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Gray Marketing and Grey Market Goods

Gray Marketing and Grey Market Goods can cause problems for trademark owners. As the owner and distributor of products‚ it is in your best interest to seek legal guidance to protect your trademark and other vital assets from infringement by unauthorized sellers and counterfeiters.

What Is Gray Marketing?

Gray marketing occurs when new‚ trademarked products are improperly diverted from authorized distribution channels or imported into a country for sale without the approval of the manufacturer. One common gray market practice involves abusing discount programs by making an excessive number of orders‚ and reselling the products without permission from the manufacturer. Another involves selling end of life inventories that were improperly disposed of.

What Is Trademark Counterfeiting?

Trademark counterfeiting occurs when a product is sold bearing a false trademark that is identical with or indistinguishable from the genuine trademark associated with the original. Unlike a mere trademark infringement‚ a counterfeiter attempts to fool the consumer into believing the product is actually made by another company.

Counterfeit products may enter at any stage of the distribution cycle. They may even be sold to a broker or distributor as legitimate goods and eventually unknowingly enter the market commingled with genuine products.

How are Gray Marketing and Counterfeiting Harmful to My Business?

Gray marketing, gray market goods and counterfeiting costs hundreds of billions of dollars in lost profits for U.S. distributors every year. If your products are currently being gray marketed or counterfeited‚ not only are you losing out on sales‚ but the goodwill and consumer loyalty you have built up may be at risk of taking a considerable hit. Consumers often purchase inferior gray market goods and black market goods believing they are the genuine article and if the product is of inferior quality as they almost always are‚ it can result in a loss of goodwill to the trademark owner.

How Can I Prevent the Distribution of Grey Market Goods?

U.S distributors suffering the effects of grey marketing and counterfeiting should notify the public and distributors of the existence of the illegitimate products‚ the differences between illegitimate and approved products‚ and the absence of warranty for illegitimate products. Since counterfeiting is a crime‚ you should also notice the police. Finally‚ it is highly advised that you notify customs and the department of homeland security which can seize counterfeit product as it enters the country.