Lanham Act Requires Material Differences
Trademark infringement actions challenging the parallel import of a product require that the plaintiff show that the disputed item is "not genuine" within the meaning of the federal Lanham Act. To meet this test, the trademark infringement plaintiff facing competition from a parallel import, must establish that either it cannot control the quality of the parallel import or that the products are materially different.
Definiton of Parallel Imports
A parallel import is the importation and, ultimately, the distribution of a product outside of the ordinary distribution chain. In many circumstances, the goods are bought overseas and intended for non-United States customers.
A trademark infringement case recently decided in the the Southern District of New York, Zip International Group, LLC v. Trillini Iports, Inc., teaches that the Lanham Act does not prohibit importation of identical branded goods as parallel imports. A company seeking to prevent the parallel imports through a trademark infringement lawsuit must establish that the products are materially different in a way that harms the interest of the trademark holder.
Test to Determine if Goods are Genuine
The court applied a two-prong test to determine whether the parallel import of sunflower seeds packaged by the same company in Russia violated the trademark rights of the authorized distributor. Finding that the goods were identical in content and packaging, the court dismissed the plaintiff's trademark infringement claims.
Quality Control Test
Under applicable law in the Second Circuit Court of Appeals, a federal trademark infringement plaintiff may establish that goods are not genuine by showing that the goods are not subject to the same control quality standards or that the goods are materially different. To prevail, the Court said, the plaintiff must procude evidence to show that its competitors parallel imports were not subject to the same measure of quality control. Because the goods came in from the same source, however, there was no difference that could be established.
Material Difference Test
Under the material difference test, the parallel importation of a product will violate the Lanham Act if it was not intended to be sold in the United States and is materially different from the goods intended for the United States. If the goods are identical in all respects, as in this case, there is no trademark infringement.
The New York District Court also rejected an argument that U.S. consumers were likely to be confused about the source of the sunflower seeds. The court, however, held that since both the authorized goods and the seeds that were the subject of a parallel import came from the same source and were identical in all respects that the likelihood of confusion argument must fail.
