For brand owners, control over distribution, pricing and brand reputation is essential. Parallel trade – in particular, parallel imports – can put this control under pressure. Niels van der Lee explains why it is important to remain vigilant about the circumstances and legal frameworks under which parallel imports occur.
Parallel imports involve the import and marketing of original branded products in one country without the consent of the brand owner. Such imports are permitted in certain jurisdictions where products were first marketed in that country by or with the consent of the brand owner. In other words, these are not counterfeit products, but genuine products.
The legal basis for parallel imports lies in the so-called 'exhaustion theory'. This theory states that the brand owner's trademark rights are 'exhausted' as soon as a product is first marketed with their consent. Within the European Economic Area (EEA), this means that the trademark owner cannot, in principle, oppose further marketing of that product within the EEA.
For the trademark owner, this represents a restriction of their exclusive trademark rights: they cannot block the resale of products that have already been lawfully traded, even if these are offered at lower prices through parallel imports in another EEA country.
What can trademark owners do?
Trademark exhaustion is not absolute. The trademark owner can oppose parallel imports if there are valid reasons for this opposition. Examples of valid reasons include when the original condition of the product has been altered, the packaging has been damaged, or the presentation of the product damages the reputation of the trademark or the trademark owner. Furthermore, the trademark owner's trademark rights are not exhausted for products that have been marketed outside the EEA with permission, meaning that the import of these products into the EEA can, in principle, be prevented.
To do this, trademark owners can register their trademarks with customs. This is not only an effective tool for combating counterfeit products but can also be used to prevent unauthorised parallel imports from outside the EEA.
How Novagraaf provides support
Novagraaf works with brand owners to register their trademarks with customs using Applications for Action (AFAs) to inform customs authorities of their trademark rights. Brand owners can indicate which importers and distributors are authorised to market their products in the EEA, preventing unnecessary detentions. This provides customs with a clear framework for intercepting unauthorised goods, allowing for better protection of your brand, distribution strategy, and market position.
If they suspect trademark infringement, customs can detain suspicious shipments. In consultation with the relevant brand owner, an assessment will then be made as to whether infringement has occurred, and whether the goods should be definitively seized or released.
From the brand owner's perspective, parallel imports create a tension between the free movement of goods and trademark protection. The doctrine of exhaustion limits control over distribution within the EEA but also offers legal tools to protect the brand when parallel trade harms the brand's quality, reputation, or guarantee of origin.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
