Grey Market: An analysis of its impact on IPR with emphasis on Copyright Infringement



The term “grey market merchandise” generally refers to goods sold outside of equivalent imports or exchanges; these goods are diverted from authorised distribution channels to unapproved vendors or beyond legally permitted appropriation channels. As a result of the coronavirus pandemic, exchanges in these markets are increasing. The unapproved means of obtaining and offering these dark goods prompts us to examine the legitimacy of these goods and the single remedies that a customer can be certain of in the event that a defect appears in such goods.

The terms “underground market” and “grey market” are often confused, but they are very different. The bootleg market refers to the illicit trading of goods within a nation.Underground market products, for the most part, are fake, though, in Dark market exchanging, confirmed merchandise is lawfully bought in one country and afterwards lawfully imported in one more country where they are then sold without the approval of the IPR holder.

Goods that are offered in grey markets may compete with the authorised merchandise channel, and buyers often enjoy dim merchandise due to its low price. In a nation such as India, where consumers are not particularly concerned with quality assurance and guarantee, these marketplaces have surpassed channels that are legally recognised and posed a great risk to retailers and holders of licenced invention rights (“IPR”). Some places in the globe have declared these kinds of markets to be illegal. Even if it is clear that hidden markets put the premium of IPR holders at risk—this is the most dubious aspect of these markets—some support such agreements on the grounds that they benefit consumers and elevate the market’s seriousness. As a result, makes this point fascinating according to a legitimate viewpoint.

Legality Of Grey Market

The legitimateness of dark market merchandise is an emotional issue and varies across jurisdictions. Numerous countries find these equal products legitimate, while certain countries criminalize something similar for contradicting the interest of IPR holders and their other domestic laws.

The Supreme Court (“SC”) of the UK, in its 2017 judgment of R v. M, where the litigants were arraigned for, entomb alia, offences of unauthorized utilization of brand names, despite area 92(1)(b) and (c) of the Brand Names Act, 1994. The charges encompassing the issue were that the respondents were taken part in the mass importation and resulting offer of marked merchandise having bona fide brand names without the assent of the brand name proprietor. The inquiry, in this case, was whether the respondents committed a criminal offence by unauthorized use of a brand name. In addressing this unsettled inquiry, the greatest obstacle under the steady gaze of the court related to the burden of obligation on somebody when the individual had not conceded brand name freedoms in any case.

In the USA, managing dim market merchandise is entirely lawful, yet it is likely to be Title 19, §133.23 of the US Government Code. Briefly talking, this part punishes just ‘genuine fake’ of the merchandise and doesn’t force, in essence, limitation on imports of certifiable products, assuming that two circumstances are satisfied by the merchants of dim products. The conditions are as follows;

1- Trademarks should be enlisted with U.S. Customs and Boundary Security through the Protected Innovation Privileges e-Recordation frameworks; and

2- U.S. and unfamiliar brands should be claimed by two distinct substances (people or organizations).

Indian Perspective

India has forever been a sturdy of global depletion. Equal imports have been allowed under Section 30(3) of the Indian Trademark Act, 1999 and Section 107A (b) of the Indian Licenses Act, 1970, yet nebulousness stays under Section 14(a)(ii) of the Copyright Act, 1957. The Delhi High Court (“HC”) in Penguin Books Ltd. v. M/S India Book Wholesalers (1984), while deciphering Section 14(a)(ii) of the Copyright Act, held that by selling Penguin distribution books in India by bringing in approved duplicate of books from the USA without the approval of the IPR holder, the litigant had caused optional encroachment of the IPR of the offended party. Afterwards, this part was changed in 1994, which approved equal imports in scholarly, emotional, and melodic works other than PC programs. After the 1994 alteration, HCs were called upon at different times to dissect the legitimateness of equal imports; however, strangely, there is no clearness to date concerning equal imports under Intellectual Property Regulation.

With respect to the Trademarks Act, 1999, the legitimacy of Section 30(3) was challenged before Delhi HC in Kapil Wadhwa and Ors. v. Samsung Gadgets Co. Ltd. and Anr . where the Court recognized the way that India proliferates the possibility of worldwide weariness of IPR and, in this manner, put away the choice of a solitary appointed authority seat, maintaining the legitimateness of equal imports. All the while, to save the interest of the consumers, the Court requested appellants to show in their display areas a disclaimer that the Samsung items sold by litigants are brought into India, and Samsung (Korea) doesn’t warrant the nature of the merchandise nor gives any after-deals administration to the products. This request was viewed as shameful by the respondents. Consequently, an allure was recorded in the SC of India, and the case right now is sub-judice.

This judgment, basically, perceived the legitimacy of Section 30(3) of the Trademarks Act and allowed equal imports carried on by the litigants with specific circumstances, yet, the lawful inquiry, including equal imports, stood disrupted inside Indian limits.


Since all of the dark products is essentially lower-cost, validated items, the grey market may first appear appealing to customers. In any case, when it matters, there are various legal ramifications. For example, a buyer of illicit goods cannot file a claim in consumer court claiming that the product is defective, nor can the buyer ever provide a guarantee or assurance of the item because India’s laws regarding product legitimacy have not yet been established. The black market discourages legitimate retailers and owners of intellectual property since the benefit of exchange is secretly claimed by these unlicensed sellers rather than by those who are deserving of it.In addition to the temporary loss of output, there are other long-term negative consequences as well, such as a decline in customer trust in the product due to unfavourable assistance from these unlicensed dealers or a refusal of the product’s health benefits because the offer is unlawful. Since that these benefits to the manufacturer depend on the public strategy, it follows that, as I would like to believe, real security must be provided in order to preserve IPR holders’ privileges and to increase market trust.

Author : Kaustubh Kumar, in case of any query, contact us at Global Patent Filing or write back us via email at

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