Could LEGO trademarks on parallel imports be used as advertisements? An Analysis on LEGO v. SAMHTOYS (Taiwan Intellectual Property Court 2020 Minshangsuzi No.27 interlocutory judgment)

Date: 29 July 2021

【Volume 53】The products of LEGO, among many other renowned toy brands, are popular in Taiwan. The fame and popularity has also led to many parallel importers importing Lego products and selling them in Taiwan without the consent of the trademark owner. There is no dispute that trademark owners cannot claim trademark rights on parallel imports and the sale of the above as it is expressly provided in the Taiwan Trademark Act (doctrine of international exhaustion). However, it is a controversial issue whether using registered trademarks on parallel imports to advertise parallel importers’ own business is an infringement of trademark rights.

One such example is brought to court, where LEGO accuses a Taiwanese toy company of inappropriately using similar or even identical stickers and trademarks on its promotional materials and advertisements. In this interlocutory judgment, the court points out that parallel importers should not use trademarks on any object other than the parallel imports. It discloses an important reference for brand agents protecting their trademark rights and importers willing to advertise their products.

Case fact

The famous Danish building block toy manufacturer “LEGO” (the plaintiff) has been continuously filing for 5 LEGO trademarks in Taiwan since September 1977 and continues to grow in the toy industry around the world. LEGO’s trademarks have grown into an influential brand on a world scale.

Mr. Zeng, the head of Taiwanese toy dealer “Stay-at-home Mom Toys” (“SAHMTOYS”, the defendant), has been using stickers identical or similar to LEGO’s trademarks on a real yellow truck imitating LEGO’s toy truck products, and advertising his business by calling the yellow truck “Mobile LEGO Truck” since 2020. He also used LEGO trademarks and stickers on the signs of a toy sale held by himself.

LEGO sent a cease and desist letter to Zeng in 2020. Nevertheless, Zeng did not cease the use of LEGO trademarks. LEGO then filed a civil litigation against Zeng. After the hearing, the Taiwan Intellectual Property Court (IP Court) found that the act of the defendant constituted infringement of LEGO’s trademark rights and violation of the Taiwan Fair Trade Act.

Usage of the Defendant and LEGO’s Trademarks

Usage of the Defendant LEGO’s Trademarks








Class 28

Combination toys, Building blocks [toys] and Building blocks [toys] for linkage, Buildings toys, Model toy figures, Model cars, Board games, etc.

Summary of the Taiwan IP Court Interlocutory Judgment

The defendant claimed that the stickers on the real yellow truck are authentic products bought from LEGO, therefore, LEGO’s trademark rights had exhausted. However, the court did not agree with the defendant’s argument. The court’s reasoning is summarized below:

  1. The defendant’s act constituted infringement of LEGO’s trademark rights The court reasoned that the exhaustion of trademarks rights of the parallel imports is already a great concession made by trademark owners. Such concession should not expand to goods other than the parallel import per se. No matter the stickers were authentic products or not, using stickers on advertising vehicles had turned them into advertisements for the defendant’s own products. It was a “use of trademarks” rather than a plain circulation of LEGO sticker products.

    Subjectively, the defendant knew that he was neither an authorized agent nor a distributor of LEGO. The defendant had no reasonable need for using the LEGO trademarks on advertising vehicles or signs since products he sold were “building blocks”. The court deemed that the defendant’s use of trademarks was essentially an attempt to shape the image that this dealer is related to LEGO. In conclusion, the defendant’s act had already overstepped the limit of fair use and constituted infringement of LEGO’s trademark rights.

  2. The defendant’s act violated Article 25 of the Taiwan Fair Trade Act. Because of LEGO’s consistent and wide using of its trademarks, Lego is one of the most influential and valuable brands in the world. It is a result of investment quite worthy of protection.

    The defendant ran a business that sells parallel-imported genuine LEGO building block products while he was neither an authorized agent nor a distributor of LEGO. Therefore, a competitive relationship was formed between them. Using trademarks similar or identical to LEGO’s trademarks even after receiving a cease and desist letter was free-riding on LEGO’s hard work. The defendant’s act had already affected LEGO’s profit and the trading order, and thus violated Article 25 of the Taiwan Fair Trade Act.

Wisdom Suggested Strategies

Taiwan recognizes the doctrine of international exhaustion under Paragraph II, Article 36 of the Taiwan Trademark Act, “where goods have been put on the domestic or foreign market under a registered trademark by the proprietor or with his consent, the proprietor is not entitled to claim trademark rights on such goods.” The purpose of statute is to prevent monopoly, provide domestic consumers with more options, and improve free competition.

The Taiwanese laws and the judicial practice about parallel imports are considered more beneficial to the parallel importers. However, the principle of exhaustion does establish a cap that exhaustion is limited to the parallel imports rather than indulging the parallel importers to freely advertise with brand owner’s registered trademarks.

In this ruling, the Taiwan IP Court indicated that the issue of this case was not the usage of stickers, which are genuine LEGO products, but the defendant’s conversion of the stickers into the use of trademark in “the advertisement of toy products”. The court held that such use of trademark constituted infringement to LEGO’s trademark rights. In other words, trademark owners are not prohibited from claiming rights to the use of trademarks on goods other than on the parallel imports. Both trademark owners and parallel importers should keep this decisive ruling in mind.



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