Posted by: euser
August 05, 2009
Topic: GRAY MARKET GOODS AND PARALLEL IMPORTS

On June 18, 2009, Red Bull ĢmbH (“Red Bull AU”) www.red-bull.com, a company organized and existing under the laws of Austria with an address of Am Brunnen 1, Fuschl am See, 5330 Austria and its wholly-owned subsidiary Red Bull North America, Inc. (“RNBA”) www.redbullusa.com, a corporation organized under the laws of California, with an address of 1740 Stewart Street, Santa Monica, California 90404, filed a complaint against Lamont Distributors, Inc., a corporation organized and existing under the laws of New York, having a place of business at 5 Lamont Court Suite 3A, Brooklyn, NY 11225.  RNBA’s Complaint is seeking damages and injunctive relief for trademark infringement, unfair competition, and copyright infringement under federal law 15 U.S.C. § 1114(1), 1125(a)(1)(A) and 17 U.S.C. §§ 501, 602, and trademark infringement and unfair competition under New York state law.  Red Bull GmbH and Red Bull North America, Inc. v. Lamonst Dist., Inc. a/k/a Lamont Distributors, Inc., et alCase No. 09-CIV-2602 (EDNY 2009). www.nyed.uscourts.gov

The central issue in RNBA’s Complaint is the nature of the Red Bull Energy Drinks available for sale in the United States.  According to the complaint filed by RNBA, Lamont Distributors imports and sells Red Bull Energy Drinks in the United States that are intended for sale in the United Kingdom (“Gray Market Red Bull Energy Drink”).  Red Bull argues that the importation, distribution, and sale of the Gray Market Red Bull Energy Drink is likely to cause confusion amongst the American consumers as to the nature, ingredients, and quality of these products, because the foreign Red Bull Energy Drink is materially different from its domestic counterpart notwithstanding the fact that it bears many of its likenesses.

Produced in the 1970s by T.C. Pharmaceutical Co., Krating Daeng (Red Bull being the literal Thai translation) is the predecessor to the Red Bull Energy Drink.  An Austrian entrepreneur, Dietrich Mateschitz, developed the brand after discovering that Krating Daeng helped cure his jetlag while visiting Thailand in 1982.  Shortly thereafter, Mateschitz and the founder of T.C. Pharmaceutical, Chaleo Yoovidhya, founded Red Bull AU.  After adapting the brand for the European markets, they finally launched the Austrian version of Red Bull in 1987.  Since then, the sale of Red Bull expanded to foreign markets, subsequently entering the United States in 1997.  RBNA is the source of the Red Bull Energy Drink authorized for sale in the United States (“U.S. Red Bull Energy Drink”). 

Red Bull states that Lamont Distributors were never authorized to import or sell any form of the Red Bull Energy Drink in the United States.  Furthermore, Lamont’s Gray Market Red Bull Energy Drink is sold and distributed outside of authorized channels of distribution and, thus, is not subject to the same rigorous quality control standards, as those being employed for U.S. Red Bull products.

RNBA alleges that the Gray Market Red Bull Energy Drink products offered for sale in the United States differ from their U.S. domestic counterparts in numerous respects:  [i] they lack required U.S. federal and state nutritional, deposit, and volumetric AU information such as the well-known “Nutrition Facts Box” along with other FDA required nutritional information that is provided through RBNA; [ii] they provide differing nutritional information; [iii] they contain unfamiliar ingredients identified on the cans; [iv] they have unfamiliar spelling or language on the cans; [v] and they have a different local distributor identified for contact information (e.g., a London address rather than the U.S. Santa Monica, California address accompanied by the U.S. “877” toll-free number featuring the U.S. website www.redbullusa.com).

Red Bull concludes that due to the nature of the Gray Market Red Bull Energy Drink, it will inevitably cause purchaser/consumer confusion to the detriment of Red Bull, as well as to the detriment of consumers and purchasers in the United States.  When such purchasers and consumers encounter the Gray Market Red Bull Energy Drink products, which are materially different from what U.S. purchasers and consumers expect, they are likely to be confused and perhaps even disappointed.

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