JURISDICTION REPORT: SOUTH AFRICA
WHEN THE BARGAIN HUNTER BECOMES THE HUNTED
Vanessa Ferguson DM Kisch Inc
Te current economic climate has resulted in an influx in the import and sale of cheaper versions and imitation products on the market. Tis has resulted in an increase in the importation and sale of parallel imports, so-called ‘grey goods’.
Grey goods or parallel imports are the trade in goods intended for sale in one market that are exported from their original destination to another country without the authority, knowledge or consent of the manufacturer or licensed importer. Tese goods are regarded as genuine goods in that they are sourced indirectly from the foreign manufacturer, but are not goods destined for this market. Tey are usually sourced from a country where the costs of such goods are low enough so the importer can sell them at a price lower than the domestic price and still make a profit.
Parallel importation of these goods does not follow the authorised manufacturer’s distribution channels. As a result, grey goods do not carry the manufacturer’s warranty and aſter sales support.
Te biggest concern in the trade of grey goods is when counterfeit goods can’t be distinguished from legitimate grey-market goods. Examples of some of the instances where goods are seemingly grey goods but are in fact counterfeit are:
• Where an authorised factory runs so-called overruns, without the manufacturer’s approval and sells these through illicit trade channels
• Where goods are rejected for quality purposes, but instead of being destroyed are sold outside of the manufacturer’s authorised channel
• Where the goods have been tampered with (i.e. additional ingredients have been added, or the product packaging has been amended in order to remove identification information such as source codes, supply details and the like), or
• Where they have been altered (such as the tweaking of tuner components in video machines in order to enable them to receive broadcasts in South Africa).
Tese goods are no longer regarded as genuine goods and are unlawful. Tese altered goods may be regarded as infringing products or counterfeit products and must be clearly distinguished from grey goods.
Te Consumer Protection Act, which comes into operation in April, will also offer the consumer a further degree of relief by regulating consumer rights to disclosure of information, including certain obligations placed on sellers to ensure that relevant information is provided, failing which consumers have the right to demand information such as:
• Suppliers are required to display labelling and trade descriptions of products that do not mislead the consumer
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“ THE CONSUMER PROTECTION ACT, WHICH COMES INTO OPERATION IN APRIL, WILL ALSO OFFER THE CONSUMER A FURTHER DEGREE OF RELIEF BY REGULATING CONSUMER RIGHTS TO DISCLOSURE OF INFORMATION.”
• Suppliers are not permitted to alter, amend, conceal or remove or deface trademarks and other product labelling so as to mislead consumers
• Importers of products are required to display the country of origin and expiry dates, etc.
Te act specifically deals with the consumer’s right to clear disclosure of reconditioned or grey market goods:
• Suppliers are required to display notice that grey market goods have been reconditioned, rebuilt or remade
• Suppliers are required to disclose, by means of a clear and visible notice, that goods are being sold without the approval or licence of the registered trademark owner.
Te act gives rise to the National Consumer Commission, which is assigned to investigate consumer complaints, as well as the National Consumer Tribunal, which is responsible for adjudicating violations and transgressions of the National Credit Act and the Consumer Protection Act.
Consumers can contact the Department of Trade and Industry via:
• The DTI Customs Contact Centre: 0861 843 384 (ask for consumer complaints)
• The DTI Office of Consumer Protection: (012) 394 1436/1558/1076 • The DTI email:
contactus@thedti.org.za
Te best way to ensure that you are buying or selling an authorised product is to purchase directly from the manufacturer, official stores and retail outlets, or look for ‘authorised dealer’ signage.
Definitely keep clear of informal traders and flea markets, which in most instances, do not follow authorised distribution channels. If you think you have found a bargain, think twice; there is always a reason why the goods are ‘going for a steal’.
Vanessa Ferguson is a director in the trademark department at DM Kisch Inc. She can be contacted at:
vanessaf@dmkisch.com
World Intellectual Property Review March/April 2011 59
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