Heidi Norton
Parallel imported perfumes, also known as grey market goods, are often suspected to be fake. However, they are not counterfeit products. Parallel import refers to the trade of commodities through distribution channels that are not authorized by the original manufacturer or trademark proprietor. While some countries prohibit parallel imports, others, like New Zealand, Australia, and South Africa, permit them. In these countries, parallel importers purchase products at a lower price in one country and import them into another country, selling them at a price between the original purchase price and the higher price in the second country.
| Characteristics | Values |
|---|---|
| Definition | Non-counterfeit products imported from another country without the permission of the intellectual property owner |
| Other Names | Grey market goods, grey products |
| Legality | Legal in some countries, illegal in others |
| Examples | Pharmaceuticals, software, music, printed texts, electronic products, perfumes |
| Benefits | Reduced prices for consumers, enhanced free flow of information, increased competition |
| Risks | Possible delays due to customs checks for counterfeit goods, potential trademark issues |
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What You'll Learn
Are parallel imported perfumes counterfeit?
Parallel imported perfumes are not necessarily counterfeit. A parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. They are also known as grey market goods or grey products.
Parallel importers purchase products in one country at a particular price and then sell them in another country, benefiting from arbitrage. They are able to sell the products at a price that is usually lower than the RRP in the second country. This is because the importers buy fragrances that are not selling well at discounted prices.
Parallel imports are often regarded as fake or counterfeit, and they are likely to be stopped by the police or customs to ensure that they are not counterfeit. However, they are not illegal in some countries like Australia, New Zealand, and South Africa. In fact, legal reforms in Australia in 2018 have made parallel importing easier.
While some parallel imported perfumes may have small defects like slight damage to the box or a slight color variant, most of them are 100% perfect and genuine.
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Are parallel imports illegal?
Parallel imports, also known as "grey market goods", are genuine products sold in a region other than where the manufacturer has authorized sales. They are often implicated in issues of international trade and intellectual property. While they are illegal in some cases, the legality of parallel imports varies across jurisdictions.
In some jurisdictions, the principle of international exhaustion of intellectual property rights applies. This means that once a rights holder or authorized distributor places a genuine product on the market with their consent, the rights holder's exclusive rights are considered exhausted, and parallel imports of such goods are generally allowed. In contrast, some jurisdictions follow the principle of national exhaustion, meaning that the exhaustion of IP rights occurs only within the specific national market where the product is first sold. In such cases, parallel imports from other countries may be considered a violation of the rights holder's exclusive rights.
For example, in the United States, parallel imports are prohibited due to their potential impact on intellectual property rights. However, the importation of grey market goods is not prohibited under many circumstances, and grey market protection is provided under specific conditions. On the other hand, parallel imports are allowed in New Zealand and have resulted in significant price reductions for consumers.
The legality of parallel imports can be complex, and it is important to note that local courts decide to uphold either national or international exhaustion. There is no international law requiring one or the other, and the impact on intellectual property rights depends on the specific laws and regulations in place in each jurisdiction. As such, it is recommended to consult local counsel or a lawyer to understand the regulations in a specific region.
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Why are parallel imports cheaper?
Parallel imports are cheaper for a variety of reasons. Firstly, they are often traded outside the authorised manufacturer's channel, meaning that they are bought at a lower price and then sold at a discounted rate to overseas companies who can clear the products faster. This creates a feedback loop where brands constantly try to push costs down and increase profits.
Secondly, parallel importers purchase products in one country at a lower price (P1) and sell them in a second country at a higher price (P2), benefiting from arbitrage by selling the products at a price between P1 and P2. This allows consumers to access more competitively priced items and avoid local sales taxes.
Thirdly, parallel importers cut out the middleman by sourcing products directly from overseas suppliers, passing the savings on to their customers. They also save on packaging design and marketing costs as the original name of the product remains the same.
It is important to note that parallel imports are not illegal in many countries, including Australia, New Zealand, and Taiwan. They are considered non-counterfeit products and are often subject to the same quality standards as locally sourced items. However, some features may not be supported in the country of import, and there may be variations in quality due to different sources of materials and reagents.
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How does parallel importing work?
Parallel imports, also known as grey market goods, are branded products that are imported and sold in a market without the consent of the trademark owner. They are non-counterfeit products that are imported from another country without the permission of the intellectual property owner. Parallel imports are often sold at a lower price point than the same product sold in its country of origin. This is because companies set different price points for their products in different markets, and parallel importers take advantage of arbitrage by purchasing products at a lower price point in one country and selling them at a higher price point in another.
Parallel importing is based on the concept of exhaustion of intellectual property rights. This concept states that when a product is first launched in the market in a particular jurisdiction, parallel importation is authorized for all residents of that state. In other words, once the product has been sold in a particular jurisdiction, the rights holder must allow the resale of that product in that jurisdiction. However, this exhaustion of IP rights does not always extend to other countries or regions, and the trademark owner can prevent the unauthorized sale of these goods in other markets.
The legal status of parallel imports varies between jurisdictions. For example, in the European Union, parallel imports are generally allowed, while in the United States, they are prohibited due to concerns over intellectual property rights. In Australia, the government removed parallel import restrictions from a range of products in 1991, and legal reforms in 2018 have made parallel importing even easier. On the other hand, some countries may restrict parallel imports based on trademark laws or product segmentation strategies to maximize profits.
The grey market for perfumes, in particular, exists due to distributors struggling to fulfill buying commitments or sell enough products. To reclaim costs, they may sell their products at a discounted price to another company overseas that can clear the products faster. The perfumes are then manufactured and imported in large quantities, pushing down the fixed cost per product. While some consumers may avoid grey market goods, they are not counterfeit and can offer significant savings compared to the same products sourced locally.
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Which countries allow parallel imports?
The legality of parallel imports varies from country to country, with no consistency in laws between nations. Some countries allow it, while others do not.
The European Union generally allows parallel imports among its member states, following the principle of exhaustion of intellectual property rights. This principle states that when a product is first launched in a particular jurisdiction, parallel importation is authorized for all residents of that state.
Australia also generally allows parallel imports, applying the principle of international exhaustion of intellectual property rights.
In the United States, the legality of parallel imports is influenced by various factors, including the type of product and the specific intellectual property rights involved. While some sources state that parallel imports are prohibited in the US, there are exceptions, and they may be allowed under the First Sale Doctrine, which permits the resale of legally purchased goods.
New Zealand allows parallel imports, which has resulted in a significant lowering of margins on many products.
In 2022, Russia legalized a parallel import scheme to allow certain goods into the country following the exit of various Western firms due to the Russian invasion of Ukraine.
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Frequently asked questions
No, they are not fake. Parallel imported goods are original products of established brands. They are often referred to as grey products or grey market goods.
Companies set different price points for their products in different markets. Parallel importers purchase products in one country at a cheaper price (P1) and sell them in another country at a price between P1 and the local price (P2).
This depends on the jurisdiction. Some countries allow it, while others do not. Parallel imports are legal in New Zealand, South Africa, and Australia, where legal reforms in 2018 made it easier. In the US, the Science, State, Justice, and Commerce, and Related Agencies Appropriations Act of 2006 prohibits future free trade agreements from banning the parallel import of patented products.
