Grey Market Goods and Parallel Imports: What Brands Can Do

Grey market goods are genuine products sold outside the channels a brand has authorized. The classic case is a parallel import: a product sold by the brand in one country, bought there and resold in another, often where prices are higher. The goods are real, so they are not counterfeits, and that is exactly why they are harder to act against.

This article explains what grey market goods are, where they show up online, how the law treats them in the US and the EU, how to tell them apart from counterfeits and which options brands actually have. It is general information, not legal advice: grey market cases turn on facts and jurisdiction, so involve counsel before you enforce.

What grey market goods are

The term covers several situations that share one feature: the product is genuine, but the sale is outside your plan.

Situation	What happens	Example
Parallel import	Goods sold in one country are imported into another without your authorization	Your product bought in Asia and listed on amazon.com
Diversion	Goods sold to one channel end up in another	Stock sold to a salon distributor appears on eBay
Unauthorized reseller	A seller outside your network resells genuine stock	A store you never supplied sells your product on Walmart Marketplace
Overstock and liquidation	Surplus or returned goods are resold through discount channels	Last season's stock sold by a liquidator

"Grey market" and "gray market" mean the same thing; US legal texts use "gray". Parallel imports are the grey market case that the law addresses most directly.

Where grey market goods appear online

Marketplaces make grey market goods easy to find and easy to sell. Common signs include a seller you do not recognize offering your product below your usual price, packaging in another language, a model number for another region, or listings on regional stores such as amazon.de or walmart.com.mx that ship across borders.

Marketplaces generally do not remove a genuine product only because the seller is outside your distribution network. Our guide to removing unauthorized sellers on Amazon explains what Amazon will and will not act on.

Exhaustion: the rule that decides most cases

Exhaustion, called the first sale doctrine in the US, means that once a genuine product is sold by the rights owner or with its consent, the owner generally cannot use its intellectual property to control later resales. The key question is where that first sale must happen.

United States

• Copyright. In Kirtsaeng v. John Wiley & Sons (2013), the Supreme Court held that the first sale doctrine applies to copies lawfully made abroad.
• Patents. In Impression Products v. Lexmark (2017), the Supreme Court held that an authorized sale abroad also exhausts US patent rights in the item sold.
• Trademarks. The resale of genuine goods is generally allowed. Courts have made an exception for goods that are materially different from the version the brand sells in the US, reasoning that such goods are not "genuine" for US buyers. Cases such as Original Appalachian Artworks v. Granada Electronics and Nestlé v. Casa Helvetia are often cited. Differences in formula, labeling, warranty or service can qualify, depending on the facts.

European Union

The EU applies regional exhaustion. Under Article 15 of the EU Trade Mark Regulation, an EU trade mark cannot be used to stop the resale of goods put on the market in the European Economic Area (EEA) by the owner or with its consent. The owner can still object for legitimate reasons, especially when the condition of the goods has been changed or impaired.

In Silhouette (C-355/96), the Court of Justice ruled that EU member states may not apply international exhaustion. In practice, this means that genuine goods first sold outside the EEA without the owner's consent can generally be opposed when imported into the EEA.

	United States	European Union
Exhaustion model	International for copyright and patents; trademark resale generally allowed	Regional (EEA)
Goods first sold abroad	Generally resellable, unless materially different	Can generally be opposed if first sold outside the EEA without consent
Key exception	Material differences	Legitimate reasons, such as changed or impaired condition

CBP and the Lever rule

US Customs and Border Protection (CBP) can restrict some grey market imports of goods bearing trademarks recorded with it, under 19 CFR 133.23. The rule depends on who applied the mark abroad.

• If a foreign owner or licensee independent of the US owner applied the mark, the goods can be restricted.
• If the US owner or a company under common ownership or control applied it, the goods are not restricted, unless CBP has found them physically and materially different.

That last case is Lever-rule protection. The owner of a recorded trademark must request it, state the basis with particularity, support it with competent evidence and give CBP summaries of the physical and material differences between the US product and the version for other markets. Goods can still enter if they carry a conspicuous label saying they are not authorized by the US trademark owner and are materially different. Detained goods that do not qualify for an exception can be seized.

How to tell grey market goods from counterfeits

The distinction matters, because the response is different. A test purchase is the most reliable way to decide.

Check	Grey market	Counterfeit
Product	Genuine, made by you or under your authority	A fake that imitates yours
Packaging	Genuine, possibly for another region or language	Imitation, often with errors in print, colors or labels
Serial or lot numbers	Valid, but allocated to another market or customer	Missing, repeated or not in your records
Price	Often below your domestic price	Often far below any genuine price
Seller	Outside your network, may hold large stock	Outside your network, often many new stores
Typical response	Distribution controls, material differences, customs	Marketplace IP reports, customs, legal action

Our guide to counterfeits, knockoffs and dupes covers the counterfeit side in more detail.

What brands can do

1. Find the leak. Use serial numbers, lot codes or test buys to trace which distributor or market the goods came from.
2. Tighten distribution agreements. Contracts with distributors can address resale channels, subject to competition law, which is strict about territorial restrictions in the EU.
3. Document material differences. If your US product differs in formula, labeling, warranty or support, write it down. It can support Lanham Act claims and a Lever-rule request.
4. Record your trademark with CBP. Recordation is the basis for customs enforcement in the US.
5. Use EU rules where they apply. For goods first sold outside the EEA, a trademark owner can generally object to their import and sale in the EEA.
6. Keep pricing policies separate. A MAP policy applies to your authorized resellers; it gives you no leverage over sellers you never supplied.

How Valigard helps

Valigard searches marketplaces worldwide, or up to 10 chosen countries, with your official product photos. Each listing shows the price and currency, the seller, the country and how closely the photo matches yours, which helps you see where your products are sold and by whom.

You mark each listing as Likely counterfeit, Authorized seller, Not relevant or Unsure, keep a saved and timestamped copy of the pages that matter, and look up sellers when you need more detail. Valigard does not determine whether a product is genuine, grey market or counterfeit with legal certainty, and it does not send reports or legal letters: those decisions and actions stay with you and your counsel.