Federal Circuit Allows Gray Market Goods That Do Not Materially Differ From Trademarked Goods

Case: SKF USA Inc. v. International Trade Commission (ITC), Case No.04-1460 (Fed. Cir. September 14, 2005)

The One Sentence Summary: In order to restrain the sale and importation of gray market goods, a trademark owner must show that all or substantially all of its marked goods are materially different from those goods.


What They Were Fighting About: Plaintiff SKF USA sells ball bearings that were supported by post-sale technical services. Defendant entities import and sell gray market SKF-marked bearings that do not come with such services.

Federal Circuit Holdings:

• Generally, gray market goods are genuine goods manufactured abroad bearing a legally affixed foreign trademark that is the same mark as is registered in the United States. The importation of such goods (produced by the trademark owner or with its consent, but not authorized for sale in the United States) may constitute trademark infringement in appropriate cases.
• The fundamental inquiry in gray market goods cases is whether there are material differences between the foreign and domestic product.
• The answer to the question of first impression of whether material differences can be found in a gray market case based solely on nonphysical differences is yes. Therefore, a material difference could be based on whether the goods are accompanied by different post-sale services.
• A plaintiff in a gray market trademark infringement case must establish that all or substantially all of its sales are accompanied by the characteristic that is alleged to be materially different from the gray market goods.
• SKF USA did not prove that substantially all of its bearings came with the post-sale services. The evidence showed that 12.6% of SKF USA bearings did not.
• SKF USA's bearings did not differ materially from the gray market bearings because SKF USA's bearings are not predictably and consistently accompanied by post-sale technical services.