Grey imports

[sovdia]

Hi All

We are UK based & have been trading over the web for the past 3 years selling a wide variety of jewellery items. One of the lines that we sell is a brand name watch manufactured in Switzerland.

We buy these authentic watches from local authorised European jewellers & sell them globally.

We recently received an email from a company of US lawyers advising that they represent the indepedent US trademark holders of these watches together with the relevant registrations attached.

They demand that we cease to supply these watches to US customers.

We only supply individual customers on personal use basis.

If their case is valid it would appear to ringfence the USA to any competition from outside their borders, which would appear unbelievable.

Is there any merit to their argument?

Regards
Sovdia

 

[JETX]

"Is there any merit to their argument?"
Yes. What you are doing is very probably in violation of reseller exclusivity agreements made between the manufacturer and the retailer. This is NOT an 'anti-competition' effort as you claim, but is only a contractual agreement with the manufacturer to protect his distribution chain. This is not unlike a manufacturers restriction for a direct buyer to only sell 'wholesale' to retailers and not the 'public'.

So, not only could you get into legal issues by continuing to sell the 'gray market' product, but your suppliers are very probably about to get their retailer agreement pulled when the manufacturer tracks serial numbers.

However, since your post says that you have received an email advising you of this action, the email notification is very probably not a proper notice and should not affect your business decision. If you were to get a registered letter, I would take that seriously.

 

[T-DESIGNER]

I am unclear as to where the watches are purchased; i.e., from
wholesale jewellers or retail jewellers.

Theoretically, if I buy 1,000 watches from a retail jeweler at a
quantity discount, are you saying I would not be able to sell
those watches? I might not be able to effectively compete,
but I would think I would have the right to sell regardless of
any manufacturer-distributor agreeements.

What if the watch manufacturer is at fault; i.e., the manufacturer's
agreements with the jewellers in Europe do not restrict where
or to whom their watches can be sold? Of course, this still may
not prevent "are very probably about to get their retailer
agreement pulled when the manufacturer tracks serial
numbers."

You might want to contact your supplier(s) to see what their
agreements might say, and to say who is at fault; i.e., your
supplier(s) or the manufacturer.

P.S. I am not an attorney, and an attorney is more qualified
to advise you on this matter because of training, experience,
access to case histories, etc.

 

[T-DESIGNER]

I never purchased anything overseas via the internet; therefore,
information in the following quote is not new to you (sovdia), but
it might be of interest to some other readers of this thread:

"Purchases sent by a merchant abroad

The merchant will attach an international customs declaration to
your package, which he or she should fill out with a complete,
accurate description of the parcel's contents and value. The
merchant will then mail or ship the package to the address you
supply.

Although the merchant may charge you for the cost of mailing or
shipping your package, he should not charge you for U.S.
Customs duties. Customs duties are not assessed until a
package arrives in the United States, and they cannot be paid in
advance. If a merchant tells you that you must prepay duty, do
not believe him or her. The Postal Service in the United States will
collect any duty owed from the recipient; in fact, by law, only the
designated recipient (addressee) is liable for duty. The
shipment's originator-the merchant, for example-will not be
charged duty for goods that he or she has sent to the United
States."

source: http://www.customs.ustreas.gov/travel/travel.htm

Back to the central issue:

This may be a hotly debated issue, but it appears you are not
selling products in the U.S. Theoretically, a U.S. citizen is (1)
visiting your country via the internet, (2) making a purchase in
your country, (3) instructing you to mail the purchase to the
address of their choosing, and (4) returning to the U.S. without
the product. The fact that you might be advertising in the U.S.
should have no bearing as to where the purchase was made.

It would seem any agreement, between the U.S. distributors/
retailers and the manufacturer, should include a clause/statement
that says no other manufacturer distributors/retailers can advertise
in the United States other than themselves. But the tricky
problem is determining whether or not foreign suppliers are
advertising in the U.S. If a retailer in England is advertising
on Microsoft's U.S. website, or on a U.S. Microsoft search
engine, then the retailer is advertising in the U.S. However,
a link from Microsoft's U.S. web site to another web site
in Canada, where an advertisement appears for a retailer
located in another country; then such an advertisement should
not be construed as being done in America. Another point to
consider. Someone visits your web site as a result of doing a
"jewelry in general" search on a U.S. search engine, but not
for the specific brand in question. In that event, you are
advertising in the U.S., but you are not advertising the
specific brand in question in the U.S; i.e., you would not
be violating any manufacturer/distributor agreement.

The manufacuturer might attempt to restrict where shipments
could be made, but this would probably be struck down by the
courts. The retailer is not doing the shipping. Instead, a shipping
company of the customer's choice is doing the actual shipping.
There is a distinction between selling, handling, packaging, and
shipping. Also, the customer may be purchasing other items
that are from a different manufacturer.

What I theorize may not be what is actually viewed by the
various legislative bodies, courts, and governmental agencies
in different countries. Also, there may be some technological
issues involved as to make it difficult to determine where
something is actually transpiring over the internet.

In conclusion, you may sell to U.S. citizens who visit your "store"
in England, but you (per an agreement) and/or your suppliers
(per an agreement) may not be able to advertise in the U.S, the
specific brand in question.