INTA Bulletin

July 15, 2015 Vol. 70 No. 13 Back to Bulletin Main Page

Committee Spotlight: Parallel Imports Committee

Parallel imports (sometimes referred to as gray market goods) refer to branded goods that are imported into a market and sold there without the consent of the owner of the trademark in that market. The goods are not counterfeit goods as they have been manufactured by or for or under license from the brand owner. However, they may have been formulated or packaged for a particular jurisdiction, and then are imported into a different jurisdiction from that intended by the trademark owner. INTA’s Parallel Imports Committee (PIC) advocates on behalf of trademark owners facing parallel imports issues.

INTA advocates for national exhaustion in the case of parallel imports. Exhaustion of IP rights refers to the extent to which IP rights holders can control the distribution of their branded goods. According to the concept of exhaustion, once an IP right holder sells a product—to which its IP rights are attached—in a particular jurisdiction, it must allow the resale of that product in that jurisdiction. The IP rights covering the product have therefore been “exhausted” by the first sale.

There are two types of exhaustion regimes: national (or regional) and international. National (or regional) exhaustion regimes only allow trademarked goods that have been exhausted to be resold in the national or, in the case of the EU, the regional area where the goods are from. It does not allow for goods to be sold outside of those areas. International exhaustion allows trademarked goods that have been exhausted to be resold in regions other than the country or region of origin.

INTA believes that the value of a trademark can be undermined and consumers’ expectations can be frustrated if a standard of international exhaustion of trademark rights and free parallel importation is followed, and therefore favors national exhaustion of trademark rights. In those countries that currently follow international exhaustion, and in which political or other conditions make it infeasible to move to national exhaustion, at the very least INTA supports a “material differences” standard in order to exclude parallel imports that are materially different from their authorized domestic counterparts.

The PIC recently conducted a worldwide survey of countries that apply national exhaustion, international exhaustion or have a hybrid regime. This study is scheduled for publication soon and should prove useful to trademark owners facing parallel imports in multiple jurisdictions. The PIC also recently presented a resolution to the INTA Board of Directors providing for a “material differences” standard in those countries where it is infeasible to argue for national exhaustion, and is hopeful that the resolution will allow for more effective advocacy in many countries, particularly in the Asian-Pacific region and Latin America. The resolution was passed unanimously by the INTA Board at the recent Annual Meeting in San Diego.

The PIC is composed of four subcommittees representing the following regions: Asia-Pacific, Europe & Central Asia, Latin America & Caribbean and North America. In the current term, committee-wide working groups were formed to work on specific projects, including the global country guides, the Board resolution and amendments to the PIC position paper.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.

© 2015 International Trademark Association