Yesterday’s Koh Santepheap Daily (Offline Khmer edition only) reported on a seizure of Heineken beer for “infringement of monopoly rights”. The term “monopoly rights” might make you think of trademark infringement, and that this was some sort of fake Heineken brew. From my reading of the article, the beers are not fakes, but interestingly enough, they are infringing Heineken’s trademarks.

How can this be? Parallel imports, my friend. Let me explain.

According to the article, the Attwood Import-Export Company has the exclusive rights to the Heineken brand within Cambodia. Some other unnamed company has the rights to Heineken in Vietnam. Though I haven’t seen their contracts, I’d venture that they prevent Attwood and the Vietnamese distributor from selling into each others’ territories. But that doesn’t prevent some enterprising chap from buying a few cases in Ho Chi Minh City and trucking them over to Phnom Penh, assuming it’s cheaper on the Vietnamese side. That’s because the contracts only bind the parties to the agreement – and the enterprising chap never signed the contract. For all the Vietnamese distributor knows, he’s just another domestic customer.

So how then would the Cambodian authorities be able to legally seize the shipment? After all, these cans were made by Heineken and sold legally in Vietnam.

The Cambodian trademark law grants mark owners the exclusive right to sell products bearing the mark within Cambodia. Because this rule would also prohibit second-hand sales of trademarked goods (think about how much your car would be worth if Toyota could sue you for reselling it), trademark rights are exhausted upon their first authorized sale in Cambodia. Those last two words are key to the whole parallel imports issue. It means that an authorized sale in Vietnam does not exhaust the trademark rights in Cambodia. For better or worse, it allows companies to price and market their goods differently in different countries.

And that’s why Heineken from Vietnam is nothing like the Heineken from Cambodia, at least according to trademark law.