Maintaining control over grey imports
Parallel imports, also known as grey market goods, exist when genuine goods containing IP rights are imported for sale on markets and territories without the brand owner’s explicit consent. A simple example would be an item bearing a trademark which is sold on, and intended for, the US market but is then imported from the US to the EU without the trademark owner’s permission. In that case, even though the goods are genuine, the act of importing to a country for which the rights owner has not given its explicit consent would constitute IP infringement.
What is important to mention is that parallel importation could occur for products protected by copyright, trademarks and patents. The rules in relation to parallel imports depend on the territorial application of the rights in question. From an EU law viewpoint this act is prohibited as the Court of Justice of the European Union (CJEU) has established in case law.
Limitations to parallel imports
IP owners’ rights are limited by the principle of the first sale doctrine. This means that once a product containing IP—be it a DVD with a copyright-protected movie, or a technology product containing a patented component—has been sold, the IP owner cannot prevent the buyer further selling the item in the same territory. The first sale of the product ‘exhausts’ the IP owner’s rights.
There are national differences on what is considered the first sale. Some jurisdictions consider a first sale to be one made anywhere (international exhaustion, applied for example in the US and Australia). Other jurisdictions consider the IP rights to be exhausted only when the product has been sold in that particular territory (national or regional exhaustion).
The latter is the case in the EU, which applies regional exhaustion. Article 15 of the EU trademark directive states: “A trademark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the EU under that trademark by the proprietor or with the proprietor’s consent.”
