Parallel Imports: How the Grey Market Turns Savings into a Supplier Dilemma

seo835
7 days ago
4 min read

Grey market or parallel imports is a quite curious and controversial concept in the contemporary international market. However, suppose that you buy a real iPhone or a good perfume that is going to be sold somewhere in another country, at a lower price in a non-officials shop. That's a parallel import.

It is not a fake one, yet it has not been sold through the official channels of the company. It is the combination of two powerful ideas, that of free trade and the protection of intellectual property. On the one hand, it promotes cheapness and consumerism, but on the other, it is a threat to leading positions and image among brands, who have made significant financial investments in quality, post sales and distribution.

Learning about the Concept of Parallel Imports.

Understanding the Concept of Parallel Imports. The parallel imports are simply the product of the original that is imported to the country without authorization of the trademark owner after it has been lawfully sold elsewhere. These are genuine products not similar to counterfeits, they use the legitimate channels. It is a question of whether to strike a balance between brand control and consumer freedom. The aspect that is typically in the controversy is the so-called principle of exhaustion i.e. the period during which the copyright holder of a given product will no longer have control over the product.

With a law that is national exhaustion model, then the owners of the brand can prevent the importation of the foreign goods. But as the case of it adopts international exhaustion, resale may be effected at any place, even where parallel imports take place, where it has sold a product at one place with the allowance.

India: The Status: In Progress.

India is yet to set up the policy on parallel imports, in relation to the Trade marks Act, 1999. Section 29 provides the factors that are deemed as infringement whilst in Section 30, it expresses the cases that resale of real goods shall not be treated as infringement. The issue with this is that it is difficult to define what market is, be it national or international. The case Kapil Wadhwa v. Samsung Electronics (2012) clarified that India is oriented to international exhaustion.

The High Court of Delhi allowed the resolutions of the original goods which were imported without authorization provided that the consumers were not misled with warranties or the origin of the products. These were later succeeded by tastes such as Western Digital v. The same was echoed by Ashish Kumar who demands transparency through the application of appropriate labelling.

The World Relationships: International Attitudes.

In different countries they treat parallel imports differently: - European Union: This follows regional exhaustion - within any country of the EU the goods can also move freely but not outside. - United States: Exempts worldwide fatigue with the exception of material differences (e.g. warranty, packaging or composition) (e.g. Lever Brothers v.). United States). - Japan and Australia: The exhaustion and international exhaustion should be the one adopted and the product must be the actual one without damage despite the presence of parallel imports.

Problem and Policy Problems in India.

In India, there remains an ambiguity in the system even after judicial rulings. The customs have made it hard to identify a counterfeit or parallel good through the Intellectual Property rights (Imported Goods) Enforcement Rules, 2007. This misunderstanding concerns the honest importers as well as the allowed distributors. Parallel importation kills pricing and brand names loyalty in the case of businesses. They offer cheaper alternatives to consumers- sometimes possibly to the point of warranty or safety. To the policymakers it poses a dilemma of how it can ensure that there is healthy competition without demotivating foreign investment or product brand identity.

The Great Controversy: Who Makes the Benefit?

The view by the supporter of the parallel imports is that it has the advantage of competition and lowering prices hence enhancing consumer power and preventing monopolies by exclusive dealers. Amenorrhea, lack of after sales service and confusion to the consumers however is what the critics are threatening would be disastrous to the very market that the parallel imports are supposed to democratise.

A Way Forward: Balancing the Scorecard.

India should be treated in a tender way. The complete ban of parallel imports may assist in saving brands at the cost of the consumers and competition. The other alternative way of exit would be more even-handed and would be like: - Adoption of controlled international exhaustion model. - The process of stricter set of norms of consumer disclosure (labelling the grey goods). - Making the custom authority more specific to a larger extent. - Presentation of innovation of business in the service, pricing and warranty models. However, in the conclusion, there is nothing that is simply good or bad about the parallel imports, it is merely a mirror of the conflict between globalisation and local control. It is not about whether they ought to exist or not but about how to strike reasonable compromise to benefit both business and consumers as well as the regulators.

Author: Yashvardhan Dixit, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at

References :

1. https://www.mondaq.com/india/trademark/1477778/parallel-imports-in-india-laws-doctrine-of-exhaustion-and-market-impact

2. https://www.mayerbrown.com/public_docs/exhaustion.pdf

3.https://heinonline.org/HOL/Page?handle=hein.journals/nliu5&div=10&g_sent=1&casa_token=TQv96S4IZ_AAAAAA:Am1sCzz40tDBn6G7Mmxu2c6_Ho_wYjpF8Jy84g8c4agiJZIQpZYBtad6mNzt1ZvfUbYBYXZ1ZDw&collection=journals