Parallel Imports and Trade Marks in Japan

Parallel imports (sometimes called grey-market goods) are genuine branded products bought lawfully in one country and imported into another outside the trade mark owner's official distribution channel. For brand owners and importers dealing with Japan, the practical question is narrow but important: can the Japanese trade mark owner use its registration to stop these goods at the border, or are they lawful to bring in and sell? Japanese case law has answered this with a conditional yes to parallel imports, and the conditions are what decide each case.

How Japan treats parallel imports

Japanese trade mark law contains no statutory exhaustion provision. Instead, parallel imports of genuine goods are permitted through a judge-made genuine-goods parallel import defence, sometimes described loosely as a form of international exhaustion but not the same as a codified rule. The leading authority is the Supreme Court's Fred Perry decision (Second Petty Bench, 2003), decided against the background of the earlier BBS patent parallel-import ruling and the lower-court trade mark line that preceded it. The starting point is that a registered trade mark protects two things: the indication of a product's origin and the guarantee of consistent quality that flows from that origin. Where genuine goods carrying the mark are put on the market abroad by, or with the consent of, a source connected to the Japanese right holder, importing them does not usually damage either of those functions, so the owner cannot ordinarily rely on its registration to block them. The import is treated as lacking substantive illegality. That is the core of why parallel imports are permitted at all.

The conditions courts apply

Fred Perry set out the conditions that make a parallel import permissible, and they are cumulative. First, the mark must have been lawfully affixed within the scope of the foreign proprietor's or a licensee's authority. This is subtler than asking whether the goods are counterfeit. In Fred Perry itself the goods were physically made by a contract manufacturer, so they were not fakes, yet the Supreme Court held they were not genuine goods because the mark had been affixed outside the scope of the licence, through a subcontractor and in a territory the licence did not permit. A licensee's breach of territorial or subcontracting terms can therefore defeat genuineness even where there is no counterfeiting at all. Second, the foreign mark and the Japanese registered mark must share the same origin, so that the mark identifies a single commercial source rather than two unconnected proprietors. Third, the Japanese right holder must be able to control quality directly or indirectly, so that the imported goods can be regarded as substantially equivalent in quality to those sold through the authorised Japanese channel. When all three hold, the origin and quality functions of the mark are not harmed and the import is lawful.

The distinction that matters most in practice is between a genuine parallel import and a counterfeit, and the two should not be blurred. A grey-market good is real product sold outside the intended channel; a counterfeit is a fake. The remedies and the analysis are different, and the wider framework for spotting that line is set out in the guide on counterfeiting and grey-market goods.

When importation crosses into infringement

The permission is not open-ended. Importation can infringe where one or more of the Fred Perry conditions fails. If the mark was not lawfully affixed within the scope of the owner's or a licensee's authority, the goods are not genuine for these purposes and the exhaustion reasoning never engages. If the foreign and Japanese marks trace back to different, unconnected proprietors, the imported goods no longer indicate the same origin to Japanese consumers and can be blocked. The quality-control limb is the one that catches many otherwise-genuine consignments: if the goods have been materially altered, repackaged, relabelled, or are a different specification from the authorised Japanese product such that the owner's quality control is broken, the quality-guarantee function is damaged and the import can be treated as an infringement. Differences that are trivial and do not mislead are unlikely to cross that line, but the assessment is fact-specific and turns on the individual product and market.

Where goods fall outside the Fred Perry conditions and are therefore infringing, enforcement can run through the civil courts and, in appropriate cases, through customs suspension procedures at the border. A true parallel import that satisfies all three conditions is lawful, and the customs route does not bite on it; the border remedy is available against goods that are infringing, not against genuine parallel imports. Timeframes, procedural steps and any official fees vary by route and change over time; treat any figure you read as indicative only and confirm the current amount with the JPO and the Japanese courts or local counsel before relying on it. The strength of a position also depends heavily on evidence of the supply chain and of the quality-control relationship, which is why early advice tends to pay off.

Practical takeaways

For an importer, the safest footing is documentary proof that the mark was lawfully affixed within the owner's or a licensee's authority, that the goods trace to the same origin as the Japanese mark, and that they have not been altered in a way that breaks quality control. For a brand owner, blocking genuine goods purely because they arrived outside the official channel is difficult in Japan; the realistic levers are the origin and quality-control conditions, plus contractual and distribution controls upstream. These issues sit within the wider Japanese trade mark framework covered in the Japan trade marks pillar.

IPEnvoy is not a law firm and does not provide legal advice. This is general information only, and the law in this area is shaped by case law that continues to develop. Confirm the current position with the JPO and the Japanese courts and a qualified local IP professional before acting. If you are weighing a parallel-import question in Japan and want it assessed against your specific goods and supply chain, IPEnvoy can help connect you with vetted local counsel.