Grey Market-Diverted Goods (Parallel Imports)- “What, its not counterfeit?”

In a world where all the buzz is about counterfeit goods; the real question is how many of the suspected counterfeit goods are really “grey market/diverted goods.”  The Alliance for Grey Market and Counterfeit Abatement reports that $40 billion of tech products are sold on the grey market each year.

According to Wikipedia a parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product, and are implicated in issues of international trade, and intellectual property.

Brand owners are always watching or monitoring their Intellectual Property (Trademarks, Domain Names, Patents, Copyrights) and when they come up with leads that they believe are possibly counterfeit they take action.  They will get advice from an attorney and then conduct some sort of investigation, whether it is internal or they enlist that help of a third party investigation firm specializing in the intellectual property investigations (trademark infringement, online protection, anti-counterfeiting & undercover buys).

When the products purchased end up with the brand expert for review after a formal buy report and investigation report have been drafted and the chain of custody has been properly signed there comes a moment of truth.

First, can the brand expert determine first if the product is in fact counterfeit?

Second, if the product turns out to be genuine how did it end up in the hands of an unauthorized retailer or distributor within their supply chain?

In the ever changing and ultra-competitive business environment supply chains can be become very complex as companies try to maximize distribution channels and optimize revenues and profits.  As companies grow it is become increasingly important that to thoroughly screen, track and audit contract manufacturers and partners that help them execute on their business plans.

Companies can use a trusted investigation firm to handle due diligence background checks on vendors and partners.  Employment background checks on their new employees.  Trademark and domain name monitoring to see who is registering marks that could be infringing and who is registering and using domain names that contain their marks or brands and are selling their products.  Undercover investigations on contract manufactures to insure that business agreements are being kept and that product is not being sold out the backdoor.  Companies should also be mindful of the ways they can mitigate risk in their operations.  Keeping their employees safe, mitigating accidents that can cause business stoppage and investigating claims and theft can mitigate insurance costs.