In the globalized marketplace, "parallel imports" (often referred to as gray market goods) present a complex challenge for brand owners. These are genuine products imported from one market to another without the consent of the intellectual property owner.
In Hong Kong, the legal framework generally favors the "exhaustion of rights" principle. This means that once a trademark owner puts goods on the market anywhere in the world, their rights are considered "exhausted," and they cannot typically prevent the subsequent resale of those goods in Hong Kong.
The "Material Difference" Exception
However, this rule is not absolute. Legal action can be taken if the parallel imported goods are materially different from the authorized goods sold in the local market. These differences can include:
- Quality Control Standards: If the imported goods do not meet the local safety or quality regulations.
- Packaging and Labeling: Differences in language, instructions, or warning labels that might confuse consumers.
- Warranty Services: If the gray market goods do not come with the standard manufacturer warranty applicable in the region.
"Brand owners must prove that the sale of parallel imports causes actual confusion or damage to the brand's reputation to succeed in court."
Strategic Protective Measures
To combat parallel imports effectively, we advise our clients to implement a mix of legal and commercial strategies:
- Differentiate Products: Customize packaging or formulations for specific regions to establish "material differences."
- Educate Consumers: Clearly communicate the benefits of buying from authorized dealers (e.g., valid warranties).
- Track and Trace: Use serial numbers to identify the source of leaked inventory.
While stopping parallel imports entirely is difficult under Hong Kong law, a robust IP strategy can significantly mitigate their impact on your bottom line.