Parallel Imports And International Exhaustion

Parallel Importation-The Concept

The term "parallel importation" refers to goods produced and sold legally, and subsequently exported. 'Parallel imports' are genuine goods that are legitimately acquired from the rights holder and subsequently sold at lower prices through unauthorised trade channels in the same or a different market.

As parallel importation is essentially a trade practice, it is regulated under both IP law and competition law. In the trademark law context, parallel importation significantly affects the rights of a manufacturer or trader, as trademarks help traders to earn goodwill in the market and to protect their commercial reputation. As territorial rights, trademarks also indicate the source of the trademarked products or services. A conflict, therefore, arises when parallel importation results in a misrepresentation of the source, reputation or quality of the trademarked goods.