Parallel import
Encyclopedia
A parallel import is a non-counterfeit
product imported from another country without the permission of the intellectual property
owner. Parallel imports are often referred to as grey product
, and are implicated in issues of international trade
, and intellectual property
.
The practice of parallel importing is often advocated in the case of software, music, printed texts and electronic products, and occurs for several reasons:
and computer game hardware from Asia
is a common practice for some wholesale and/or retail stockists. Many consumers now take advantage of online stores in Hong Kong
and the United States
to purchase computer games at or near half the cost of a retail purchase from the Australian RRP. Often the versions sold by the Asian retailers are manufactured in Australia to begin with. An example is Crysis
, which was available from Hong Kong online stores for approximately $50 AUD but whose retail cost in Australia was close to $100. Crysis was sold in Asia using identical versions of the game box and disc, right down to including Australian censor ratings on the box.
In 2000 the Australian Government resolved to remove parallel import restrictions from a range of products except cars
, and followed this up with legislation making it legal to source music and software CDs from overseas and import them into Australia. An Australian Productivity Commission report recommended in July 2009 that legislation be extended to legalise the parallel importing of books, with three years' notice for publishers.
toothpaste
from Thailand
into Hong Kong
. The goods are bought in markets where the price is lower, and sold in markets where the price of the same goods is, for a variety of reasons, higher. Electronic goods like Apple's iPad
are frequently imported in Hong Kong before they're official and resold to South-East Asian early adopters for a premium.
dealers in New Zealand
buying Mercedes-Benz
vehicle
s in Malaysia at a low price, and importing the cars into New Zealand to sell at a price lower than the price offered by Mercedes Benz to New Zealand consumers. There are also many parallel import dealers of electronics hardware. Parallel importing is allowed in New Zealand and has resulted in a significant lowering of margins on many products.
. Certain car makers find the required modifications too expensive. This creates demand for grey import vehicles
, where certain models are modified for individual customers to meet these requirements, at a higher expense than if this were done by the original manufacturer on an assembly line
. This procedure interferes with the marketing scheme of the manufacturer, who might plan to import a less powerful car and force consumers to accept it. This happened in 1981 with the Mercedes-Benz W126
.
from Japan up to twelve months prior to the European launch. The unusual component of this example is that some importers were selling the console for a higher price than the intended EU price, taking advantage of the relative monopoly they enjoyed.
nor the Paris Convention
explicitly prohibit parallel importation.
, the Bundesgerichtshof has held that the doctrine of international exhaustion governs parallel importation. The European Union
allows the doctrine of international exhaustion to exist between member states, but not outside the EU.
Ordinance before The Copyright (Amendment) Ordinance 2007 came into force 6 July.
's intellectual property rights law prohibits audiovisual articles marketed for export from being sold domestically, and such sale of "re-imported" CDs are illegal.
, legal precedent indicates that parallel importation is legal, although no definitive laws exist on the matter.
, the possibility of harmonization of laws regarding parallel imports comes into picture.
Article 23.2 ACTA obliges the parties of the ACTA to "provide for ciminal procedures and penalites" in cases listed later in that article. In contrast to art. 1 EP does the ACTA not exclude parallel imports from its scope.
Due to the nature of hotels, travellers often have little information on where to shop except in the immediate vicinity. Grocery shops opened to serve brand-name hotels often feature parallel-imported foodstuffs and toiletry to cater to travellers so that they can easily recognise the product they have been using at home.
Foodstuffs and toiletry made from different plants may vary in quality because different plants may use materials or reagents (such as water used for washing, food additives) from different sources, although they are usually subject to the same standards by internal QC or public health authorities. A person may be allergic to the foodstuff or toiletry made by some plants but not others.
To sum up, the major reasons for such a market are:
, while others believe that it discourages intellectual property owners from investing in new and innovative
products. Some also believe that parallel imports tend to facilitate copyright infringement
and software piracy
.
This tension essentially concerns the right
s and duties
of a protected monopoly
. Intellectual property rights allow the holder to sell at a price that is higher than the price one would pay in a competitive market
, but by doing so the holder relinquishes sales to those who would be prepared to buy at a price between the monopoly price and the competitive price. The presence of parallel imports in the marketplace prevents the holder from exploiting the monopoly further by market segmentation, i.e. by applying different prices to different consumers.
Consumer organisations tend to support parallel importation as it offers consumers more choice and lower prices, provided that consumers retain equivalent legal protection to locally sourced products (e.g. in the form of warranties
with international effect), and competition is not diminished.
However, such organisations also warn consumers of certain risks in using parallel-imported products. Although the products may have been made to comply with the laws and customs of their place of origin, these products or their use may not comply with those in places where they are used, or some of their functions may be rendered unusable or meaningless (which may needlessly drive up prices). Electronic devices, however, suffer less from this type of risk because newer models support more than one user language.
Counterfeit
To counterfeit means to illegally imitate something. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product...
product imported from another country without the permission of the intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
owner. Parallel imports are often referred to as grey product
Grey market
A grey market or gray market also known as parallel market is the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer...
, and are implicated in issues of international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
, and intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
.
The practice of parallel importing is often advocated in the case of software, music, printed texts and electronic products, and occurs for several reasons:
- Different versions of a product are produced for sale in different markets. E.g.: Top Gear Magazine (UK Edition) is officially sold in UK and Top Gear Magazine (Australian Edition) is officially sold in Australia. However some unofficial distributors in AustraliaAustraliaAustralia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
also sell Top Gear Magazine (UK Edition). - Companies, either the manufacturer or the distributor, set different price points for their products in different markets. Parallel importers ordinarily purchase products in one country at a price (P1) which is cheaper than the price at which they are sold in a second country (P2), import the products into the second country, and sell the products in that country at a price which is usually between P1 and P2. See arbitrageArbitrageIn economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices...
. - Consumers who are able to obtain more competitively priced items, and can choose to avoid local sales taxes which may not be regarded as entirely appropriate, are placed on an even footing with consumers who have less access to overseas sales online.
- Some advocacy groups support parallel importing on the grounds of enhancing the free flow of information.
Australia
Importation of computer gamesComputer Games
"Computer Games" is a single by New Zealand group, Mi-Sex released in 1979 in Australia and New Zealand and in 1981 throughout Europe. It was the single that launched the band, and was hugely popular, particularly in Australia and New Zealand...
and computer game hardware from Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
is a common practice for some wholesale and/or retail stockists. Many consumers now take advantage of online stores in Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
to purchase computer games at or near half the cost of a retail purchase from the Australian RRP. Often the versions sold by the Asian retailers are manufactured in Australia to begin with. An example is Crysis
Crysis
Crysis is a science fiction first-person shooter video game developed by Crytek , published by Electronic Arts for Microsoft Windows, and released in November 2007. It is the first game of a trilogy. A separate game entitled Crysis Warhead was released on September 12, 2008, and follows similar...
, which was available from Hong Kong online stores for approximately $50 AUD but whose retail cost in Australia was close to $100. Crysis was sold in Asia using identical versions of the game box and disc, right down to including Australian censor ratings on the box.
In 2000 the Australian Government resolved to remove parallel import restrictions from a range of products except cars
CARS
Cars, or automobiles, motor cars, are wheeled motor vehicles used for transporting passengers.Cars or CARS may also refer to:-Entertainment:* Cars , a Disney/Pixar film series...
, and followed this up with legislation making it legal to source music and software CDs from overseas and import them into Australia. An Australian Productivity Commission report recommended in July 2009 that legislation be extended to legalise the parallel importing of books, with three years' notice for publishers.
Hong Kong
Importation of ColgateColgate (toothpaste)
Colgate is an oral hygiene product line of toothpastes, toothbrushes, mouthwashes and dental floss.-Duraphat:Duraphat is a professional strength paste intended for the treatment and prevention of dental caries....
toothpaste
Toothpaste
Toothpaste is a paste or gel dentifrice used with a toothbrush as an accessory to clean and maintain the aesthetics and health of teeth. Toothpaste is used to promote oral hygiene: it serves as an abrasive that aids in removing the dental plaque and food from the teeth, assists in suppressing...
from Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
into Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
. The goods are bought in markets where the price is lower, and sold in markets where the price of the same goods is, for a variety of reasons, higher. Electronic goods like Apple's iPad
IPad
The iPad is a line of tablet computers designed, developed and marketed by Apple Inc., primarily as a platform for audio-visual media including books, periodicals, movies, music, games, and web content. The iPad was introduced on January 27, 2010 by Apple's then-CEO Steve Jobs. Its size and...
are frequently imported in Hong Kong before they're official and resold to South-East Asian early adopters for a premium.
New Zealand
The practice of luxury carAutomobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
dealers in New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
buying Mercedes-Benz
Mercedes-Benz
Mercedes-Benz is a German manufacturer of automobiles, buses, coaches, and trucks. Mercedes-Benz is a division of its parent company, Daimler AG...
vehicle
Vehicle
A vehicle is a device that is designed or used to transport people or cargo. Most often vehicles are manufactured, such as bicycles, cars, motorcycles, trains, ships, boats, and aircraft....
s in Malaysia at a low price, and importing the cars into New Zealand to sell at a price lower than the price offered by Mercedes Benz to New Zealand consumers. There are also many parallel import dealers of electronics hardware. Parallel importing is allowed in New Zealand and has resulted in a significant lowering of margins on many products.
United States
The United States has unique automobile design legislation under the National Highway Traffic Safety AdministrationNational Highway Traffic Safety Administration
The National Highway Traffic Safety Administration is an agency of the Executive Branch of the U.S. government, part of the Department of Transportation...
. Certain car makers find the required modifications too expensive. This creates demand for grey import vehicles
Grey import vehicles
Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker's official distribution system...
, where certain models are modified for individual customers to meet these requirements, at a higher expense than if this were done by the original manufacturer on an assembly line
Assembly line
An assembly line is a manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods...
. This procedure interferes with the marketing scheme of the manufacturer, who might plan to import a less powerful car and force consumers to accept it. This happened in 1981 with the Mercedes-Benz W126
Mercedes-Benz W126
The Mercedes-Benz W126 is a series of flagship vehicles manufactured by German automotive marque Mercedes-Benz. Premiering in September 1979 as the successor to the earlier W116 line, the W126 was the second generation of the Mercedes-Benz flagship to officially bear the S-Class name referring to...
.
United Kingdom
The importation of Sony PSP video game consoles in to the European Economic AreaEuropean Economic Area
The European Economic Area was established on 1 January 1994 following an agreement between the member states of the European Free Trade Association and the European Community, later the European Union . Specifically, it allows Iceland, Liechtenstein and Norway to participate in the EU's Internal...
from Japan up to twelve months prior to the European launch. The unusual component of this example is that some importers were selling the console for a higher price than the intended EU price, taking advantage of the relative monopoly they enjoyed.
International approach
Parallel importing is regulated differently in different jurisdictions; there is no consistency in laws dealing with parallel imports between countries. Neither the Berne ConventionBerne Convention for the Protection of Literary and Artistic Works
The Berne Convention for the Protection of Literary and Artistic Works, usually known as the Berne Convention, is an international agreement governing copyright, which was first accepted in Berne, Switzerland in 1886.- Content :...
nor the Paris Convention
Paris Convention for the Protection of Industrial Property
The Paris Convention for the Protection of Industrial Property, signed in Paris, France, on March 20, 1883, was one of the first intellectual property treaties. It established a Union for the protection of industrial property...
explicitly prohibit parallel importation.
Germany
In GermanyGermany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, the Bundesgerichtshof has held that the doctrine of international exhaustion governs parallel importation. The European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
allows the doctrine of international exhaustion to exist between member states, but not outside the EU.
Hong Kong
In Hong Kong, parallel importation is permitted under both, the Trade Mark and (amended) CopyrightCopyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
Ordinance before The Copyright (Amendment) Ordinance 2007 came into force 6 July.
Japan
JapanJapan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
's intellectual property rights law prohibits audiovisual articles marketed for export from being sold domestically, and such sale of "re-imported" CDs are illegal.
United States
In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, legal precedent indicates that parallel importation is legal, although no definitive laws exist on the matter.
Anti-Counterfeiting Trade Agreement
With the ACTAAnti-Counterfeiting Trade Agreement
The Anti-Counterfeiting Trade Agreement is a proposed plurilateral agreement for the purpose of establishing international standards on intellectual property rights enforcement...
, the possibility of harmonization of laws regarding parallel imports comes into picture.
Article 23.2 ACTA obliges the parties of the ACTA to "provide for ciminal procedures and penalites" in cases listed later in that article. In contrast to art. 1 EP does the ACTA not exclude parallel imports from its scope.
Parallel-imported foodstuffs, etc.
Markets for parallel imports and locally made products sometimes exist alongside each other even though the parallel imports are markedly more expensive. This may be for various reasons, but is mostly observed in foodstuffs and toiletry.Due to the nature of hotels, travellers often have little information on where to shop except in the immediate vicinity. Grocery shops opened to serve brand-name hotels often feature parallel-imported foodstuffs and toiletry to cater to travellers so that they can easily recognise the product they have been using at home.
Foodstuffs and toiletry made from different plants may vary in quality because different plants may use materials or reagents (such as water used for washing, food additives) from different sources, although they are usually subject to the same standards by internal QC or public health authorities. A person may be allergic to the foodstuff or toiletry made by some plants but not others.
To sum up, the major reasons for such a market are:
- Lack of information
- Recognisability
- Avoidance of risk due to products by different plants
Issues
A manifestation of the philosophical divide between those who support intellectual property and those who are critical of it, is the divide over the legitimacy of parallel importation. Some believe that it benefits consumers by lowering prices and widening the selection and consumption of products available in the marketMarket
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
, while others believe that it discourages intellectual property owners from investing in new and innovative
Innovation
Innovation is the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets, governments, and society...
products. Some also believe that parallel imports tend to facilitate copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...
and software piracy
Copyright infringement of software
Copyright infringement of software=The copyright infringement of software refers to several practices which involve the unauthorized copying of computer software. Copyright infringement of this kind varies globally...
.
This tension essentially concerns the right
Right
Rights are legal, social, or ethical principles of freedom or entitlement; that is, rights are the fundamental normative rules about what is allowed of people or owed to people, according to some legal system, social convention, or ethical theory...
s and duties
Duty
Duty is a term that conveys a sense of moral commitment to someone or something. The moral commitment is the sort that results in action and it is not a matter of passive feeling or mere recognition...
of a protected monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
. Intellectual property rights allow the holder to sell at a price that is higher than the price one would pay in a competitive market
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
, but by doing so the holder relinquishes sales to those who would be prepared to buy at a price between the monopoly price and the competitive price. The presence of parallel imports in the marketplace prevents the holder from exploiting the monopoly further by market segmentation, i.e. by applying different prices to different consumers.
Consumer organisations tend to support parallel importation as it offers consumers more choice and lower prices, provided that consumers retain equivalent legal protection to locally sourced products (e.g. in the form of warranties
Warranty
In business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen; the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.In real estate transactions, a...
with international effect), and competition is not diminished.
However, such organisations also warn consumers of certain risks in using parallel-imported products. Although the products may have been made to comply with the laws and customs of their place of origin, these products or their use may not comply with those in places where they are used, or some of their functions may be rendered unusable or meaningless (which may needlessly drive up prices). Electronic devices, however, suffer less from this type of risk because newer models support more than one user language.
See also
- Exhaustion of rights
- Track and trace
- Counterfeit consumer goodsCounterfeit consumer goodsCounterfeit consumer goods, commonly called knock-offs, are counterfeit or imitation products offered for sale. The spread of counterfeit goods has become global in recent years and the range of goods subject to infringement has increased significantly...
- Import sceneImport sceneThe Import Scene or Import Racing Scene or Tuner Scene refers to the subculture that revolves around modifying imported brand cars , especially those of Japanese brands, for street racing.-History:...
- Parallel importing in video games