AWA Objects to Gray-Market Proposal

September 1998


AWA Objects to Gray-Market Proposal

Trademark security, quality are at risk, says AWA

Consumers and manufacturers would be harmed significantly by a U.S. Treasury Department proposal that would allow gray-market watch imports into the country, says the American Watch Association, Washington, DC. Trademark security and quality problems would occur, hurting the industry overall, and retailers could bear the brunt of many consumer complaints.

If the proposal becomes law, gray-market goods could enter the U.S. legally as long as they are labeled "materially different." AWA, which represents 45 major watch companies doing business in the U.S., made several points in written comments to the department, including:

  • The proposal runs counter to case law that protects companies from products that infringe on legal U.S. trademarks.
  • A large number of malfunctioning or inadequately cased watches could result. The reason: imported watch movements must be stamped with country of origin, name of manufacturer or purchaser and number of jewels, if any, before entering the U.S. Many countries don't have these requirements, so goods initially intended for those countries would have to be restamped before entering the U.S. During this restamping, importers of gray-market watches could damage gaskets and affect water resistance, damage case backs or leave plastic or metallic pieces that could damage the movement.
  • Consumers would blame the trademark owner or retailer, even though the fault would lie with the gray marketer and even though the label or tag would identify a watch as a gray-market item.
  • It would be impossible to enforce a provision requiring everyone along the supply chain to keep the gray-market label attached to the product.

The proposal has no timetable for becoming law, says Toby Collado, executive director of AWA. For information, call AWA at (703) 759-3377.

– by Michael Thompson

Copyright © 1998 by Bond Communications.


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