Scenario: the exclusive distributor of a foreign brand in Vietnam discovers genuine brand goods — lawfully bought in another Asian market at 25% lower prices — being imported by an independent trader and sold through e-commerce platforms. The distributor demands the brand “kill the grey goods” and sue the importer for trademark infringement. The legal answer is not what they hoped: parallel importation of genuine goods is in principle not trademark infringement under the international-exhaustion principle Vietnamese IP law applies. This article explains that boundary, the exceptions that genuinely can be sued on, and how to protect a distribution system with lawful tools instead of wrong lawsuits.
The exhaustion principle: why genuine parallel imports are in principle non-infringing
Trademark rights are not an unlimited right to control every resale of a product lawfully placed on the market. Under the exhaustion principle, which Vietnamese law applies in the international-exhaustion direction for trademarked goods: once the trademark owner (or their licensee) has placed a product on the market anywhere, the distribution right over that specific product is “exhausted” — a lawful buyer may resell it, including importing it into Vietnam, without further permission. Consequence: a parallel importer selling genuine goods in original condition in principle does not infringe the trademark, and the exclusive distributor cannot use IP law to stop them — exclusivity of distribution is a contractual right against the brand, not a right enforceable against every third party in the market.
Keep this entirely separate from counterfeits: products falsely bearing the mark, never placed on the market by the owner, are clear infringement, handled with the full IP enforcement toolkit (administrative, customs, civil, criminal at scale thresholds). Mixing grey goods with counterfeits in one campaign is a strategic error that damages the distributor’s own legal credibility.
The exceptions: when can parallel imports still be acted against?
- Altered goods or goods in impaired condition: products repackaged so as to obscure origin, stored in wrong conditions degrading quality, or materially different from goods intended for the Vietnamese market (composition, standards, warranty terms) to a degree harming trademark reputation or deceiving consumers — the owner has grounds to intervene under trademark and consumer-protection rules;
- Conduct causing confusion about distribution source: the parallel importer advertises as if it were the authorised distributor, uses the official distribution system’s signs, or promises the brand’s warranty without authority — what is actionable is the unfair-competition/false-advertising conduct, not the importing of genuine goods;
- Sector goods-rule violations: genuine goods lacking Vietnamese circulation conditions (product registration, Vietnamese sub-labels, sector inspections for conditional goods groups) — handled under goods-management law, applied to every importer alike;
- Contract breaches inside the chain: if the grey goods trace back to another country’s distributor who breached territorial limits in its contract with the brand — the brand acts against that distributor in contract; the Vietnamese importer who lawfully bought on the open market still does not become a trademark infringer because of the upstream seller’s breach.
Protecting the distribution system with lawful tools
When IP suit is unavailable, the brand and exclusive distributor still have a lawful toolkit to defend the system: (1) honest market differentiation — warranty and after-sales policies clearly published as applying only to official-channel goods, so the official channel’s advantage lies in service rather than in a non-existent ban; (2) the brand’s own supply-chain discipline — territorial and resale-control clauses in contracts with distributors in other countries, and tracing grey sources by serial/batch numbers; (3) competing on price and service — a 25% inter-market price gap is the root cause of grey goods; regional pricing policy and reasonable trade terms dry up parallel-import sources more durably than any lawsuit; (4) selective action on real exceptions — goods degraded by bad storage, false authorised-distributor advertising, missing sub-labels/registrations: these are the winnable battles to concentrate on instead of suing “parallel importation” in general.
Frequently asked questions
Do parallel imports violate exclusive distribution?
Separate two layers: toward the brand, a distributor in another country selling outside its territory may breach its distribution contract. Toward the Vietnamese importer lawfully buying genuine goods: in principle no trademark infringement under Vietnam’s international-exhaustion approach, and distribution exclusivity is a contract right not enforceable against independent third parties.
Are grey goods counterfeits?
No. Grey goods are genuine products lawfully placed on the market by the trademark owner elsewhere and imported in parallel — in principle non-infringing. Counterfeits are fake products never placed by the owner — clear infringement handled with the full IP enforcement toolkit, including customs and criminal action at commercial-scale thresholds.
When can parallel imports still be acted against in Vietnam?
When goods are altered or in impaired condition harming trademark reputation or deceiving consumers; when the seller falsely poses as the authorised distributor or misadvertises warranty (unfair competition); and when goods lack Vietnamese circulation conditions such as product registration, Vietnamese sub-labels or sector inspections.
How can an exclusive distributor protect itself against parallel imports?
Do not sue IP over importing genuine goods — instead: press the brand to enforce territorial discipline on the source distributor abroad; build the official channel’s edge through clearly published warranty/after-sales applying only to system goods; act selectively on real exceptions (degraded goods, false authorisation claims); and renegotiate regional pricing, because the price gap is the root of grey trade.
This article has been quality-reviewed by the FLAW AI Legal Council