Protecting your Brand from Grey Market Products Coming Into or Out of Korea

Parallel Importing, in general, is legal in Korea. A grey market import, also known as parallel import, is the sale of a product through unofficial/unauthorized channels. Often, this occurs across international borders. For example, the goods are purchased in the United States, where they are readily available, and then imported into Korea, where they are more expensive or difficult to obtain through official channels.
Some manufacturers have different pricing in different markets; thus, they wish to maintain this pricing by restricting these parallel imports. The products themselves are authentic products; this is not to be confused with knockoffs, but the distribution outside the manufacturer’s or brand owner’s authorized network is why these imports are characterized as a grey market import. 

Legality of Grey Market Imports in Korea

The Supreme Court of Korea ruled in 2002 in the landmark Burberry Case in Korea that:

“As a consequence, in spite of the Exclusive Importer’s agreement with the Original Manufacturer that guarantees the exclusive right to Import to the Exclusive Importer, parallel importing does not constitute a violation of Korean Laws and the Parallel Importer is not bound by the contractual rights and obligations granted and imposed by the exclusivity agreement between the Sole Importer and the Original Manufacturer.”

Korean Grey Market

Simply, the argument is that the Parallel Importer is not a party to the contract, and no other Korean Law is violated. Most jurisdictions have reached similar conclusions.

Exceptions, however, do exist.  For example, if the grey market goods are materially different (e.g., warranty terms, product labeling, or specifications) or if their sale misleads consumers about origin or affiliation, this may violate the Unfair Competition Prevention and Trade Secret Protection Act of Korea or the Korean Trademark Act.

Please note that, in compliance with Korean Law and business practices, exporters and importers may take creative and proactive measures to assist in alleviating the impact of grey market products entering the market. Schedule a time to speak with me, and we can discuss options and a path forward.

Sean’s profile may be found at Sean C. Hayes. To schedule a call with Sean Hayes, please click: Schedule a Call with Sean Hayes.

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients in their contentious, non-contentious, and business development needs. Sean is rated a Top 100 attorney, and his firm was rated a top dispute resolution law firm for Korea.   

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