Gray-Market Goods Law and Legal Definition

Gray-market goods are also known as parallel imports. These are goods that are manufactured abroad for sale in foreign countries and properly marked with trademarks registered in the U.S. Later these goods are purchased and imported into the U.S. to compete with the U.S. trademark owner's or licensee’s own products. Generally, there will be considerable incentive to sell gray-market goods in the U.S. if the prices on goods sold abroad are substantially lower than those sold in the U.S. Mostly, gray-market goods provide no trademark infringement because the mark represents the true source of the goods to which the mark is affixed. Pursuant to 19 USCS § 1526, importation of gray-market goods are prohibited in the U.S. However, the statute has provided certain exceptions to the prohibition, such as :

1. When a foreign manufacturer who affixes the mark to the goods is a subsidiary or brother -sister company to the U.S. trademark owner, there is no prohibition to importation.

2. When the goods are purchased by an individual in a foreign country and brought into the U.S. for personal use and not for resale, there will be no prohibition to importation.