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Chinese trademark law has no specific prohibitions against sale of gray market products diverted into the Chinese market, also known as parallel importation.  An important breakthrough occurred recently when the Suzhou Intermediate Court enforced trademark holders’ rights against an unauthorized reseller of gray market goods imported into China.

Pernod Ricard China (Trading) Co., Ltd. is the exclusive trademark licensee of Absolut Vodka (Images II-IV) in China.  Pernod Ricard and the trademark owner, Absolut Company Aktiebolag, brought a lawsuit in China against a local retailer of parallel imports of Absolut Vodka products, asserting trademark infringement and unfair competition.  The key facts were that the imported products had manufacturers’ identification codes removed and had added labels bearing Chinese characters for “Absolut” (Image I) and identifying an unauthorized importer and distributor.  The code removal and label addition infringed consumers’ right to know about the product origin, interfered with the trademark owners’ ability to track products to maintain product quality, and undermined the integrity and beauty of the genuine product.   The removal of the manufacturers’ identification code violated Article 52.5 of China’s Trademark Law, which is a catchall term prohibiting impairment of an exclusive right to use a registered trademark, and constituted unfair competition.  The addition of unauthorized labeling violated Article 52.1 & 52.2, prohibiting use of an identical or similar mark on the same or similar goods without the permission of the owner of the registered trademark, and infringed the exclusive right to use the registered trademark.

Conkle, Kremer & Engel works to protect its clients’ brands in the United States and abroad.