Don't buy more than one "Gucci" or "Rolex" knock-off on your next trip. Now that the U. S. Customs Service has issued a final rule implementing the decision in Lever Bros. Co. v. United States, 981 F.2d 1330 (D.C. Cir. 1993), U.S. trademark owners can compel Customs to restrict importation of "gray market" goods that bear genuine trademarks causing consumer confusion, even where the U.S. and foreign trademark owners are related or are the same company. Gray market goods generally are merchandise that the U.S. trademark owner has not authorized for importation or domestic sale, although such merchandise in fact bear a genuine trademark identical to or substantially indistinguishable from that appearing on merchandise that the U.S. trademark holder has so authorized.
Customs long had taken the position that it would not restrict importation of gray market goods produced abroad by a party related to the U.S. trademark owner -- the "affiliate exception." The court in Lever reversed this position by drawing a distinction between identical goods produced abroad under the affiliate exception and goods produced abroad under the affiliate exception that were physically and materially different from the goods authorized by the U.S. trademark owner. The Lever court held that Section 42 of the Lanham Act, which protects against consumer deception or confusion concerning a good's origin or sponsorship by restricting importation of trademarked goods in certain cases, prohibited Customs from following the affiliate exception with respect to goods that are different both physically and materially.
According to the final rule issued this week, a U.S. trademark owner will need to submit an application to Customs for "Lever-rule" protection, describing the physical and material differences between the gray market goods and those goods authorized by the U.S. trademark owner for importation or sale. Should Customs grant "Lever-rule" protection, it then would detain relevant imported goods. An importer either can show that the goods are identical, and thus "Lever-rule" protection does not apply, or can except the goods from "Lever-rule" protection by attaching a label that states "[t]his product is not a product authorized by the United States trademark owner for importation and is physically and materially different from the authorized product."
Customs long had taken the position that it would not restrict importation of gray market goods produced abroad by a party related to the U.S. trademark owner -- the "affiliate exception." The court in Lever reversed this position by drawing a distinction between identical goods produced abroad under the affiliate exception and goods produced abroad under the affiliate exception that were physically and materially different from the goods authorized by the U.S. trademark owner. The Lever court held that Section 42 of the Lanham Act, which protects against consumer deception or confusion concerning a good's origin or sponsorship by restricting importation of trademarked goods in certain cases, prohibited Customs from following the affiliate exception with respect to goods that are different both physically and materially.
According to the final rule issued this week, a U.S. trademark owner will need to submit an application to Customs for "Lever-rule" protection, describing the physical and material differences between the gray market goods and those goods authorized by the U.S. trademark owner for importation or sale. Should Customs grant "Lever-rule" protection, it then would detain relevant imported goods. An importer either can show that the goods are identical, and thus "Lever-rule" protection does not apply, or can except the goods from "Lever-rule" protection by attaching a label that states "[t]his product is not a product authorized by the United States trademark owner for importation and is physically and materially different from the authorized product."