01.11.2004

Settlement might influence Grey imports

Yanmar , the Japanese producer of engines and equipment has agreed the settlement of a law suit that it took out against Wallace International Trading Co. of Anderson, Calif., and its principal, Michael Wallace, in the United States District Court for the Eastern District of California, alleging that the defendants facilitated and brokered the importation of used Yanmar tractors from Japan to the United States which were intended for sale and use only within Japan.

Products that are imported into a market that they were not intended for by the trademark holder and without its consent are known as “grey market” products. Yanmar claimed that the importation and sale of used “grey market” Yanmar tractors without its consent infringed Yanmar’s trademarks and constituted unfair competition because there was a likelihood of confusion between those tractors and the Yanmar tractors designed and intended for the U.S. market and sold through Yanmar’s authorised U.S. distribution channels.

Surprisingly Yanmar cited numerous safety devices that are fitted to its tractors in the USA but not in Japan thus suggesting that the units it sells in Japan are less safe than those it sells in America! However the main thrust of its argument was that tractors designed and intended for the Japanese market, pose a potential safety risk to unsuspecting U.S consumers, due as much to the fact that they are different from the units that Americans are familiar with than that they are less safe.

As part of the settlement, Wallace, who had a nationwide network of more than 30 gray market dealers, admitted to willful and intentional infringement of Yanmar’s trademarks and unfair competition. The settlement terms call for Wallace International to cease and desist its activities, send notices of its dissolution to all of its dealers and to enter into a permanent injunction binding Wallace International and Wallace individually, precluding engagement in these activities in the future. The settlement also requires that Wallace post a link to the settlement’s Consent Order, Judgment and Permanent Injunction on Wallace’s former Web site, together with a link to Yanmar’s “Important Safety Notice” concerning gray market,

In late 2003 a “grey market” Sumitomo Crawler crane was involved in an accident where the boom collapsed after the boom hoist winch was left in creep speed by an unsuspecting driver, not familiar with the idiosyncrasies of a Japanese market crane.

Producers and distributors of Japanese Cranes and Aerial work platforms have long complained about the flow of "grey market" products into Europe without proper CE marking. This case shows that action can be successful against grey market importers if the manufacturer has a mind to pursue it.