Readers of this blog may well be familiar with the regional exhaustion rule which applies to IP rights in the EU, including (for the time being) the UK. Under this rule, IP rights can be exhausted where they are put on the market with the consent of the proprietor in one part of the EU, even if they are parallel imported to another Member State and sold there as ‘grey’ product. But there is no international exhaustion, which would allow the sale of grey goods from countries outside the European Economic Area[i], even where they have been sold on those markets with the brand owner’s consent. All of this is now fairly well established.
The UK, like most other EU countries, backs up civil causes of action for IP infringement with criminal sanctions to cover the most egregious cases, i.e. counterfeiting and pirating, but there has always been a question mark over the extent to which these criminal sanctions should apply to infringements relating to grey imports from outside the EEA. A case recently came before the highest domestic UK Court – the Supreme Court – where this issue arose in the context of the offences which applied to misuse of registered trade marks for commercial purposes[ii].
The case[iii] involved sale in the UK of what were referred to by the Court as “grey market goods”. However, the goods consisted entirely of what I always understood was called “cabbage” i.e. they were goods which had been made by an authorised manufacturer, but, for one reason or another, they had not been authorised by the brand owner for sale[iv]. So they were, for example, goods which failed the brand quality standards, or goods for which the factory’s licence was cancelled by the brand owner, or production overruns (with or without the brand owner’s knowledge). This cabbage stock was, as often happens, intermingled with “real” counterfeit stock.
Read more: http://www.ilnipinsider.com/2017/08/cabbage-will-get-uk-porridge-but-is-it-grey-enough/
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