AnalysisonParallelImportationofTrademarkedGoodsinChina
【摘要】Theproprietyofparalleltradeisamatterofintensecontroversialissueinanumberofcountriesandintheworldtradeorganization（WTO）。Sinceintellectualpropertyrightisrecognizedonaterritorialbasis，eachnationhasestablisheditsownpolicycoveringparallelimports.Countrieshaveapolicyofnationalexhaustionamountingtoagovernment-enforcedterritorialrestrictiononinternationaldistribution.Originalmanufacturersretaincompleteauthoritytodistributegoodsandservices；Incontrast，countriespermittingparallelimportsarenotterritoriallysegmented.ThispaperaimstoanalyzewhetherChina，asadevelopingcountry，shouldpermitparallelimportsinthecontextoftrademarkedgoods，andseekstoanswerthisquestionbypayingattentiontothediverseapproachestakenbyothercountriesinthisarea.ThearticleconcludesinthelastsectionwiththesuggestionthatparallelimportationoftrademarkedgoodsshouldbepermittedinChinawithcertainexceptions.
【关键词】parallelimportation，exhaustionofrights，territorialityprinciple，freetrade
【正文】
Introduction
Parallelimportationreflectsthecontradictionbetweeninternationaltradeandintellectualpropertyright（IPR）。Ontheonehand，withtherapiddevelopmentofcurrenteconomicglobalization，freecirculationofgoodswithafreetradepolicyhasbecomeadominanttrendinworldwidetradingworld.Ontheotherhand，byvirtueofIPR'sterritoriality，tosomeextentithinderssuchafreetradeinordertoprotectintellectualproperty（IP）holders'interests.Howtodealwiththeparallelimportationissueappropriatelyhasbeenofgreatpracticalsignificancetoeachcountry.Inthefieldofinternationaltraderelatedtotrademarkedgoods，therehavebeengrowingrelevantdisputesandlawsuitstakingplacearoundtheworld.Inessence，parallelimportationcanbeperceivedasatradepolicydilemmawhichderivesfromeachnation'scomplicatedpolicyconsiderations.Balancingtheconflictofinterestsamongvariouspartiesinvolvedistheessentialpointinthisregard.
InChina，parallelimportationwasnotapracticallynotablephenomenonduetolackoftheeconomicconditionsinthepast.Chinawaswidelyknownforitslowlaborandproductioncosts，andpricesinChinaweremuchlowerthantheinternationalmarketprices.Becauseofthis，togetherwithhighcustomsdutiesandastrictquotasystem，parallelimportshadnotbeenrampantinChina.[FN1]However，withChina'saccessiontotheWTO，andthegrowingeconomics，constantsocialimprovement，parallelimportationcasesarespringingupinrecentyears，e.g.the“Lux”caseandthe“AN'GE”case，[FN2]whichwillbediscussedbelow.Nonetheless，China'scurrentlegislationsonparallelimportationoftrademarkedgoods，includingthenewTrademarkLaw（2001）andtheAnti-UnfairCompetitionLaw（1993）[FN3]，arestillvagueandinsufficientforthepresent.Whileattentionhasbeendrawninthissubjectacademically，itisurgenttomakeeffortsatthesubstantialleveloflegislationonparallelimports.
Thisarticleconsistsofsevensections，thefirstsectionisbriefintroduction，thenfollowedbyliteraturereviewonparallelimportationoftrademarkedgoodsinthesecondsection；Thethirdsectionfocusesonstudiesofparallelimports'classiccasesinChina，andthefourthsectionexaminesinternationaltreatiesonparallelimports；Aviewofothercountries'currentsituationonthisissueisgiveninthefifthsection.ThelasttwosectionsofthisarticlearegeneralintroductionofChina'slegalenvironmentinparallelimportationoftrademarkedgoods，andaconclusionofChina'sfuturedirectionontrademarkedparallelimportstobemadeonthebasisoftheanalysisabove.
Overviewof“TrademarkedParallelImports”
A.WhatareParallelImports？
Insummary，parallelimports'salientcharacteristicisthattheyaregenuineproductsratherthancounterfeits，producedbythetrademarkownersordistributors.Thatmeanstheyhavethesamequalityasgoodasproductsimportedthroughnormaldistributionchannelsandsupervisedexactlybythetrademarkownersordistributors.Inaddition，whatshouldbenoticedisthattheparallelimportersbuyparallelimportsinalegalmanner.Inotherwords，theredoesn'texistsmugglingorotherillegaltradetransaction.However，thearguableissuethatwhetherparallelimportationisalegalorillegalbehavior，resultsfromthefactthatbeforetheparallelimportsimportedintothetargetcountry'smarket，thetrademarkhasbeenprotectedundertherelevantlawsofthatcountry.Andtheparallelimportsaresoldbycompanieswhichmayhavenorelationshipwiththeproducerofthegoods，simultaneouslywithouttheauthorizationorconsentfromthetrademarkownersoruserseither.
B.Whydoesparallelimportationhappen？
Multiplecomplicatedfactorsmayexplaintheemergenceandexistenceofparallelimports.Mostimportantly，paralleltradetakesplaceduetosignificantpricedifferentialforthesameproductbetweentwomarkets.Commercialprofitisthecatalysttopromoteparalleltrade.Thisisthefundamentalreasonforthegrey-markettoexistandtheparallelimportstoemergecontinually.Putitinmoredetail，therelevantfactorsincludingconsumers'income，consumptivelevel，thedemandsofthemarket，fluctuationofexchangerateandsoon，areessentiallyinfluencingaproduct'sprice；Moreover，eachcountry'sdifferentdevelopmentlevelinscienceandtechnology，laborcostetc，alsoresultsinthepricedifferentiation.
Thereisapotentialfactorthatprovidesanadvantagedchanceforparallelimportation.Thatistheriseoftransnationalenterprises'globalmarketingstrategy.Becauseofthisworld-wideexpandingstrategy，multilateralenterprisesmakemultifaceteddecisionsregardingthemeansbywhichtheycanserveforeignmarkets.Itisnotpossibletoregisterandmaintaintrademarkregistrationsinallinternationalclassesinalljurisdictions.Thusitisapreferredchoiceforthemultilateralenterprisestolicenseorassigntheirtrademark.Inthissense，itunconsciouslyoffersanavailablechanceforthethirdpartytoconductparallelimportation.
C.ProsandConsofTrademarkedGoods'ParallelImportation
CasesReview
Thoughtherehaven'tbeenlaws，regulationsorjudicialinterpretationsspecificallyregulatingtheissueoftrademarkedparallelimportsinChina，inevitably，thecourtencounteredandwaschallengedbysuchcases.Theauthorbelievesthatthedifficultyanduncertaintyforthecourttojudgeontheseparallelimportscaseswillcontinue，aslongaslawsonthisissuearenotarticulate.Thehigh-profilecasesinChina'sjudicialpracticesarethe“Luxsoap”caseandthe“AN'GE”case.
The“Luxsoap”case，[FN7]aclassicparallelimportationincharacter，isinterpretedasbeingdecidedpurelyonitsparticularfactualmatrix，becauseitsdecisionwasdecidedmainlyonthefactthatthedefendantfailedtoshowthatthesoapsatissueweregenuinegoodsmanufacturedinThailandwithauthorizationfromtheforeigntrademarkowner.Thequestionofwhetherparallelimportationisallowediftheparallelimporterisabletoproducetherequisiteevidenceisnotyetsettled.[FN8]However，thiscaseperhapscouldberegardedasapreludeofparallelimportscasesinChina，anditindeedraisedsomethought-provokingquestionstobediscussed.Forinstance，ifthedefendantwasabletoprovethegoodswerelegallyauthorizedfromthetrademarkowner？Inthiscase，shouldthecourtadoptthe“firstsaledoctrine”topermitsuchparallelimportsoradopttheterritorialityprincipletoprohibit？Whatshouldbenotedis，unlikethePatentLaw，theTrademarkLawdidnotmentionwhether“exclusiveright”includedtherighttoimport.[FN9]
Comparedwiththe“LuxSoap”case，thefollowing“AN'GE”case，tosomeextent，reflectedmuchmoredeeplyonthecourt'sattitudesandcomprehensiononChina'sparallelimportationissues.Inthe“AN'GE”case，[FN10]theplaintiffarguedthatthetwodefendantsinfringedhisexclusiverightasasolelicenseetoselltheproducts，andviolatedbusinessprincipleofhonestyandcredit.Thus，theplaintiffadvocateditwasakindofunfaircompetitionwhichshouldbestoppedimmediately.Theplaintiffclaimedcompensationforeconomiclossesandapologies.Onthepartofthedefendants，bothofthemdeniedtheplaintiff'sclaimsabove.Theparallelimporter（oneofthetwodefendants）insistedthathisactivitywaslegalbecausetheparallelimportsfollowedtheformalimportprocedures.
Thiscasewentthroughtwotrials.Atthefirsttrial，thejudgeruledthattheparallelimporter'sbehaviorwaslegalbusinessoperations.Therationalebehindthedecisionwasthatthoughthebusinesslicensingagreementconcludedbetweenthelicensorandthelicenseewasauthorizingthelicenseetheexclusiveright.However，itislegallypermissibleforthethirdparty'sresaleactivity，becausecontractualrightscannotdirectlybeassertedasadefenseagainstathirdparty'sresale.Nostatutoryrestrictionsstipulatedthatthebuyerswhoboughttheproductsmustbedirectconsumersorusers.Thustherewasapossibilitythattheproductsweresoldforthesecondtimebythethirdparty.Thejudgementfinallydeniedtheplaintiff'sclaims.Theplaintiffappealedtoahigherpeople'scourt.Theappealcourtmaintainedthedecisionofthelowercourtthatthedefendant'sbehaviorwaslegalandtherewasnounfaircompetitioninvolved.Thecourtpronouncedagainsttheplaintiff'sappealintheend.
Inbrief，thiscasetypicallycharacterizedthegeneralpictureofparallelimportationinChina.Thereseemedtobeanindicationthatthecourtinthiscasepreferredtoadopttheinternationalexhaustionprinciple.ItisknownthatthedecisionsorjudgementsfromthelocalPeople'sCourtinChinaarenotbindingonsubsequentcases，because“staredecisis”isnotestablishedinChineselegalsystemasopposedtocommonlawlegalsystem，nonetheless，the“AN'GE”casesignificantlyprovidesanumberofvaluablereferencesinthecourt'sjudicialpractice.
TrademarkedParallelImportsUnderInternationalTreaties
ThoughTRIPSdoesn'tdirectlyaddresstoallowparallelimportation，article6ofTRIPSon“Exhaustion”stipulatesthat“ForthepurposesofdisputesettlementunderthisAgreement，subjecttotheprovisionsofArticles3and4nothinginthisAgreementshallbeusedtoaddresstheissueoftheexhaustionofintellectualpropertyrights.”Furthermore，article30addresses“exclusiverightofimportation”，subjecttoarticle6andparallelimportexception.Article51on“broadermeasures”，itsobligationdoesnotapplytoparallelimports.Fromtheseprovisions，TRIPSseemstobeinfavorofparallelimports.Itisobviouslyreflectedinthearticle6，whichindicatesthatevenaparallelimportdisputearises，thereisnodisputesettlementproceduretoapply，withanimplicationthataccusationofinfringementisimpossible.
RegardingtoTheUnitedNationsConventiononContractsfortheInternationalSaleofGoods（CISG），article42addressesthat“Thesellermustdelivergoodswhicharefreefromanyrightorclaimofathirdpartbasedonindustrialpropertyorotherintellectualproperty，ofwhichatthetimeoftheconclusionofthecontractthesellerkneworcouldnothavebeenunaware，providedthattherightorclaimisbasedonindustrialpropertyorotherintellectualproperty……”；Andsomerestrictionsarestipulatedfollowingthisprovision.However，itdoesn'taddresswhetherparallelimportsarelegalornoteither.Whendisputesonthismatterarises，itcanonlyberesolvedbynationalcourtpertainingitsnationallawsonparallelimports.
ImplicationfromtheUnitedStatesandEuropeanUnion
SinceWTOprovisionsallowmembercountriestoestablishtheirownrulesforparallelimports，theflexibilityleaveseachcountrytolegislateonthebasisoftheirvariousnationalsituations，suchaseconomicdevelopment，tradepolicyetc.
TheUnitedStates
ThepositionoftheUnitedStatesonparallelimports，generallyspeaking，adherestotheprincipleofterritoriality.Itisgovernedbybothstatuteandcaselaw.ThemainstatutesaretheTariffAct，theLanhamAct，andtheCustomsRegulations.ExistinglegislationandrecentcourtdecisionsdemonstratethattheUnitedStatesisnotlikelytodepartingfromitscurrentpositionthatparallelimportsarenotallowedandthatexhaustionislimitedtonationwideboundaries.[FN18]Section526oftheTariffActprohibitstheimportationintotheUSofmerchandisebearingatrademarkregisteredintheUSandownedbyaUSentity，unlesstheimporterhaswrittenconsentfromthetrademarkproprietor.[FN19]Thegistofthesectionisonconsenttoimportation，notconsenttoaffixingthemarkontotheproductandtheprohibitionrequiresnoproofoflikelihoodofconfusion.TheintendedbeneficiariesofthesectionareAmericancitizenswhohadpurchasedtrademarksfromforeigners.[FN20]
Overtheyears，theCustomsandtheTreasuryDepartmenthavepromulgatedregulationssupplementingandprovidingexceptionstotheoperationofSection526.[FN21]TheseexceptionsallowCustomstorefuseseizureofparallelimportswhere：theUSandforeignmarksareownedbythesameentity（the“sameentity”exception）；Orbothtrademarkproprietorsaresubjecttocommonownershiporcontrol（the“commoncontrol”exception）。[FN22]
TheUSCustomsRegulationsamendedin1999werealsoofimportancetoruleparallelimports.TheRegulationsnowpermitparallelimportationofmateriallydifferentgoodsmanufacturedabroadbyentitiesthatareaffiliatedwiththeUSdomestictrademarkproprietor，providedthattheproductsbearaprominentandlegiblelabelstatingthattheproductisnotauthorizedbytheUStrademarkownerforimportationandisphysicallyandmateriallydifferentfromtheauthorizedproduct.[FN26]
Ingeneral，theUnitedStatespermitsparallelimportsoftrademarkedgoodsunlessthetrademarkownercanshowthattheimportsareofdifferentqualityfromgoodssoldlocally，orotherwisemightcauseconsumers'confusion.
EuropeanUnion
AlthoughtheEuropeanUnion（EU）hasenactedregionalexhaustionboundaries，theEUpolicyisnotnowsubstantiallydifferentfromtheU.S.policy.TheEUpolicyofregionalexhaustionissimilartothatoftheU.S.policyofdomesticexhaustion，asthemembernationsoftheEUareanalogoustotheindividualAmericanstates.Exhaustionisrecognizedwithintheregion/states，butnotoutsidetheregion/states.EachmembernationoftheEUhastheirownintellectualpropertylaws，butthecreationoftheEUregionhasbroughtwithituniformity.[FN27]
EUtreatsparallelimportsintwodifferentways.IntheEuropeanEconomicArea（EEA），onceaproductbearingatrademarkissoldeitherbythetrademarkownerorthedistributorwiththetrademarkowner'spermission，itisimpossibleforthetrademarkownertousehisregisteredtrademarkrightsinotherEEAcountriestopreventthatoriginalproduct'simportation.However，itisstillnotclearhowfaraparallelimportercango，incasehedecidestoaltertheoriginalgoodsinanyway.WhileoutsidetheEEA，parallelimportsoftrademarkedgoodsareblockedfornon-membercountries.AsaresultofrecentEuropeanCourtofJustice（ECJ）decisions，theowneroftrademarkrightsintheEEAcanpreventtheimportationofanoriginalproductbearingthatmarkintotheEEAfromoutsidethatEuropeanEconomicAreaunlesstheimportercanunequivocallydemonstratethatthetrademarkownerhasrenouncedhisrighttoopposetheplacingoftheproductontheEEAmarket.[FN28]
China'sCurrentLegalEnvironmentofParallelImportationinTrademarkGoods
WithaviewtootherrelevantlawsofPRC，suchastheContractLaw，theCustomsLaw，theAnti-UnfairCompetitionLawandsoon，theyhavenotaddressedtheparallelimportsissuedirectly.Ingeneral，theparallelimportsdonotseemtobeprohibitedbylawsinChina.
Conclusion
Frommyviewpoint，thegroundsforallowingthetrademarkedgoods'parallelimportationinChinaareonthebasisofthefollowingreasons.
Itissaidthatcountriesthatparticipateininternationaltradegrowoutofpovertyfasterthanthosethatdonot.Theevidenceforthispropositionisclear.Worldbankresearchshowsthatpercapitarealincomegrewthreetimesfasterinthe1990sfordevelopingcountriesthatmostincreasedtheirparticipationinglobalizationthroughtradethanfortherestofthedevelopingcountries.Theworldbankalsofindsthattradebarriereliminationinconjunctionwithrelateddevelopmentpolicieswouldlifttensofmillionsofpeoplefrompovertyby2015.Developingcountriesthatgenerategrowththroughtradewillbelessdependentonofficialaidovertime.[FN30]Inthisregard，topermitparallelimportationispossiblyconducivetotrading-encourageddevelopingcountries.Chinashouldtreattheparallelimportsproblemasachallengingtestwithwillingness，tobringharmonizationtothegloballegalandeconomicenvironmentbyestablishingandenforcingnationalpredictable，equitablelawsandregulations.Chinaisabletosteertowardsthegoalofachievingabarrier–freeinternationalsystemoftradeonitsowninitiative.
Secondly，fromaneconomicsperspective，withananalysisofverticalpricecontrol，amanufacturersellingitsproductthroughanindependentagentsetsthewholesalepricesufficientlylowtoinduceadesiredretailpriceabroad.Thispermitstheagenttoselltheproductprofitablyintheoriginatingmarket.Parallelimportscanincreaseretail-marketcompetition，itcanalsoaffectarights-owner'sincentiveinsettingthewholesalepriceitchargesadistributor，therebyreducingverticalpricingefficiency.ThereexistsaU-shapedwelfarecurveofparalleltradewithrespecttotradecost.Restrictingparallelimportsbenefitsthemanufacturer，butcouldraiseorreduceglobalsurplus.However，itissaidthatparallelimportsaremorelikelytoincreasewelfarewithinaregion.[FN31]Therefore，prohibitionofparallelimportsisnotnecessarilyagoodchoice.
Thirdly，tocomparetrademarkedgoodswithpatentedgoods，itisunderstandabletoprovidefortheformeramoreflexiblelegalenvironment.Becausepatentsincorporateusefulscientificdiscoveriesorknowledgewhicharecostlytoacquire.Itisclearthat，giventhattheinvestmentoftime，energyandmoneyintodevelopingapatentableitemissubstantial，andthelowprobabilityofanygivenpatenteditembeingsuccessful，itisimportanttoprovideinnovatorswithanincentivetoundertakeresearchanddevelopment.[FN32]
Bycontrasttopatentprotection，trademarkisatoolwhichreducessearchcostsandenableconsumerstoenjoythebenefitofprevioussatisfactoryexperienceswithproducts.Trademarkactsasasignalfromproducertoconsumerthattheycanbeassuredofagivenqualityofproduct.Regardingtothetrademarkedparallelimportsaregenuinegoods，inthismanneritisreasonablypersuasivetopermittrademarkedparallelimports.
Fourthly，fromasocialpointofview，Chineseconsumersmayenjoythesamequalityproductsatlessexpensiveprices.ThebenefitistoincreasethelivingstandardofChinesepeople.Thisisimportantfordevelopingcountries，andperhapsitcouldalsoexplainwhyveryfewdevelopingcountrieschoosetorestrictparallelimportscompletely.Moreover，ifparallelimportationisnotallowed，highpricesandlucrativeprofitsinsellingfamousforeignbrand-nameproductswillonlyincreasethelikelihoodofunscrupuloustradersproducingandsellingcounterfeitsofsuchproducts.[FN33]
Lastly，atthecurrentstage，ChinaonlyhastheAnti-UnfairCompetitionLaw，butwithoutAntitrustLaw.Therefore，therearenorealsafeguardsagainstabusesofmonopolisticoranti-competitivebehaviorwhichmighthappeninthelocalmarket.Permittingparallelimportationoftrademarkedgoods，tosomeextent，couldplayaroleofmitigatingunfairmonopolyofthetrademarkownersinordertomaintainsoundmarketorder.Althoughitistruethatintheshortrun，interestsofdomestictrademarkproprietorsareharmedbythepresenceofparallelimportsinthemarket，itisassertedthatthepictureisincomplete.[FN34]ThelossofdomestictrademarkproprietorsfromsuchcompetitionwouldbelargelyoffsetbythegaintheywouldmakefromthereductionintariffandeliminationofquotasystemuponChina'sWTOaccession.[FN35]Toconclude，intheprogressivelyglobalizedworld，freetradehasbeengainingincreasingpopularity.Strikingthebalanceamongavarietyofinterests，parallelimportationoftrademarkedgoodsinChina，theadvantagesoutweighthedisadvantages.
【注释】
[FN1]CindyWaiChiWong，“ParallelImportationofTrademarkedGoodsinHongKongandChina”（2004）34HKLJ151.
[FN2]The“Lux”caseandthe“AN'GE”case，thedetailsofwhichareanalyzedinthethirdsectionofthisarticle.
[FN3]Seearticle52（1）and52（5）oftheNewTrademarkLawofPRC（2001）。
[FN4]KeithE.Maskus，“ParallelImportsInPharmaceuticals：ImplicationsforCompetitionAndPricesInDevelopingCountries——FinalReportToWorldIntellectualPropertyOrganization”，April2001.
[FN8]Seenote1above.
[FN9]Seenote7above.
[FN10]YuanXiao-dong，“BalanceRequiredinApproachingParallelBattle”（2002）MIP36，38（July/August）。
[FN11]Seenote5above.
[FN12]ShiraR.Yashor，“CompetingintheShadowyGray：ProtectingDomesticTrademarkHoldersfromGrayMarketeersUndertheLanhamAct”（1992）59UChiLRev1363，1369-1371
[FN13]PeterDrahos，TheUniversalityofIntellectualPropertyRights：OrginsandDevelopment“，availableatwww.wipo.int/tk/en/hr/paneldiscussion/papers/pdf/drahos.pdf
[FN14]Formoreexplanationofthetwoprinciples，seeFriedrich-KarlBeier，“TerritorialityofTrademarkLawandInternationalTrade”[1970]1IIC48.
[FN15]ChiShaojie，“ExclusiveRighttoaLicensedTrademark：ADefenseagainstparallelimportation？”availableatwww.lawinfochina.com/dispfree.asp？db=4&id=40-21k.
[FN16]AlanJ.Kasper，“AViewoftheParallelImportsIssueFromAnInternationalPerspective”，availableatwww.sughrue.com/……/Presentation/PublicationAttachment/bb332de0-48be-b0f4-1f5a991feabc/par_imports.htm.
[FN17]Seenote16above.
[FN18]Seenote16above.
[FN19]19USC§1526（1999）。
[FN20]CarlBaudenbacher，“TrademarkLawandParallelImportsinaGlobalizedWorld-RecentDevelopmentsinEurope，withSpecialRegardtoLegalSituationintheUnitedStates”（1999）22FordhamInt'lLJ645，679
[FN21]37FedReg20，678（1972）（codifiedat19CFR§133（1981））。
[FN22]19CFR§133.21（c）。
[FN23]MarkS.Sommers，“USGreyMarketGoods：What'sIn，What'sOut”[1994]7EIPR269，272.
[FN24]982F2d633（1stCir1992）。
[FN25]Ibid.，p640.
[FN26]19CFR§133.23（b）。
[FN27]Seenote16above.
[FN29]S.K.Verma，“ExhaustionofIntellectualPropertyRightsandFreeTrade-Art6oftheTRIPSAgreement”（1998）29IIC534，553.
[FN30]“2006TradePolicyAgendaandAnnualReport”，March2006，availableat
2006_Trade_Policy_Agenda/asset_upload_file897_9076.pdf
[FN31]KeithE.MaskusandYongminChen，“VerticalPriceControlandParallelImports：TheoryandEvidence”，ReviewofInternationalEconomics，12（4），551-570，2004.
[FN32]PatrickKenny&PatrickMcnutt，“Competition，ParallelImports&TrademarkExhaustion：TwoWrongsFromATrademarkRight”，December1999，CompetitionAuthorityDiscussionPaper.
[FN33]Seenote1above.
[FN34]Seenote1above.
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