Pattishall IP Blog

March 19, 2013

Supreme Court’s Wiley Gray Goods Decision Does Not Foreclose Trademark Options Against Gray Market Goods

Filed under: Copyright, Gray Market — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:51 pm


By Jonathan S. Jennings, Partner

The U.S. Supreme Court decided today that copyright law would not protect against most gray market works.[1]  It is important to remember, however, that U.S. federal and state trademark and unfair competition laws still provide effective remedies against the importation, sale and distribution of gray market goods.

In most cases, a brand owner in the U.S. must establish that it owns a valid trademark here in the United States, or is an exclusive licensee, and that there are material differences between the authorized domestic product and the gray market product that bear the mark.  Trademark law protects consumers from confusion when they encounter a product with the same trademark, but that has materially different components, functionality, or health and safety information or warnings.  Federal courts have restricted the sale of gray market goods under trademark and unfair competition law involving a wide variety of goods from soft drinks and packaged foods, to pharmaceutical and cosmetic products, among others.  In many cases, the gray market good is not appropriate for sale in the U.S. because it is tailored to the tastes, preferences, conditions and laws of another country, and not the U.S.  The Tariff Act as well, and, to a lesser extent because of a labeling exception, the U.S. Customs and Border Protection’s Lever Rule may provide additional protections against gray market goods.  Finally, for famous brands, anti-dilution laws may provide a remedy.

The Court’s decision in Wiley does not impact these trademark and unfair competition remedies, as it is limited to copyright protection.  Therefore, when faced with a gray market goods problem, a brand owner should explore remedies available under trademark and unfair competition laws, notwithstanding this copyright decision.

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Jonathan S. Jennings is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues. Mr. Jennings counsels clients on a variety of trademark, copyright and unfair competition cases, has handled over 50 successful gray market goods trademark and unfair competition suits, and is the former Chair of INTA’s Parallel Imports Committee. 

April 27, 2010

Supreme Court to Examine Application of Copyright Law’s First Sale Doctrine to Importation of Gray Market Goods

Filed under: Copyright, Gray Market — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:18 pm

by Uli Widmaier, Trademark Attorney

Does copyright law’s first sale doctrine apply to imported goods manufactured abroad that are not intended for the United States market?  That is the question on which the Supreme Court recently granted certiorari in Costco Wholesale Corp. v. Omega, S.A., No. 08-1423 (Apr. 19, 2010).  Costco purchased genuine Omega “Seamaster” from an entity that acquired the watches outside the U.S. and imported them into the U.S. without Omega’s authorization.  Costco ultimately sold the watches to consumers at 35% below the price Omega normally charged in the U.S.  To stop this practice, Omega engraved a small design on the back of these watches, registered it with the U.S. Copyright Office, and then sued Costco for copyright infringement in the Central District of California, alleging violations of Sections 106(3) and 602(a) of the Copyright Act, 17 U.S.C. §§ 106(3), 602(a).  The district court entered summary judgment in Costco’s favor, but the Ninth Circuit Court of Appeals reversed.  Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008). (more…)

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