Ad featuring third-party mark on the aftermarket ruled fair use

The Intellectual Property & Commercial Court (IPC Court) has rendered a criminal judgment finding that a defendant’s sale of consumable spare parts in the aftermarket does not constitute trademark infringement.

Most machine, device or instrument manufacturers and sellers are rightly concerned that the sale of consumable spare parts on the aftermarket may not only affect their trademark rights and commercial interests, but also their long-established reputations. However, if there is no likelihood of confusion or misidentification, and no infringement of any rights, then it may not be easy to stop third parties advertising or displaying for sale the spare parts of a branded compatible machine, device or instrument.

The complainant in this case is the holder of the trademark OMRON and its Chinese character mark ‘歐姆龍’, designated for use on medical analysis instruments, medical devices and medical instruments. Without consent from the trademark holder, the defendant placed an advertisement on the e-commerce store Shopee for medical consumable patches which are compatible with a low-frequency therapeutic device feature the phrase "Omron 歐姆龍 Alternative Patches”. The prosecutor indicted the defendant based on the latter paragraph of Article 97 of the Trademark Act for illegally displaying and selling, in electronic media or online platforms, counterfeit goods. After the district court rendered a decision to acquit the defendant, the prosecutor filed an appeal with the IPC Court.

The issue in this lawsuit is whether the defendant’s use of the mark ‘歐姆龍’ registered by another person constitutes fair use as defined in Article 36.1.1 of the Trademark Act. According to said provision, a registered trademark is not infringed if the use is not intended as a trademark and is in accordance with honest practices in industrial or commercial matters for the purpose of providing information about a commodity or service. Fair use of a mark includes: descriptive fair use and nominative fair use. The latter permits the use of another’s mark to refer its owner’s goods and services. The use of a mark in this context is generally meant to indicate the function and source of the goods or services to which the mark is applied, thereby indicating quality, nature, characteristics and intended use of the goods or services.

During the trial proceedings, the IPC Court noticed that the defendant displayed photographs of disputed replacement patches on the Shopee website. Although the replacement patches did not bear the ‘歐姆龍’ or OMRON mark, text descriptions next to the photographs featured the phrase "Omron 歐姆龍 Alternative Patches”. Moreover, apart from the wording “our own brand” shown on the website, there were descriptions regarding the difference between the alternative patches and the patches under the ‘歐姆龍’ or OMRON mark from the original factory. The advertisement also indicated that “[t]he shape of the patches sold by the defendant matches that of the OMRON low-frequency therapeutic device”. It is evident that the ‘歐姆龍’/OMRON mark was only used by the defendant to explain that the patch being sold was compatible with the OMRON low-frequency therapy device produced by the trademark owner and could replace the original factory patches. In addition, the price at which the original factory generally sells the patches is 12 times higher than that of the defendant. 

The IPC Court thus came to the conclusion that the text description and price difference are sufficient to indicate that − while the alternative patches sold by the defendant can replace the original factory patches − lay consumers are capable of recognising that the two kinds of patches are from different, non-associated sources.

Based on this analysis, the IPC Court held that the defendant did not use the mark to indicate that the disputed goods were from the original factory. Instead, the ‘歐姆龍’ mark was used to indicate to consumers that an alternative product was available. Obviously, this is a fair use and should not be restrained by the trademark rights of the ‘歐姆龍’ or OMRON mark.

Fair use is a commonly deployed defence tactic in trademark litigation. This case makes it clear that displaying for sale or selling consumable spare parts bearing a third-party mark does not constitute trademark infringement. However, the advertisement should conspicuously indicate that the spare parts are not from the original factory so that consumers are unlikely to be misled regarding the origin of the product. This is well within the definition of fair use and does not constitute trademark infringement. 

This is an insight article whose content has not been commissioned or written by the WTR editorial team, but which has been proofed and edited to run in accordance with the WTR style guide.

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