A Response to Robert Bird and Peggy Chaudhry by David Orozco

[David Orozco is an Assistant Professor of Business Law at Michigan Technical University]

Professors Bird and Chaudhry provide an insightful and timely analysis of European Law related to the repackaging and relabeling of grey goods, specifically pharmaceutical products. The analysis navigates readers through the morass of legal confusion and uncertainty in this area of international law. A couple of questions were raised by the paper that I would specifically like to address to the authors. First, given that the property system has provided little legal certainty in this area, why not resort to the law of contract? Can pharmaceutical companies, for example, embed contractual provisions with distributors that would shift economic and legal risk for products that somehow deviate from the expected distribution chain? This contractual risk would be imposed against a particular firm, so would EU trade law be circumvented in this regard, by resorting to contract law?

It also seems like the law has created a perfect Catch-22 scenario. The authors state that “[w]hen this [reputational] harm occurs, the mark owner can object unless the use is necessary to enter the market.” It seems as if trademark law attempts to reward the drug manufacturers’ marketing behavior and investments in brand equity on the one hand, and yet the trade laws penalize them for this since the argument will be made by parallel importers that they cannot compete unless they appropriate the valuable mark. The Article dissects the complex nuances of this paradoxical state of affairs.

Finally, it would be interesting to learn a bit more about how grey market goods become grey market goods. What occurs within the supply and distribution chain that allows for this to happen? Are there ethical concerns related to fraud or breach of contract regarding how these good enter the stream of commerce during re-importation? Should these facts be weighed in at all in the preceding analysis of the economic and legal implications of grey market activity?