On 26 October 2011, the Intellectual Property Research Institute of Australia (IPRIA) and the Centre for Media and Communications Law (CMCL) hosted a free seminar at the Melbourne Business School titled ‘Brands and the Challenges of Grey Markets’. The panellists were, by a surprising majority, in support of parallel imports…is this the way of the future?
A number of the panellists stressed the importance of distinguishing between between parallel imports and counterfeiting, with counterfeits “baaaad” and parallel imports “gooood”. Parallel imports were proffered as a remedy for increasing consumer choice and keeping price competitiveness alive, particularly where some countries are victims of price discrimination (an example is iTunes’ Australian price per song being nearly double that charged to its US customers). Even Owen Malone, the head of IP at Treasury Wine Estates, speaking from the point of view of the brand owner, acknowledged that the rise of parallel imports had forced some companies to adjust their pricing accordingly, to the benefit of consumers.
In relation to alcohol, which Owen kindly informed us was classed as a ‘food’ under the Food Standards Code (to the delight of the audience and the other panellists), the business of parallel importing was described as a market driven by price competition and arbitrage opportunities, in which products travel long distances, and in which there may be an extensive time period between production and sale, with little evidence of any love of brands or care to sustain quality. This can mean serious impacts to consumer health and safety as well as brand and reputational damage.
Vicki Huang, a lecturer in Marketing Law at Deakin University, spoke about parallel imports from the point of view of the consumer. The growing prevalence of online shopping offers more options to Australian consumers and Vicki discussed highlights from the Productivity Commission’s draft report into the Economic Structure and Performance of the Australian Retail Industry, an interesting read: here.
Susy Frankel, a professor from the School of Law at Victoria University of Wellington (NZ), explained how, as a signatory to free trade agreements, New Zealand had embraced parallel imports in their trade mark and copyright law, but not in relation to patented goods. She suggested that intellectual property law was an inappropriate avenue to use to try and stop the global movement of goods.
Don O’Sullivan, an associate professor in Marketing at the Melbourne Business School discussed both the positives and negatives of the impact of grey market goods, and seemed, overall, to support the idea. He used the example of grey market iPads in China, to state that parallel imports can facilitate broader market coverage for a trade mark owner in a particular market, even if the goods have not come through authorised channels. Both Don and Vicki agreed that consumers now seem willing to sacrifice some levels of certainty in terms of warranties and consumer service for a reduced price and the added functionality of online (for example user reviews etc). Owen was concerned that sole focus on a price war can lead to a downward spiral of reduced innovation, development and customer service within a market.
In markets where the distributor (who may not be the trade mark owner in the jurisdictions where the goods have come from) is responsible for educating the market, paying for advertising and building brand equity, the audience seemed to concur that the distributor should be entitled to the revenue from that investment. And in a situation, as is so common in the world of consumer goods, where the consumer is not paying for the product itself, but for the extensive brand equity behind it, perhaps intellectual property law is quite an appropriate avenue for that protection.