine the parallel import’s infringement
There could be found no provisions concerning the trademark infringement by parallel import in Chinese Trademark Law. And as known up till now, most foreign experts are against to determine it as an infringement, for the principle of exhaustion of rights. However, we prefer not to judge the problem with only a principle, for it deserves a discussion among the situations. Let’s first take a glance at two cases:
1. Beijing Fahuayilin Trading Co., Ltd (the “Fahua Company”) filed a lawsuit against Beijing Shiji Hengyuan Science and Trading Co., Ltd (the “Shiji Company”) and Chongqing Metropolis and Pacific Department Store Co., Ltd (the “Pacific Company”), claiming that Shiji Company set up a counter in the Pacific Company selling clothing marked AN’ GE imported from Hong Kong, and that infringes the exclusive license right of Fahua Company in the Chongqing City and other regions in mainland China. Yet to the consideration of the court, the products sold by Shiji Company is the genuine articles of AN’ GE, and thus incurred no confusion o misunderstanding by the consumers with the origin or manufacturer. Based on the ground, the judge rejected the claims of the plaintiff.
2. The Michelin Group (Euronext: ML), the holder of Michelin trademark, filed a lawsuit against a Chinese individual business who sold the tyres manufactured by Michelin’s Japanese Plant and should be only sold in Brazil. Moreover, such tyres sold were with no security examination in China. In the consideration of the court, the establishment of the infringement shall lay on the infringement against the plaintiff’s trademark proprietary interests (note: the link is in Chinese). And as seen in the final decision, due to the lack of security examination for those unlicensed sold in China, the individual business was judged infringement for the damage thereby caused to the Michelin trademark.
We bear the same opinions in Case 2. It’s quite common to see a different quality over the same product manufactured in countries. And that endorses the judgment by the court in Michelin dispute on the ground of “damage to the plaintiff’s trademark interests.” Meanwhile in Case 1 as discussed above, the parallel imported products are clothing, which bear no differences in quality among the countries or regions, and therefore the conclusion of the court is sound and reasonable on no-infringement has thereby be made.
III. Any trademark infringement of smuggled iPhone selling in China?
Allow for the aforesaid standard, we think it could be more understandable for you to judge the infringement by smuggled iPhone selling in China. Not like the described tyre, we could see iPhones in a unified quality and standard, and the limitation of local operator takes no influences on that. In general, those iPhones purchased in Hong Kong could be functioning well in mainland China, and for this reason, it shall be seen no damage to the reputation of the interests of the right holder from the trademark, and once by the standard in Case 2, no infringement shall be established.
Surely, considering iPhone5 has not been sold in the market, it could not preclude the possibility, though low, it could be found a poor quality failing to meet the quality control demands in China with the smuggled new iPhone when sold in the country, and that could damage the reputation developed on the brand. Also by the opinions in the above Case 2, it shall be determined infringing.
Furthermore, with the flooding in of the smuggled iPhones, the foreseeable interests of Apple, as well as its local partner, China Unicom (NYSE: CHU), could be reduced, yet it may produce no influence on iPhone’s commercial reputation. With regard to the losses of this, Apple could have no settlement on the parallel import of iPhone with the reference to the Trademark Law.
Other recommended posts on our website:
1. The Actual Term of Trademark Registration in China
2. How to Apply for the Trademark Record in China Custom
3. How to improve the success rate of trademark registration in China?
4. Matters for Attention in Trademark Refusal Review in China
5. Introduction of China’s Legal System of Trademark Renewal
6. Introduction on the Regulations concerning the Capital Contribution in IPR or Domain Name in China
7. The Copyright Registration in China Could Be FREE?
8. China Copyright Protection Term Longer than EU’s?
9. Matters for Attention in the Patent Preliminary Injunction Application in China(I)
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