Document Type

Article

Disciplines

International Law

Abstract

Everyone loves a bargain. In a free market economy, it is the mecca for the serious shopper. Finding a sought after item at a price below the competition is, to some, like finding the holy grail. In the United States, bargain hunting is serious business and where there is a demand, you can bet there will be a supply to follow. But when is a bargain not a bargain? For many consumers it is an experience with the gray market.' The gray market involves the sale or import of genuine trademarked goods outside the intended distribution channels.' These goods are purchased by the domestic consumer with the expectation that it matches the performance of the U.S. product with which they are most familiar. Occasionally these expectations are not met. The failure of performance is rarely the result of fraudulent practices, but rather a result of physical differences in a product tailored to the needs of the consumer in the country of origin, not the U.S. consumer.

More specifically, the gray market is loosely designated as the market in which imported goods, bearing trademarks, patents or copyrights identical to that of a domestic producer, are sold. These goods are not counterfeits but genuine merchandise with valid trademarks in their country of origin. 3 While there are a number of ways in which these products enter into the U.S. market, the most common is via a third party who purchases the goods from the foreign manufacturer and then exports them to the United States for sale. Meanwhile, there is a domestic owner of an identical trademark who is now competing with what may appear to be identical merchandise at a much lower price.4 In general, the end purchaser of the goods may become dissatisfied with the performance of the product and will either attempt to obtain a remedy from the domestic firm or simply avoid purchasing that firm's goods in the future. In either situation, an association has been made between the unsatisfactory product and the domestic firm. Hence, both the customer and the domestic producer lose in the long run: the consumer does not obtain that which he believed was bargained for and the domestic trademark holder loses a potential customer.

This note will explore the reasons why failing to protect the rights of the domestic trademark holder is injurious not only to the trademark holder, but also a detriment to the consumer and ultimately damaging to our fundamental notions of trademark. In situations where Congress has explicitly dealt with this issue, but the subsequent interpretation by an executive branch agency is contrary to that statement, the courts can and must act to restore the integrity of the legislative action. In the recently decided case of Lever Bros. v. United States,' the Court of Appeals for the D.C. Circuit gave some credence to the notion that there is sufficient statutory direction to bar certain gray market merchandise.

This note will begin by looking at how the controversy in Lever Bros. arose in the context of parallel importation. It will then review the historical development of the gray market controversy with particular emphasis on the notions of trademark integrity and intellectual property rights. This work will then analyze the Lever Bros. decision both in terms of the conflict as it was presented and the gray market controversy as a whole. It will be argued that the Lever Bros. court failed to adequately protect domestic corporations from future injury by not extending its ruling beyond the present case. This note will propose a direction for the courts in deciding future conflicts that will safeguard our notions of trademark integrity and protect the unwary consumer.

Accessibility Requirements

1

Download

Share

COinS