Parallel Import Enforcement in Southeast Asia – THAILAND

Thailand does not prohibit parallel importation, because the first-sale doctrine (exhaustion of rights) is recognized by most intellectual property laws in the country.

Trademark

Thailand’s Trademark Act does not specifically allow parallel importation, but courts have ruled many times that the parallel importation of trademarked items is legitimate. One high profile case resulted in Supreme Court Decision 2817/2543 (regarding the WAHL trademark), in which the court found that if a trademark owner authorizes the sale of goods embodying its trademark, the attached exclusive rights are exhausted because the trademark owner already benefits from the first sale of the products. The trademark owner then has no right to prevent customers from reselling the products.

Even though the Supreme Court’s judgment is only a guideline and not legally binding under the civil law system, many subsequent cases have tended to follow this line of reasoning, and it seems unlikely that a court would go against this.

The court has not considered an exception to the exhaustion doctrine based on material differences between authorized goods and resold goods. As this would be a novel argument under Thai practice, it is difficult to predict how the court would rule on the issue.

Pharmaceuticals

In contrast with other goods, parallel imports are prohibited in the pharmaceutical sector. This is because importers must obtain an import license and local product registration before importing a pharmaceutical product. Furthermore, Thailand’s Food and Drug Administration (FDA) will not accept an application for a trademarked product without the manufacturer’s consent.

Remedies

Even though parallel importation is generally legitimate in Thailand, there are several factors that IP owners can investigate to tackle this challenge.

For example, if any of the parallel imported products require FDA registration or if there are any regulatory requirements, such as for medical devices (namely, prescription lenses) or cosmetics, the IP owner can point out that failure to meet the requirements is a violation of the regulations. Alternatively, if a parallel importer does anything that affects the quality or material characteristics of the product, or damages the brand’s reputation, there might possibly be trademark infringement and the exclusive rights of the trademark owner might not be exhausted due to material differences between the authorized goods and the resold goods. In that case, the IP owner might be able to take legal action against the parallel importer to claim damages. Lastly, action can be taken if the taxes and import duties are not fully paid on the parallel imported products in accordance with the tax laws.

By Ploynapa Julagasigorn, Alan Adcock, & Wiramrudee Mokkhavesa, Tilleke & Gibbins, Thailand, a Transatlantic Law International affiliated firm. 

For further information or for any assistance please contact thailand@transatlanticlaw.com

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