IPAN issue brief - no. 2
intellectual property and cheap imports
Current Situation
If a trade mark owner puts its goods on the market within the EEA
(European Economic Area) then those goods can circulate freely in the
EEA. On the other hand, if the goods are put on the market outside the
EEA, then they can only be imported into the EEA if the trade mark owner
has consented to such import. But it may be that the trade mark
owner does not consent to the marketing.
Benefits and disadvantages for Society
- Benefits: Traders import goods when there is a price
differential between the EEA and another market. This can lead to
lower prices for consumers.
- Disadvantages: The overall return for the trade mark owner is
less. (Note that consumers are always free to buy competing branded
or unbranded goods.)
The trade mark owner loses control of how the goods are sold. This
can have a detrimental effect on brand image e.g. position in the
marketplace.
When the products imported are of different quality from those
normally sold in the UK under the trade mark, consumers can be deceived
in what they purchase. Always this lowers the reputation of the product
and in some cases there can be real dangers because of safety issues,
for example with pharmaceuticals.
These factors can lead to companies being less likely to invest in
the development of branded products. This will have an effect on the
quality and variety of products available. It will also affect jobs.
In addition, the price differential may not always be large. The
importer will want to maximise his profit.
But at the end of the day, the policy issue - rather than the
interesting legal issue of what constitutes “consent” - is whether the
possibility of cheap imports compensates for a reduction in the
incentives to invest in development of branded goods.
last reviewed: jul 08
suggested links for further
reading:
parallel or grey imports:
parallel trade in medicines:
page last revised:22 Jun 2009 | 
