Parallel imports are genuine goods that are put on the market by a trade mark proprietor in one country, and subsequently purchased and imported into another country for resale.
Singapore permits parallel importation. As such, it is an issue that arises frequently in practice, but is rarely litigated on. In Samsonite IP Holdings Sarl v An Sheng Trading Pte Ltd  SGHC 18, the Singapore High Court clarified the scope of the parallel importation defence in Singapore.
The Plaintiff, Samsonite IP Holdings Sarl, owned various trade marks relating to the Samsonite brand in respect of bags, backpacks, luggage and travel accessories in many countries (the “Samsonite Marks”), including Singapore and China.
Samsonite’s Chinese subsidiary (“Samsonite China”) was granted a licence to use the Samsonite Marks in China only. Samsonite China had entered into a co-branding agreement with Lenovo, a manufacturer and distributor of computers and laptops. Under the terms of the agreement, Samsonite China was to manufacture backpacks bearing at least one of the Samsonite Marks, and the backpacks were to be given away in conjunction with Lenovo laptops in China. The terms prohibited Lenovo and its authorised dealers from disposing of the backpacks independently from the sale of the laptops.
However, some of Lenovo’s authorised dealers sold the backpacks independently from the laptops to unauthorised dealers, who eventually sold the unbundled backpacks to the Defendant, An Sheng Trading Pte Ltd, a parallel importer.
The Defendant imported 2,328 co-branded backpacks into Singapore, which were detained at the customs. The Plaintiff applied for summary judgment against the Defendant for trade mark infringement, and the Defendant sought to rely on the parallel importation defence.
The Court found that there was a prima facie infringing use of the Samsonite Marks in relation to the backpacks.
The crux of the dispute was whether the Defendant could avail itself of the parallel importation defence. The defence is found in Section 29 of the Singapore Trade Marks Act, which states that the trade mark proprietor’s right in 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, or with his “express or implied consent (conditional or otherwise)”.
Two issues arose before the Court:
- Were the goods put on the market?
- If the goods were put on the market, whether the goods were put on the market by the proprietor, or with his express or implied consent?
Were the goods put on the market?
The Court held that the goods were not put on the market.
The expression “put on the market” was held to refer to the situation where:
- The disposal of the goods was done in a way which allowed an independent third party to acquire the right to dispose of the goods bearing the trade mark; and
- The disposal simultaneously allowed the proprietor of the trade mark to realise the commercial or economic value of the trade-marked goods.
The Court explained that such acts of disposal included not just the sale of the goods, but also in appropriate cases, allowing the goods to be hired, or to be given away for free (for the purpose of building brand awareness). However, it did not include preparatory acts such as offers for sale.
The Court found on the facts that the backpacks had never been “put on the market”.
First, the Court found that the Plaintiff’s economic objective was to penetrate the Chinese consumer market to create awareness of the Samsonite brand by associating it with Lenovo laptops. This economic value was never realised because the backpacks never reached the Chinese consumer market and, more fundamentally, were never associated with Lenovo laptops since the backpacks were sold independently.
Secondly, the Court held that backpacks were not put on the market when they passed from Samsonite China to Lenovo as there was no assertion that Samsonite China had sold the backpacks to Lenovo for profit. The backpacks were also not put on the market by their passing from Lenovo to its authorised dealers because the dealers were part of the co-branding arrangement, and were not “independent third parties”. Finally, neither the passing of the backpacks from the authorised dealers to the unauthorised dealers, nor from the unauthorised dealers to parallel importers put the backpacks on the market because no economic value was realised in either transaction. The profits received through those sales never passed to the Plaintiff.
Was there consent?
Since the backpacks were not “put on the market”, the issue of consent did not arise. However, the Court made some observations to clarify the law.
The Court explained that express consent is permission which is explicitly, clearly and unmistakably given either verbally, in writing or by clear conduct (such as an unmistakeable nod).
The Court characterised implied consent as consent which is inferred from the proprietor’s actions or the facts of a particular situation. While implied consent must not be ambiguous, the Court cautioned against adopting an overly narrow approach to consent as it would be inconsistent with the Singapore Parliament’s favourable attitude towards parallel importation.
The Court observed that even if a proprietor’s consent to putting the goods on the market is conditional, it is still treated as valid consent. Thus, even where the proprietor imposes restrictions on the sale of the goods to particular territories, consent is deemed to have been given. This is to prevent the proprietor from controlling the subsequent exploitation of the goods after they have been put on the market (which is the principle that underlies the parallel importation defence).
The Court observed that the notion of consent had to be interpreted with reference to putting the goods on the market, which involved realising the economic or commercial value of the trade marks. The Court observed that the Plaintiff never consented to the backpacks being sold independently from the Lenovo laptops to parallel importers. The Plaintiff had only consented to the manufacture of the backpacks by Samsonite China to be supplied to Lenovo to be given away in conjunction with the sale of Lenovo laptops in China.
While Singapore courts still lean favourably toward parallel imports, the Samsonite case demonstrates that, in certain situations, the trade mark proprietor can still succeed in enforcing his trade mark against parallel importers. However, the full range of situations in which a trade mark proprietor can be said to have exhausted his rights by putting his goods on the market remains to be explored in subsequent cases.
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