Non-Physical Differences can be Material in Gray Market Cases

Following up on its ruling in Gamut, the U.S. Court of Appeals for the Federal Circuit clarified that "material differences" that are a predicate to a gray market trademark infringement case do not need to be physical. However, the trademark owner must establish that "all or substantially all" of its goods meet the claimed material differences to prevail. SKF USA Inc. v. U.S. International Trade Commission, Case No. 04-1460, 2005 U.S. App. LEXIS 19750 (Fed. Cir. Sept. 14, 2005) (Lourie, J.).

SKF manufactures ball bearings in the United States and imports other bearings manufactured by its overseas affiliates. It sells approximately 87 percent of these SKF-marked bearings to authorized distributors and provides post-sale support for them. It sells the remaining approximately 13 percent through alternate channels and does not support them post sale.