December 23, 2013 Articles

Gray Matters: Statutory Remedies for Sales of Unauthorized Parallel Goods Post-Kirtsaeng

It appears that brand owners may be moving toward Lanham Act claims.

By Michael Steger

Gray market goods or parallel imports are genuine branded goods that are legitimately produced but then imported into a market without the consent of the trademark and/or copyright owner. In contrast to counterfeit goods, gray goods are manufactured under license from or even by the brand owner, but then imported by another party into a jurisdiction for which the goods were not intended.

Brand owners have historically used litigation to combat sellers of gray goods through a combination of copyright, trademark, and other unfair competition actions. In March 2013, however, the United States Supreme Court ruled that the "first-sale" doctrine under section 109 of the Copyright Act protected the importation and sale of copyrighted works legally made abroad. This decision, in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351, 185 L. Ed. 2d 392 (2013), which overturned contrary circuit court case law, opened up the American market to importers who purchase copyrighted goods legally manufactured abroad, by removing one of the primary weapons used by U.S. copyright owners to keep lower-cost foreign goods out of the American market.

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