The Breitling Watch Source Forums

Here's the Second Circuit opinion: http://caselaw.findlaw.com/us-2nd-circuit/1577369.html

Interesting conflict in the purposes of §109(a) & §602(a). A leglislative solution would be more elegant.

Unclear to me if the Court will limit its holding, either way, to publishing or just where the items otherwise are not available in the US market. This surely is not my area of expertise.

But if all gray market watch dealing is outlawed in the US, many ADs will feel a tremendous sting as they are the gray market feeders.


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SHARKMAN

And it would seem that ADs can stock a bigger selection, when they can dump to gray market, if necessary.

It would seem to me that a broad application of §602(a) could have very far-reaching effects, perhaps a heavy-handed result from the law of unintended consequences. This isn't my area, either; I didn't even have an IP course in school.

My understanding is AD's have to buy XXXX amount of watches per year from the manufacturer to be considered an authorized dealer. The AD cannot always sell this many, but they don't care because they can sell it to a gray market reseller. If they cannot do this anymore you will force AD's not to buy as much, so wouldn't the manufacturer have to reduce the minimum number of items that the AD must buy, but if they do this, won't they also have to raise prices to not lose profit?

This may be completely wrong, but just my understanding.

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End of Discussion.

My understanding as well and it surely varies from store to store. I do know you have to have certain sales of Breitlings to qualify for and then to retain the Bentley range for instance.

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SHARKMAN

very interesting. IMO i dont think they will be able to do much regarding the watches.

It's not going to have much impact on US ADs. The vast majority of grey market pieces are from Asia, South America or Eastern Europe - there are exceptions (CostCo gets some from Holland), but those are the biggest players.

The bottom line is that the grey market exists because Breitling (and other brands) have set sales targets for certain markets (i.e. the sum of the AD quotas in that market) that can't be sustained by the market. For sure some of it is just 'bad' ADs, but in many cases the targets are out of whack with market demand.

In theory therefore the impact of this would be that there would be fewer ADs in those markets that supply the grey market sellers as the brands have to cut supply to those regions. In reality - the grey market sellers will simply move out of the US.

From the article: "'Market segmentation creates many benefits for consumers and producers,' Wiley and Pearson argued."

What benefits do consumers get in the most expensive markets?