Is There A Legal Way To Import Big Brands
Is there a legal way to import well-known brands into the USA for resale?
There are many big brand products that can be purchased overseas, even at retail, at prices way below the retail price in the USA.
It is vital to appreciate that there is absolutely no way you can safely or legally import imitations, counterfeits, or knockoffs. Even items that look like big brand items may be confiscated by the US CBP Service. Reconditioned big brand items may suffer the same fate.
Before proceeding please understand that this document is not intended as legal advice, and the author accepts no liability for any outcome resulting from acting upon any matter referred to in the article.
This post is specific to the USA, but later posts will explore the issue in relation to other countries if I receive requests to do so.
First: What are parallel imports? Parallel imports (also known as gray market goods) refers to genuine branded goods that are imported into a market and sold there without the consent of the owner of the trademark.
The goods are "genuine" goods (as distinct from counterfeit goods) in that they have been manufactured by or for or under license from the brand owner.
However, they may have been designed with small differences, or even packaged differently for a particular jurisdiction, but then imported into another jurisdiction (USA). This can lead to the presence of what is called a material difference. What you might consider is a trivial difference can be classed as material by CBP or a court of law.
Here are some of the things that courts have determined constitute material differences:
· Packaging differences, including absence of certain familiar markings;
· Product appearance, even a slight difference in shape or distinctive color;
· Difference in smell;
· Different appearance of labels;
· Missing legislated labeling requirements;
· If it is food, beverage, cosmetic etc., different ingredients.
A material difference is one that consumers familiar with the brand would notice and consider relevant to their decision to buy. If a consumer is familiar with a branded product, and after purchasing a parallel import notices that the product's characteristics are inconsistent with his or her previous purchases, the consumer may begin to doubt that he or she has purchased a genuine product.
These differences are important because of potential damage to the brand owner's image or reputation. If material differences exist, it may be possible to get around that with appropriate labeling warning customers that the products are physically and materially different from those branded products normally sold in the USA under that brand, but in some cases the CBP Agency have agreed with the brand owner that such differences warrant refusal to allow the imports.
Why Parallel Importing?
One of the best ways to answer this is to say that according to the World Health Organization, Bayer sell ciprofloxacin (an antibiotic) in India for $15 per 100 units (500 mg) but in Mozambique they charge $740.
The clear reason is that there is absolutely no competition in Mozambique, but there is a huge amount of competition in India. Wow! What an opportunity! Or is it ???????
Now don't rush to buy ciprofloxacin in India and try to sell it in the US. Pharmaceuticals are one of many product categories subject to specific legislation that would make it impossible. There are other branded products that are either impossible to import or can only be purchased as parallel imports if certain very tight rules are observed.
About 5 years ago, in a U.S. Customs and Border Protection's Customs Bulletin, the agency announced that it was applying the "Lever rule" (a landmark court ruling in the case Lever Bros. Co. v. United States, 1993) to cover certain brands of watches.
Importation of those watches is now forbidden unless they bear labels warning potential purchasers that they are "physically and materially" different from watches normally sold in the United States under those trademarks. This applies even though the watches are made by the brand owner and are genuine.
This ruling applies to many product categories, and consequently anyone considering parallel importing should seek expert advice. Experienced Customs Brokers should be able to identify which products have been specifically listed as restricted gray market goods.
It is possible to conduct a search on the CBP site located at: http://iprs.cbp.gov/ and find the Intellectual Property Rights Search (IPRS) page. Enter the brand name in the "Keyword" box and if that brand owner has requested and been granted gray market protection, a CBP Recordation number will be displayed. If you click on the entry under the second column, which is labeled "Title Product", on the brand name, the CBP Recordation opens up to another screen and displays more details.
Although I have provided that search information I can assure my readers that I would not personally rely upon the results. If your Customs Broker cannot give you a definite answer, it would be unwise to proceed with parallel importing without obtaining legal advice.
Just a word of caution: If you intend relying on any expert or legal advice, you must have that advice in writing.
Is Parallel Importing Worth the Trouble?
That is a decision for each one individually, but if you obtain sound expert advice that gives you a definite assurance that you are on safe ground, parallel importing can be extremely lucrative.
In some countries where government protection of big business interests is not as great as it is in the US, parallel importing is actively encouraged. Japan and New Zealand are two notable examples, where there is a thriving market for parallel imports and some quite large businesses have grown up around that business model.
It is always necessary to do your research before beginning any enterprise, but in the case of parallel importing, thorough research is absolutely essential, but I believe there is so much profit potential that time spent on research could be handsomely rewarded.
Just think; Do you think the manufacturers, (Bayer) are selling at below cost in India?
No it would not cost them anywhere near $15 to produce 500 mg. (0.0176 oz) of ciprofloxacin. After all, Indian manufacturers are profitably selling the same antibiotic at around that price. Bayer is also no doubt selling at a profit at $15, yet they found a market (Mozambique) where they can sell the same product for $740.
You may not find such extreme price differences for products that interest you, but huge differences do exist. Maybe you can capitalize on that.
There are many big brand products that can be purchased overseas, even at retail, at prices way below the retail price in the USA.
It is vital to appreciate that there is absolutely no way you can safely or legally import imitations, counterfeits, or knockoffs. Even items that look like big brand items may be confiscated by the US CBP Service. Reconditioned big brand items may suffer the same fate.
Before proceeding please understand that this document is not intended as legal advice, and the author accepts no liability for any outcome resulting from acting upon any matter referred to in the article.
This post is specific to the USA, but later posts will explore the issue in relation to other countries if I receive requests to do so.
First: What are parallel imports? Parallel imports (also known as gray market goods) refers to genuine branded goods that are imported into a market and sold there without the consent of the owner of the trademark.
The goods are "genuine" goods (as distinct from counterfeit goods) in that they have been manufactured by or for or under license from the brand owner.
However, they may have been designed with small differences, or even packaged differently for a particular jurisdiction, but then imported into another jurisdiction (USA). This can lead to the presence of what is called a material difference. What you might consider is a trivial difference can be classed as material by CBP or a court of law.
Here are some of the things that courts have determined constitute material differences:
· Packaging differences, including absence of certain familiar markings;
· Product appearance, even a slight difference in shape or distinctive color;
· Difference in smell;
· Different appearance of labels;
· Missing legislated labeling requirements;
· If it is food, beverage, cosmetic etc., different ingredients.
A material difference is one that consumers familiar with the brand would notice and consider relevant to their decision to buy. If a consumer is familiar with a branded product, and after purchasing a parallel import notices that the product's characteristics are inconsistent with his or her previous purchases, the consumer may begin to doubt that he or she has purchased a genuine product.
These differences are important because of potential damage to the brand owner's image or reputation. If material differences exist, it may be possible to get around that with appropriate labeling warning customers that the products are physically and materially different from those branded products normally sold in the USA under that brand, but in some cases the CBP Agency have agreed with the brand owner that such differences warrant refusal to allow the imports.
Why Parallel Importing?
One of the best ways to answer this is to say that according to the World Health Organization, Bayer sell ciprofloxacin (an antibiotic) in India for $15 per 100 units (500 mg) but in Mozambique they charge $740.
The clear reason is that there is absolutely no competition in Mozambique, but there is a huge amount of competition in India. Wow! What an opportunity! Or is it ???????
Now don't rush to buy ciprofloxacin in India and try to sell it in the US. Pharmaceuticals are one of many product categories subject to specific legislation that would make it impossible. There are other branded products that are either impossible to import or can only be purchased as parallel imports if certain very tight rules are observed.
About 5 years ago, in a U.S. Customs and Border Protection's Customs Bulletin, the agency announced that it was applying the "Lever rule" (a landmark court ruling in the case Lever Bros. Co. v. United States, 1993) to cover certain brands of watches.
Importation of those watches is now forbidden unless they bear labels warning potential purchasers that they are "physically and materially" different from watches normally sold in the United States under those trademarks. This applies even though the watches are made by the brand owner and are genuine.
This ruling applies to many product categories, and consequently anyone considering parallel importing should seek expert advice. Experienced Customs Brokers should be able to identify which products have been specifically listed as restricted gray market goods.
It is possible to conduct a search on the CBP site located at: http://iprs.cbp.gov/ and find the Intellectual Property Rights Search (IPRS) page. Enter the brand name in the "Keyword" box and if that brand owner has requested and been granted gray market protection, a CBP Recordation number will be displayed. If you click on the entry under the second column, which is labeled "Title Product", on the brand name, the CBP Recordation opens up to another screen and displays more details.
Although I have provided that search information I can assure my readers that I would not personally rely upon the results. If your Customs Broker cannot give you a definite answer, it would be unwise to proceed with parallel importing without obtaining legal advice.
Just a word of caution: If you intend relying on any expert or legal advice, you must have that advice in writing.
Is Parallel Importing Worth the Trouble?
That is a decision for each one individually, but if you obtain sound expert advice that gives you a definite assurance that you are on safe ground, parallel importing can be extremely lucrative.
In some countries where government protection of big business interests is not as great as it is in the US, parallel importing is actively encouraged. Japan and New Zealand are two notable examples, where there is a thriving market for parallel imports and some quite large businesses have grown up around that business model.
It is always necessary to do your research before beginning any enterprise, but in the case of parallel importing, thorough research is absolutely essential, but I believe there is so much profit potential that time spent on research could be handsomely rewarded.
Just think; Do you think the manufacturers, (Bayer) are selling at below cost in India?
No it would not cost them anywhere near $15 to produce 500 mg. (0.0176 oz) of ciprofloxacin. After all, Indian manufacturers are profitably selling the same antibiotic at around that price. Bayer is also no doubt selling at a profit at $15, yet they found a market (Mozambique) where they can sell the same product for $740.
You may not find such extreme price differences for products that interest you, but huge differences do exist. Maybe you can capitalize on that.
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