Parallel Imports: Legal Risks and Compliance in Global Distribution

Gray market goods enter the U.S. Market through arbitrage, capitalizing on price differentials between countries. While this provides consumer access to lower-priced items, it creates significant cross-border distribution risk for brand owners who have invested in localized marketing and post-sale support.

The distinction lies in the contract. Authorized distributors are bound by specific quality control and service standards. Parallel importers, however, operate without these constraints, often leading to discrepancies in warranty coverage, packaging, or technical specifications.

Trademark protection in the U.S. Is territorial. Under the "Material Differences Doctrine," a brand owner can block the import of genuine goods if those goods are "materially different" from the versions intended for the U.S. Market. SJKP LLP deconstructs these differences—ranging from language on the box to internal chemical compositions—to establish or defend against infringement claims.

Following landmark judicial rulings, the "first sale doctrine" generally allows for the legal re-importation of copyrighted works (including labeled packaging) if they were lawfully manufactured abroad. However, this is not a blanket authorization; specific exceptions regarding software and digital components remain high-conflict areas in 2026.

U.S. Customs and Border Protection (CBP) has the authority to seize gray market goods under the "Lever Rule" if the brand owner has recorded their trademark with CBP and can prove material differences. SJKP LLP manages these gray market enforcement actions, ensuring that your IP recordations are leveraged as a defensive asset.

Lawful parallel imports are those that are identical in all material respects to the U.S. Version and where the first sale doctrine has been fully exhausted. Infringement occurs when the imported product creates a likelihood of confusion through material differences or fails to meet the brand owner's established quality control standards.

A material difference is any difference that a consumer would likely consider relevant when purchasing the product. This is a low threshold; even minor variations in labeling or instructions can trigger a trademark infringement claim. SJKP LLP utilizes forensic market analysis to quantify these differences and establish their legal significance.

Yes. If a trademark is recorded with CBP and "Gray Market Protection" is granted, customs officials can detain and seize incoming shipments that violate the recordation. SJKP LLP assists brand owners in securing these recordations and helps importers challenge wrongful detentions through administrative petitions.

When goods are detained by CBP, the importer has a limited window to file a petition for relief or a "Lever Rule" response. SJKP LLP manages these administrative proceedings to secure the release of goods or, conversely, to ensure that infringing shipments are permanently excluded from U.S. Commerce.

High-value disputes often move into federal court. Brand owners may seek preliminary injunctions to stop the sale of parallel imports, while importers may seek declaratory judgments of non-infringement. We litigate these cases with a focus on the clinical reality of the product's attributes and the consumer's perception.