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Commercial Law

Parallel Imports and Grey Goods

By 02/06/2010 No Comments

The World Trade Organisation defines parallel importation as follows:

“.. refers to the importation, without authorisation of the patent holder, into a country of a product from a third country, where this product has been marketed by the patent holder or in another legitimate manner”.

The goods so imported are referred to as “Grey Goods”. These goods are not counterfeit or illegal, and are precisely in terms of the manufacturer’s specification. Should an importer alter the slightest on such goods, it will be tampered with and he may be charged with infringement of copy right.

Should grey goods become second hand within the parallel imports cycle, the goods are referred to as “green goods”.

The World Trade Organisation, to which South Africa is a Member issued and adopted the Agreement on Trade Related Aspects of Intellectual Property (TRIP’s).

It appears that TRIPS, does not prohibit parallel importation, and it seems that the EU actually supports it as it broadens competition.

TRIPS, and other relevant agreements, seem to place the responsibility of governing these practices on the individual countries, which must enact their own legislation and regulations.

The South African Department of Trade and Industry set up the Consumer Affair Committee in terms of the Unfair Business Act, 1988.

The CAC was  tasked to investigate Parallel Imports etc. and concluded a report which, seemingly was published as regulations in the Government Gazette, 1077 of 1993.

The notice contains the following conditions:

  1. Dealers are to indicate clearly in their warranty-related literature and where appropriate, on sales receipts:
    • Whether any guarantee is supported by the manufacturers;
    • whether the guarantee is supported by the seller only / or any organisation unrelated to the manufacturer or the licensed distributors’ network, specifying that the consumer may not be entitled to any rights, including any rights for repair or replacement against licensed dealers of the product, or the manufacturer, except as provided by common law or statute;
    • if there is no guarantee;
  2. When you are Dealer in goods, the manufacturer will either directly or indirectly advise you that the goods are in a form or state which is approved by the owners of the trade mark, you must inform your customers accordingly; Thus, if you buy from an unauthorised dealer, you may receive a product which does not fully comply with the form or state that was approved by the owners of the trade mark, and you will have no recourse against the manufacturer / trade mark owner.
  3. Retailers to refrain from representing goods as having a sponsorship, approval, status, guarantee repair, and back up services, affiliation or connection recognised by the proprietor of the trade mark under which they are sold.

In the event that a seller does not adhere to the above conditions, he may be found guilty of a transgression and receive a fine of up to R 200 000.00 and / or imprisonment of up to 5 years.

Ian Mc Laren

Ian Mc Laren

Ian Mc Laren

Ian McLaren BA LLB (WITS) General Educated St Johns College, Houghton. BA LLB University of the Witwatersrand 1984 Founded McLarens Attorneys September 1986. Right of Appearance High Court, October 1996. Expertise Litigation, Labour Law, Commercial Law, Family Law, Pension and Provident Funds, Customs and Excise, Wills, Deceased Estates, Trusts, Commercial Agreements, Reviewing and Drafting Government Legislation, Information Technology. Committees/ Trusts Law Society of South Africa Information Technology Committee. Trustee Verney College Educational Trust Other Transvaal Provincial colours for Practical Shooting. Third degree Black Belt JKS Karate. Photographer and motor cyclist Lectured for Continuing Legal Education on Information Technology issues.