Most brand owners are well acquainted with the threat of counterfeits—unauthorized products bearing fake versions of their marks. The legal and strategic response to counterfeiting is relatively well understood: register trademarks, monitor online marketplaces, file takedown requests, pursue litigation when warranted. But there is a related and often overlooked threat that does not fit neatly into the counterfeiting framework: the gray market.
Gray market goods are legitimately manufactured products, real, authentic items that bear the trademark owner’s genuine mark, but they were intended for sale in a foreign market and have been imported and resold in the United States without the trademark owner’s consent. While they are not fakes, they can still cause serious damage.
Why Gray Market Goods Harm Brands
The problem with gray market goods is not their authenticity; it is their context. Products manufactured for sale abroad are often formulated, packaged, or labeled differently to meet the consumer expectations, regulatory requirements, or environmental conditions of their intended market. They may lack U.S. warranties. They may arrive improperly stored or shipped. They may carry different instructions, safety information, or customer service contact information. And when a U.S. customer who purchased one of these gray market products experiences a problem and turns to the trademark owner for support, the trademark owner faces an unenviable choice: absorb the cost of supporting a sale it never authorized, or disappoint the customer and suffer brand damage for a problem it did not cause.
As AI tools proliferate, the gray market problem is intensifying. Generative AI allows unauthorized sellers to quickly produce polished product listings, marketing copy, and even fake reviews at scale, making gray market goods harder for consumers to distinguish from authorized products. AI tools also help gray market sellers close a flagged storefront and reopen under a new identity rapidly, an evasive tactic that makes traditional platform-by-platform enforcement increasingly ineffective.
Federal District Court Is the Obvious Forum, But It Has Limits
Trademark owners confronting gray market imports have traditionally pursued relief in federal district court, asserting trademark infringement under the Lanham Act. The key legal doctrine is the “material differences” standard: if the unauthorized imported goods differ materially from the authorized domestic product in ways that would matter to consumers, different warranties, formulation, labeling, or customer service, those goods are not the trademark owner’s genuine goods in the relevant sense, and their sale creates a likelihood of consumer confusion. Courts have applied this standard broadly, recognizing that even nonphysical differences, such as warranties, labeling, or post-sale services, can be material to consumers, including in cases such as SKF USA Inc. v. International Trade Commission, 423 F.3d 1307 (Fed. Cir. 2005).
The problem with district court is time. A contested trademark case can take two to three years to reach resolution. For a brand owner watching its reputation erode through unauthorized gray market sales on Amazon, Walmart’s marketplace, or Temu, that timeline may be unacceptably long. Injunctive relief is available but contested, and obtaining a preliminary injunction requires satisfying a demanding standard that many trademark owners find difficult to meet in the early stages of litigation.
The ITC as a Strategic Alternative
The U.S. International Trade Commission (ITC) offers a different and often faster path. Under Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, the ITC has jurisdiction over unfair acts in the importation of articles into the United States, including trademark infringement. A Section 337 investigation averages 16 to 18 months from filing to a final determination, meaningfully faster than district court and without the same preliminary injunction hurdles.
The remedies available at the ITC are also uniquely powerful. The ITC can issue a general exclusion order barring the importation of infringing goods regardless of source, meaning it can apply to all importers, including those who were not named parties in the original proceeding where the statutory requirements for such relief are met. This in rem reach is particularly valuable when gray market sellers are nimble, distributed, and capable of shifting their import pipelines. The ITC can also issue cease-and-desist orders against domestic entities that hold inventories of infringing goods, and U.S. Customs and Border Protection enforces exclusion orders at the border.
To prevail in a Section 337 investigation based on gray market trademark claims, a complainant must establish four elements: trademark infringement (under the same likelihood-of-confusion standard applied in federal court); importation of the goods into the United States; a domestic industry; and a material difference between the imported goods and their authorized domestic counterparts. Of these, the domestic industry requirement has historically been the most challenging for downstream or niche brand owners to satisfy. But two recent Federal Circuit decisions have eased that burden. In Lashify Inc. v. International Trade Commission, 130 F.4th 948 (Fed. Cir. 2025), the court held that investments in sales and marketing qualify toward the domestic industry requirement—a significant expansion. The court also reaffirmed in Wuhan Healthgen Biotechnology Corp. v. International Trade Commission, 127 F.4th 1334 (Fed. Cir. 2025), that even relatively small or low-revenue product markets can satisfy the requirement when considered in context, foreclosing arguments that smaller or specialized brands are categorically excluded from ITC relief.
Practical Considerations for Brand Owners
The ITC is not the right forum for every trademark dispute. It offers no monetary damages, which means brand owners seeking compensation for lost profits must file a parallel district court action. Its accelerated schedule also front-loads discovery costs in ways that may be burdensome for smaller claimants. And the commitment of resources required to see a Section 337 investigation through is real.
But for brand owners dealing with fast-moving gray market activity at scale, particularly where the import pipeline is the central chokepoint and where reputational harm is accumulating in real time, the ITC’s combination of speed, breadth, and Customs enforcement makes it a compelling option. The combination of AI-enabled detection tools (which can now scan online marketplaces for gray market listings continuously and in real time) and the ITC’s broad exclusionary authority represents a genuinely powerful enforcement strategy that most brand owners have not fully explored.
Contact
For questions about gray market brand protection, ITC proceedings, or trademark enforcement strategy in online and multi-channel commerce, please contact KJK eCommerce attorney Kyle D. Stroup (KDS@kjk.com).