NAPIB - National Association of the Parallel Importers in Bulgaria

Parallel import substance

Foreign literature provides a number of definitions of the term “parallel import”. Summarised in them, parallel import is defined as a type of international trade in which original goods from abroad are imported in a country, bearing the registered trademark and produced according to the requirements of the trademark owner, who hasn’t consented to the distribution of these goods on the territory where they are imported. Some authors add to this definition the clarification that “parallel import is an import of foreign goods by a multitude of importers”. In literature, goods trade with commodities that are object of parallel import is often referred to as „grey market”.

It is generally accepted as a formula that goods that are object of parallel import:

have been produced by or by the permission of the trademark owner and bear this trademark;

have the same or approximately the same quality as the original products, but are not always produced exactly (with the same components) as the originals;

have been initially sold at a market in a country different from the one of the import;

are imported by traders who are not official dealers of the respective trademark and have no permission by the trademark owner for import in the respective country;

a lower price than in the country of sale and even lower in the country of import

It is here that we should pay attention to the fact that the aforementioned characteristics of the parallel imported goods show unambiguously that these goods are not produced or imported in violation of the trademark legislation.

The questions that make the parallel import a widely discussed topic in international aspect are mainly two:
(1) whether the admission of parallel import is harmful or useful for the economies of the different countries and economic unions, and
(2) from which moment on can the parallel importers exercise their right to import the goods owned by them and bearing the respective trademark

As parallel import in Bulgaria is often introduced in a bad light (which practically leads to its perception as a violation of the effective legislation), we should add to the questions above the question whether parallel import is legal in the Republic of Bulgaria.

The clarification of the benefits, downsides and lawfulness of parallel import inevitably imposes the consideration of the issue of exhaustion of trademark rights and one of its central elements – the first sale at the market of the commodity bearing the respective trademark. Exhaustion of rights and parallel import are two separate activities, which develop sequentially in time. The first in time is the exhaustion of rights, which occurs at the moment of the first sale of the trademark commodity, done by the trademark owner or by a person authorised by the owner. Only after the exhaustion of rights there are conditions for parallel import of goods.

The exhaustion of trademark rights is a doctrine that is encountered in one form or another in the legislation of most countries. In some of them it is defined exactly as „exhaustion of trademark right” (EU, Bulgaria), whereas in others it is not explicitly formulated but is demonstrated through the content of separate texts from the normative acts that regulate it (USA, Japan, Great Britain).

The reason for the wide prevalence of the doctrine is that it manages to reach a maximal balance between the controversial interests of the trademark owner and the retailer of goods bearing this trademark through legal limitation of the exclusive rights, which these persons have with respect to the trademark and the goods. The presence of this limitation also imposes the brief consideration of the issue of the framework of trademark protection and its correlation to competition legislation and the freedom of commodities movement. In view of the approximation of Bulgarian legislation to that of EU, the analysis concentrates mostly on the issues connected with the EU and its legislation.

Trademark protection and its correlation to competition legislation and the freedom of commodities movement >>

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