Book Review: Gray Markets: Prevention, Detection and Litigation, by David R. Sugden

Sugden, David R. Gray Markets: Prevention, Detection and Litigation.  Oxford U. Press, 2009.  ($185.00 | 360 pages | 9780195371291).

David Sugden, author of Gray Markets, is a partner at Call, Jensen & Ferrell in California, where he specializes in intellectual property litigation and brand protection.  In this book, Sugden writes about the “gray market,” so-named because it hovers between the legal market and the black market.  Sugden’s book is one of the only books on this topic, and its comprehensiveness makes it an attractive purchase for both academic and law firm libraries.  I would especially recommend this book to any firm that deals with matters such as trademark and copyright issues. 

Sugden’s book has four parts. The introduction provides an overview of the gray market, including examples of its effect on a variety of industries.  The gray market, in its essence, can be described as “goods diverted from a brand owners’ authorized sale channel.” A distributor may legally buy a product at a reduced or wholesale price, and then resell it at a higher price, often in a different market.  If the resale value undercuts the brand’s official price point in a given market, the distributor will earn a profit, and the brand will presumably lose a sale.  For example, Omega manufactured and sold watches to authorized distributors overseas.  Those watches eventually made their way to Costco, who sold them in California.  While Omega authorized the original transaction, it did not authorize the importation of the watches into the United States, nor the sales made by Costco.  This portion of the book also provides the reader with information on other consequences of the gray market, such as loss of tax revenue for states. 

In Parts II and III, Sugden focus on prevention and monitoring.  He discusses how things can go wrong for businesses in the distribution chain, and he describes steps businesses must take to claim damages or demonstrate how their products are materially different from products found on the gray market.  The portion on monitoring discusses warning flags and ways to detect gray market activity.  Not only does Sugden give recommendations for monitoring, but he also provides case analysis for practitioners to understand the legal ramifications for their actions and advice.  He includes a great deal of case law in these two parts of the book, and both sections offer practical advice for attorneys.

The final section describes how businesses should react to the discovery of gray market activity.  Sugden discusses preliminary activities that businesses should take; how to pursue the case in court, if at all; and recommendations on how to handle the potential problem of destruction of evidence in a civil suit.  His analysis of recovery is particularly useful in Part IV.  He offers six different theories of liability, each in their own chapter.  Each chapter then discusses how the theories would apply to the gray market, provides affirmative defenses under those theories, and states what remedies are available.  Sugden pays special attention to copyright and trademark laws.

The book is similar to a law review article: it is written in an outline format and has ample discussion of case law.  It also follows the traditional pattern of identifying a problem, explaining the importance of the problem, and advancing solutions to that problem.  His outline format is problematic in that he does not transition well from one topic to the next.  He rarely provides introductions to the chapters.  The reader is unsure of how the different components relate to one another and fit into the scheme of the chapter as a whole.

Despite this drawback, the book would make an excellent addition to any law firm, particularly one that works with trademark and copyright issues.  The book is comprehensive, but brief enough to function as a guide for practitioners.  The book would also make a good addition to an academic law library, primarily for his advancement of different theories in Part IV. 

Reviewed by Ryan Harrington, Reference Librarian, Yale Law School, Lillian Goldman Law Library

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