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INTA Circulates New Paper Detailing Arguments against Parallel Market
October 2nd, 2007 INTA, Trademarks none Comments

The International Trademark Association (“INTA”), a worldwide association of Intellectual Property attorneys has circulated a paper detailing arguments against the parallel market. The paper was presented by Annette Freeman, of Spruson & Ferguson, Sydney, Australia, not as an analysis of the issues but as talking points for persons wishing to advocate “national exhaustion.” The concept of “national exhaustion” suggests that the rights of the trademark owner are only exhausted within the country that the goods are sold. This concept is at variance with current law in the US and Canada which recognize that a sale of a trademarked good anywhere in the world exhausts the trademark owner’s right to control the resale of the work except under certain limited circumstances.

The paper suggests the following consumer expectations dictate against parallel market sales:

1. Reassurance that the branded product is reliable, of a certain quality;
2. Receiving the expected quality and satisfaction from the purchase;
3. Confidence that the branded product is the same as that purchased previously and is equally suitable for their needs;
4. Trust in the quality or value that the brand signifies to them;
5. In many cases, convenience of wide availability; and
6. Expectation that the branded product will be backed by the brand owner with quality guarantees or after-sales service.

The paper also cites numerous frequently used arguments against the parallel market including: consumer savings in purchasing parallel goods are not substantial, packaging of parallel goods is often altered, regional incompatibility in electronics (caused by mfg. region coding), lack of warranty support, risk of hidden counterfeits and material differences in out of region products.

INTA, an organization which is heavily dominated by the attorneys of brand owners, has taken a position that “parallel imports are harmful to brand owners, except in the case of imports between countries that are in recognized regions with truly harmonized markets.” Therefore, the Association supports national exhaustion or, in appropriate cases, regional exhaustion of rights.

Those of you who already have an INTA password can read the paper in the most recent INTA Bulletin

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