Under Article 36.2 of Taiwan’s Trademark Act, parallel imports do not infringe when they “have been put on the domestic or foreign market under a registered trademark by the proprietor or with his/her consent.”
Setting aside statutory exceptions to the exhaustion doctrine, a unique scenario has long challenged the boundaries of this principle: does it still apply when the same trademark is registered by different entities at home and abroad?
In a seminal 2019 decision, the Supreme Court ruled that exhaustion still occurs when there is a legal or economic relationship between the foreign and Taiwanese proprietors. Infinity Beauty Ltd. v. Ohwin Inc., 108 Tai-Shang No. 397, Taiwan’s Supreme Court (Jan. 2020). See our Newsletter on this case.
In 2024, the Supreme Court further clarified that, in the legal-or-economic-relationship test, courts should consider whether there exists a licensing or distribution agreement, a relationship of affiliated enterprises or corporate groups, a parent-subsidiary structure, exclusive distribution arrangement, or a globally unified brand image, or where a coordinated trademark marketing strategy is adopted between trademark registrants across different jurisdictions. Nefful International Holdings Pte. Ltd. v. Hsieh, 113 Tai-Shang No. 882, Taiwan’s Supreme Court (June 2024).
Recently, the Intellectual Property & Commercial Court (the IPC Court) held that the exhaustion doctrine remains applicable even in the absence of an apparent legal or economic relationship, provided that the facts and evidence indicate that the appearance of such an absence is a deliberate arrangement to circumvent the principle of exhaustion. Botanicus Spring Co., Ltd. v. Wang, 113 Min-Shang-Su No. 56, IP & Commercial Court (Oct. 2025).
In this Botanicus case, the plaintiff is the owner of six trademark registrations in Taiwan, including the marks “BOTANICUS” and “botanicus”. The plaintiff filed a civil lawsuit against the defendant for unauthorized sale of the products bearing the asserted trademarks on online marketspace. The defendant contended that the disputed goods were genuine products and originated from a Czech company, Botanicus, spol. s. r. o., which owns registrations of the marks in Europe.
At this point, the case turned to fact-finding under the legal-or-economic-relationship test. According to the IPC Court’s findings:
(1) Three of the asserted Taiwanese trademark registrations were originally owned by the Czech company’s former Asian representative, which later transferred the registrations to the plaintiff;
(2) The former Asian representative authorized a Taiwanese representative to act in Taiwan, and these two companies subsequently transferred the Taiwan representative right to the plaintiff’s predecessor; and
(3) After assuming the representative right and acquiring the three trademark registrations from the former Asian representative, the plaintiff imported goods from the Czech company.
Based on these findings, the IPC Court concluded that, under the Supreme Court’s test, a legal or economic relationship existed between the plaintiff and the Czech company.
The plaintiff nevertheless argued that, by the time the defendant engaged in the parallel importation at issue, the plaintiff had ceased importing products from the Czech company since 2020 and therefore no longer maintained any legal or economic relationship with it.
However, the IPC Court rejected this argument. First, it held that the three Taiwanese trademark registrations acquired by the plaintiff must have originally been filed with the Czech company’s consent.
Furthermore, the IPC Court found that, also in 2020, the plaintiff assigned its representative rights to another Taiwanese company, Botanicus Co., Ltd., which continued importing goods from the Czech company into Taiwan. In addition, the plaintiff and this existing importer shared the same legal representative. In the IPC Court’s view, this arrangement had been meant to create the appearance that the plaintiff had severed its legal and economic relationship with the Czech company and thereby avoid the application of the exhaustion doctrine.
While holding that such an appearance could not preclude the application of the exhaustion doctrine, the IPC Court emphasized that a contrary conclusion would be obviously inequitable, given that the apparent termination of the legal or economic relationship was a deliberate arrangement to impede the subsequent circulation of parallel imports in the Taiwanese market.
For better understanding of the legal relationship between the plaintiff and the Czech company, please see the table below.
The IPC Court’s reasoning appears to push the legal-or-economic-relationship test toward a framework in which the parties’ historical relationship may also be taken into account. This development is highly noteworthy for trademark owners. Nonetheless, as the plaintiff has appealed, it remains to be seen whether the appellate court will adopt this approach.