GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
Parallel Imports, Trademarks Law, and Agency Regulation: The Controversy in Jordan
Paper Proposal Text :
Although Jordan has made many efforts to bring its intellectual property laws into compliance with international legal standards set forth in the World Trade Organization's (WTO) Agreement on Trade Related Intellectual Property Rights (TRIPs) and other international treaties, Jordan has not taken a clear stance on many intellectual property issues, including trademark exhaustion and parallel imports of trademarked goods. Neither trademarks law nor customs law or practice addresses clearly parallel importation.

Parallel imports or gray market goods are genuine goods and not counterfeits whereby trademark is misappropriated. Parallel imports involve the importation of genuine goods outside the authorized distribution channels. In other words, parallel import is the importation of these goods from a foreign source by bypassing the authorized local distributor and trademark licensee therefore allowing the sale of goods directly to retailers or consumers.

Jordan's position on exhaustion of trademark rights is unclear. Jordan's laws contain nothing that directly addresses the issue; the few cases that have involved parallel imports have failed to resolve the issue definitively. A closer examination of the cases, however, indicates that it is difficult to articulate any coherent doctrinal position on the issue of parallel imports based on these cases. Even if, as some cases indicate, parallel imports will be permitted when certain conditions are met, there are many practical hurdles that can prevent an importer of gray market goods from satisfying such conditions.

Jordan may want to adopt a position on parallel imports that is consistent with the doctrine of other major trading powers, such as the United States and the European Union (EU). The position is these countries allow parallel imports at least under certain conditions. At the same time, however, perceive the need to protect its own national economic and commercial interests in adopting new legal rules on technology and intellectual property.

The issue of parallel importation is also intertwined with agency law. Some in Jordan may argue that agents/distributors would abuse the market because of the exclusive agency. Parallel imports would not be sold in competition with goods subject to an exclusive agency agreement. Those agents/distributors are powerful merchants or local elites. They may have forced these laws or agreements to protect themselves from the interference of small competitors or merchants since they do not have to lower their prices to compete with parallel imports. Small merchants may not be able to benefit from price differences in different markets. Closed distribution channels would impede free trade, competition, and consumer choice in terms of product and price.

The opposing view may counter-argue that local agents/distributors/wholesalers may have built the goodwill of imported products by marketing plan, promotional efforts, and providing a product warranty through after-sale servicing. The purpose of all these programs is to maintain clients and increase the sale of goods. Agents provide services and incur costs that parallel importers may not provide or incur. Thus, parallel importers free ride at the expense of authorized distributors. In addition, parallel imports may damage product quality control. Poor quality could cause consumer confusion and diminish the reputation of the manufacturer and agent. There are no restraints on free trade in restricting parallel imports since consumers could purchase goods from the authorized local distributor.

The paper will examine these competing interests in further detail, analyze why courts in Jordan have been reluctant to adopt a clear position on parallel imports, and explain why a legislative amendment to the Trademark Law is likely necessary before Jordan's position on parallel imports is made clear.