Parallel imports refer to genuine products that are imported into a country without the permission of the intellectual property (IP) owner but are legally acquired elsewhere. These are not counterfeit or pirated goods — they are authentic products sold in another market and then imported through unofficial channels.
Example:
A company may sell a product in the U.S. at a lower price than in the U.K. A third party may buy that product in the U.S. and import it into the U.K. to sell it at a profit, bypassing the official distributor or licensee in the U.K.
Key Concepts:
- Legitimate Goods: Unlike counterfeit items, parallel imports are genuine products.
- Different Market, Same Product: Often arise due to price differences across countries.
- Grey Market: Sometimes called the “grey market” because it exists in a legal gray area — the goods are legal, but the distribution may not be authorized.
- IP Rights Conflict: The central legal issue is whether the IP rights holder can restrict the resale or importation of their products into a different region.
Legal Treatment Varies by Country:
- European Union (EU): Once goods are sold in the EU with the IP owner’s consent, they can’t usually prevent further resale within the EU — this is called the principle of exhaustion.
- United States: The Supreme Court ruling in Kirtsaeng v. John Wiley & Sons (2013) held that the “first sale doctrine” applies to goods lawfully made abroad, meaning parallel imports can be legal.
- Japan and others: Laws differ; some permit it under certain conditions, others restrict it more heavily.
Pros and Cons:
Pros:
- Lower prices for consumers
- Increased competition
- Greater product availability
Cons:
- Undermines official distributors
- Potential warranty/support issues
- Risk of regulatory non-compliance (e.g., labeling, safety standards)
⚖️ Legal Perspective (Fragrances)
European Union (EU)
- Exhaustion of Rights applies: once a product is placed on the EU market with the IP owner’s consent, the trademark owner cannot stop its resale within the EU.
- However, importing from outside the EU (e.g., U.S. or UAE) without authorization can be blocked.
United States
- U.S. courts allow parallel imports under the first sale doctrine.
- However, if there’s a material difference between the imported product and the one sold domestically (e.g., packaging, ingredients, batch codes, labeling), the trademark owner can object.
Australia
- Permits parallel imports, especially if the product is genuine and not materially different.
- Fragrance brands often try to block these imports by claiming branding confusion or different formulation.
💡 Key Industry Issues
1. Price Arbitrage
- Perfume brands use regional pricing based on market demand and brand positioning.
- Parallel imports exploit these price gaps.
2. Packaging & Labeling
- Fragrances sold in the Middle East or Asia might have different packaging, ingredient disclosures, or even alcohol content, which can justify legal action by the brand.
3. Counterfeit Risk
- Though parallel imports are legal and genuine, the channels used to acquire them can overlap with counterfeit markets, raising quality control concerns for consumers.
🇿🇦 More on South Africa
- Legal Standing: South Africa allows parallel imports under the principle of international exhaustion. Once a genuine product is sold anywhere in the world, the IP holder’s rights are considered exhausted under South African law.
- Notable Case: Premier Hangers CC v Polyoak Packaging (2004) helped reinforce this principle.
- Competition Commission: The Competition Act has been used to support parallel imports where blocking them is seen as anti-competitive behavior.
- Brand Resistance: Brands may still object, particularly if packaging misleads consumers, e.g., fragrance concentration or volume differences.
- Retail Landscape: Many South African online perfume retailers openly sell parallel imports at lower prices. These may not come with official warranties or return policies.
✅ Summary
- Parallel imports of fragrances are legal in South Africa, EU, Australia, Japan, and the U.S. — with varying conditions.
- Fragrance brands use packaging, trademarks, and perceived differences to resist them.
- Consumers benefit from lower prices but may lose after-sales support or authentic packaging.