Parallel Imports

Piracy and its disastrous effects are very well known. However, it is yet another less known villain that sometimes also causes harmful effects to the rights of intellectual property owners – Parallel Imports.

Parallel Importation is the non-authorized introduction of legitimate goods into a country. As its name reveals, it follows non-regular channels of commerce and therefore may cause various unforeseen harms:

* to the title-holder, damages to the reputation of its marks, since its products may have a different quality than the one required under local legislation;

* to local licensees or distributors, as adherence to local laws generates additional burden as compared to parallel importers, whose products have not been subject to them;

* to consumers, who may acquire similar, but differentiated products or lack technical assistance;

* to the country, by loss of investments and evasion of taxes.

The Brazilian Industrial Property Law (n°9279/96) renders illicit the trade of goods being introduced in the country for the first time without due authorization from its title-holder. But how can they effectively obstruct parallel importation?

First, the license agreement with the distributor must be recorded before the Brazilian Patent and Trademark Office (BPTO), making it effective before third parties, including any exclusiveness established therein.

Second, an initial cease and desist letter must be remitted and a detailed investigation of the product’s commercial path into the local market, the importer himself, products specifications and declared price at Customs must be conducted.

Finally, the Customs Office is an important ally in the cohibition of parallel imports. Thus, title-holders must avail of themselves to them through their local attorneys, in the case of illegal merchandise seizure.

Parallel import may have undesirable consequences, as it could be detrimental to the local goodwill of the trademark owner, to the investments made by local licensee or distributor, to the consumers and the country. Title-holders must be keen to take effective and timely measures to avoid it and protect their interests.