Brooklyn Journal of International Law
If a street vendor offers a famous brand-name product for a substantially lower price than one would expect, the average consumer's initial reaction might be that the product had been stolen or was "hot" - a product of the black market. While such discounted goods might indeed be stolen, sophisticated consumers have come to expect similar discounts in stores and mail-order houses throughout the country on goods not from the black market but rather from the "gray market." These products, naturally enough, are called "gray market goods" or simply "gray goods." Gray goods are brand-name products manufactured abroad which bear an authentic trademark authorized by the owner of the trademark in the market for which the goods are intended. The owner of the trademark is usually foreign. These goods are normally intended for markets outside the United States at the time of manufacture. At some point, however, the gray goods are "diverted" or imported into the United States for the purpose of competing with the U.S. trademark owner's authorized goods. Historically, the importation of gray goods was rare and sporadic. As a consequence, the U.S. Customs Service's regulations which permit their importation were ignored. Gray goods, as a legal topic, were confined to the backwaters of antitrust and intellectual property law. In the last few years, however, the importation of gray goods has become a growth industry and has generated numerous lawsuits and commentaries. While the initial growth in the gray market was spurred by the very high value of the U.S. dollar in international currency markets, it appears that now a permanent gray market network has developed that will make the subject of gray-goods importation one of importance for years to come regardless of the value of the dollar.
13 Brook. J. Int'l L. 249 (1987)