Richard Nelson joins co-authors Sue Su-Yeon Chun, Jason Jeong Lee and Rebecca Felsenthal on “Confronting the Gray Market in Korea and the U.S.” in Today’s General CounselOctober 2016
Both Korea and the United States face an influx of gray market goods (also known as “parallel imports”), but they offer trademark owners vastly different tools to combat this problem.
The Lanham Act enables U.S. trademark owners to fight gray market goods in federal court. The resale of trademarked goods is limited by the first sale doctrine, according to its quite limited definition of what constitutes a “genuine product.” Legal remedies are also available in the courts of some states, including California and New York.
In addition to the courts, U.S. Customs has authority to detain imported gray market goods (including those bearing “genuine” trademarks) when the goods are physically and materially different from those authorized for sale in the United States, and where the trademark owner has obtained specific “Lever Rule” protection. Obtaining this protection is a double-edged sword. It prevents some gray market goods from being imported into the United States, but it also creates a snag in the importation of goods to the authorized supply chain.
In South Korea, while parallel imports are generally allowed, a trademark owner may have recourse against third parties who use the related trademark and/or copyright in a manner that violates unfair competition laws, copyright laws, etc. Decisions on potential actions against parallel importers should be made based on the specific facts involved. Excessive action against parallel importers could be construed as violation of the Monopoly Regulations and Fair Trade Law of Korea.