Monday, November 7, 2011

Importing trademarked goods and the gray market

Sometimes trademark owners sell their wares in other countries.  So, you might think that if you can go to the other country and get trademarked goods for cheap that it makes sense to have it imported back to the U.S. and to sell it for less than what it sells for in the U.S.  Unfortunately the Tariff Act of 1930 prohibits this sort of business.  Title 19 U.S.C. sec. 1526 is the section that outlaws this behavior and it says that it is unlawful to import into the U.S. any merchandise made in another country if it bears a trademark owned by a person or business that was created or organized in the U.S.; the trademark is registered by a person domiciled in the U.S.; and the registration is filed with the secretary of the treasury; unless you have the written consent of the owner of the trademark.  These goods are called gray market goods because in the country they were in, they were authorized goods with a valid non-counterfeit trademark on them.  However, when those goods are imported they become illegal.  If you get caught importing gray market goods then:

  • first time, you get a fine for less than the value of the goods' American suggested retail price;
  • any time after that, you get a fine for less than two times the value of the American suggested retail price;
The fine is at the discretion of the U.S. Customs services and it is in addition to any other criminal or civil penalty.  Also they seize your goods and you don't get them back.  Lastly they can shut your business down and stop you from selling these imported gray market goods. 

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