What is "parallel import"

n. A legitimate product imported from another country without the permission of the intellectual property owner.

A parallel import is a non- counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product and are implicated in issues of international trade, and intellectual property.

Parallel importing is based on concept of exhaustion of intellectual property rights: according to this concept, when the product is first launched on the market in a particular jurisdiction, parallel importation is authorized to all residents in the state in question. Some countries allow it but others do not.

Parallel importing of pharmaceuticals reduces price of pharmaceuticals by introducing competition; TRIPS agreement in Article 6 states that this practice cannot be challenged under the WTO dispute settlement system and so is effectively a matter of national discretion.

The practice of parallel importing is often advocated in the case of software, music, printed texts and electronic products, and occurs for several reasons:

1. Different versions of a product are produced for sale in different markets: Top Gear Magazine (UK Edition) is officially sold in UK, and Top Gear Magazine (Australian Edition) is officially sold in Australia. However some unofficial distributors in Australia also sell Top Gear Magazine (UK Edition).
2. Companies, either the manufacturer or the distributor, set different price points for their products in different markets. Parallel importers ordinarily purchase products in one country at a price (P1) which is cheaper than the price at which they are sold in a second country (P2), import the products into the second country, and sell the products in that country at a price which is usually between P1 and P2. See arbitrage.
3. Consumers who are able to obtain more competitively priced items and may be able to avoid local sales taxes, are placed on an even footing with consumers who have less access to overseas sales online.
4. Some advocacy groups support parallel importing on the grounds of enhancing the free flow of information.