February 2, 2016

Strategies for How to Stop Grey Market Sales Online


Grey market goods generally refer to items manufactured in one country and imported into another without the trademark owner's consent.

Often referred to as parallel imports, grey market goods can be problematic for businesses. Specifically, those that take steps to prohibit importation into the United States or otherwise attempt to establish certain quality controls.

The process of dealing with unlawful grey market sales is similar to what we recommend for stopping traditional online product diversion.

First, businesses will want to monitor the sale of their products for potential prohibited sales. This can involve setting up a monitoring program designed to find unauthorized sellers and sales, rank them based on volume and assist in the tracking of potential removals.

Another tactic involves sending cease and desist letters to grey market sellers. In these letters, businesses should explain the potential legal consequences of the grey market good sellers not stopping their unlawful activity. If the sellers' identities are unknown, it will be necessary to first use investigation techniques to obtain their identities.

When sending a cease and desist letter, it is often beneficial to include a copy of a draft complaint. Including a draft complaint effectively serves as a threat to pursue litigation if the unauthorized sellers do not cooperate.

Another legal option includes filing an ex-parte temporary restraining order. The goal here is to obtain an order to freeze PayPal accounts or website domains. A company can also attempt to obtain an injunction transferring the rights of a website to the company.

When grey market goods are harming a company, that company can potentially file a lawsuit in the United States and have foreign counsel (from the appropriate jurisdiction) assist with conducting discovery and enforcement.

In short, the key in pursuing grey market sellers or importers is putting enough pressure on them to coerce them to stop their unlawful sales. If necessary, a company can work to cut off the source of the “leak."