The gray market, also known as parallel importing, presents a significant challenge for businesses striving to maintain control over their distribution channels. At its core, the gray market involves the unauthorized sale of genuine branded products through channels not approved by the original manufacturer. While these goods are authentic, they often bypass the brand’s established supply chains, leading to quality control issues, diminished customer service, and lost revenue.
With the expansion of digital marketplaces, gray market activity has become even more pervasive. Online resellers exploit regional pricing differences, offering products at lower prices that undercut authorized sellers. This practice not only affects revenue streams but also weakens brand reputation and erodes consumer trust.
Businesses affected by gray market activity face a range of consequences. Customers who purchase from unauthorized sellers may receive products without valid warranties, missing components, or improper packaging, damaging brand credibility. When products appear in unintended markets without brand oversight, inconsistencies in quality can harm long-term customer loyalty. In some cases, products designed for one country may fail to meet the legal and regulatory requirements of another, exposing companies to compliance risks. Market disruptions can also arise, as authorized distributors who adhere to pricing and service standards struggle to compete with unauthorized sellers, leading to an uneven playing field and potential conflicts within the supply chain.
While eliminating gray market activity entirely is challenging, businesses can take strategic legal action to mitigate its impact. A gray market lawyer can assist in strengthening contracts with authorized resellers to control product distribution and prevent inventory from being diverted into unauthorized channels. Trademark law may provide an avenue for enforcement when gray market goods create consumer confusion or fail to meet brand quality control standards. Registering trademarks with U.S. Customs and Border Protection (CBP) and leveraging border enforcement programs can help intercept unauthorized goods before they enter the market. In some cases, pursuing civil litigation may be necessary to take legal action against unauthorized resellers for false advertising, unfair competition, or tortious interference with contractual relationships. When fraud, warranty abuse, or misrepresentation are involved, businesses may also work with government agencies to investigate and prosecute bad actors.
At Sideman & Bancroft, our Brand Integrity and Innovation Group has extensive experience assisting companies in navigating the legal complexities of gray market enforcement. Our gray market lawyers help businesses investigate and identify unauthorized sellers, enforce intellectual property rights, and combat unfair competition. We engage with law enforcement and regulatory agencies when appropriate and develop legal strategies that protect brand integrity and revenue. With a proven track record of successfully recovering losses, securing injunctions, and implementing preventative measures that deter gray market activity, we provide businesses with the strategic guidance and legal solutions necessary to regain control.
For companies facing challenges related to unauthorized distribution, working with a gray market lawyer at Sideman & Bancroft offers the expertise needed to safeguard brands against the risks of the gray market.
