Parallel importation is a practice that promotes market competition and expands consumer choice. However, it may conflict with the exclusive interests of trademark owners.

In recent Japanese court practice, the three requirements established by the Supreme Court in its 2003 decision in the Fred Perry case have served as the established framework for determining whether the parallel importation of genuine goods does not constitute trademark infringement.

1. Three Requirements for Determining Whether Parallel Importation of Genuine Goods Is Lawful

Under Japanese court practice, parallel importation is considered lawful and does not constitute trademark infringement only when all three of the following requirements are satisfied:

① Genuine Goods Requirement
The trademark must have been lawfully affixed to the goods by the trademark owner in the foreign country or by a person authorized by the trademark owner.

② Substantial Identity of the Foreign and Japanese Trademark Owners
The foreign trademark owner and the Japanese trademark owner must have a relationship under which they can be regarded as substantially the same entity from both legal and economic perspectives.

③ Substantial Identity of Quality
There must be no substantial difference in the quality guaranteed by the trademark between the imported goods and the goods distributed in Japan by the Japanese trademark owner.

2. "Continuity of Quality Control" and Recent Judicial Trends

In the past, Japanese courts tended to place greater emphasis on the physical identity of the goods, based on the view that parallel importation was lawful if the goods were genuine. In recent court practice, however, courts have increasingly examined more strictly whether the trademark owner's quality-control authority effectively extends throughout the distribution process-that is, the "continuity of quality control."

(1) Recent Notable Case: IP High Court Decision of May 19, 2021

In this case, the defendant imported goods manufactured by the trademark owner. The IP High Court applied the three requirements established in the Fred Perry case and held that the parallel importation was lawful and did not constitute trademark infringement.

With regard particularly to the third requirement, namely substantial identity of quality, the court indicated that where the goods have been manufactured by the trademark owner itself, the quality assurance associated with the trademark is inherently satisfied. Thus, as long as the quality of the goods has not deteriorated during the distribution process, the quality-control function of the trademark is considered to have been maintained.

(2) Major Cases in Which Parallel Importation Was Held to Constitute Infringement

(a) Burberry case (Tokyo District Court, 2006):** The requirements for lawful parallel importation were not all satisfied.

(b) Converse case (IP High Court, 2010):** Parallel importation was held to constitute trademark infringement because the foreign and Japanese trademark owners lacked substantial identity.

Recent Japanese court decisions seek to prevent the excessive use of trademark rights while appropriately protecting the trademark owner's inherent quality-assurance function. Courts are therefore conducting increasingly detailed analyses of the specific facts and circumstances of each case.