THE THRIVING GRAY MARKET, which brought $7 billion of discounted goods into the U.S. last year, may fall under a growing legal attack.
Taking advantage of the strong dollar, gray marketers import a variety of goods, such as cars and cameras, and sell them at discounts outside the manufacturers' distribution channels. Always controversial, gray marketers are under assault from producers, who claim that they illegally free-ride on trademarks and advertising.
Trademark owners have found little sympathy from the Reagan Administration, which is split between free-trade advocates and gray-market opponents. The Administration has refused to stop such shipments.
So manufacturers have increasingly sued importers and retailers and lobbied for regulatory changes at both the federal and state levels. In 1985 alone, Original Appalachian Artworks Inc. and Coleco Industries Inc. filed at least 10 gray-market suits against unauthorized importers of Cabbage Patch Kids. Other companies have filed suits against gray-market importers of such goods as batteries, toothbrushes, painkillers, and apparel.
The manufacturers' strategy is to establish legal precedents by moving against small importers that can't afford a costly defense. In settling cases, importers have agreed to pay some of their profits, to reexport goods, to sell them to the trademark owners, or to label them as gray. "Small importers will be faced with lawsuits that raise national issues," says Robert W. Steele, an attorney specializing in gray-market matters. Adds Lee Sandler, another attorney, "The mere rattling of sabers is enough to make some people back out."
Gray-market foes are active in legislatures as well. Because gray goods often come without manufacturers' warranties, New York State requires retailers to post signs informing consumers of the limitations of their inhouse warranties. And proposals under consideration in Washington could restrict importation of gray-market autos. But, says Max F. Schutzman, an attorney for Olympus Corp. cameras, "Spirits run high on this. Nobody's going to lay down and die."