Increasing international trade is vital to the prolongation of globalization. Without international trade, nations would be limited to the goods and services produced within their own national borders. Intellectual property and international trade have a close relationship and parallel import is a problem which arises out of international trade. Markets around the world are swamped with ‘parallel imported’ goods.
Parallel import means: “A product bought in one country and imported in to another by the importer, often to take advantage of the price difference between states; such product also known as grey market goods. Parallel importation usually takes place outside suppliers - authorized official networks”. In simple words, parallel import takes place where the price of a product is cheaper in one country, than the price in another country. To take the advantage of this price difference, the importer imports the marked goods from the country where the price of the goods are cheaper and sells it the importing country at a rate, cheaper than the same goods which are already places in the market, without the authorization of the trademark owner. This act is usually done outside the normal distribution channel.
Parallel importation is an act, where by unauthorized person imports the marked good which are cheaper in one country and sells them in another country, to make profit as of the price difference.
Parallel Importation – for / against? The owner of the trademark good would undoubtedly be against parallel importation as he can earn more revenue, not having grey marketed goods placed in the domestic market. On the other hand, the end consumer would favour it as they can enjoy wide variety of good at a much cheaper price. To resolve this dual interest, there are two types of regulatory mechanism which are recognized. They are
Contractual – As long as the contract is not, against competition law, too monopolistic and restrictive, the owner of the trademark may compel any restrictions on his licensees from selling the marked goods in particular area.
Legal – Many countries, in interest of the consumer, by their jurisdiction ensure that the goods which are imported, out of the normal distribution channel, are clearly marked as gray marketed good, so that the basic purpose of the trade mark is not questioned. This form of importation is executive through custom notification, where the goods bear a clear distinction as gray marketed good, ensuring the basic function of the trademark i.e. the source of origin.