Parallel Imports and Exhaustion of Rights: What Foreign Brand Owners Can and Cannot Stop

Parallel imports are genuine goods bought in one market and brought into another without the authority of the local brand owner or its exclusive distributor. They are not counterfeits, and Kenyan law does not treat them uniformly. Whether a foreign brand owner can stop them depends on which right it relies on: a patent, a trademark or copyright. Pharmaceuticals add a separate regulatory regime. This article maps the position under each, so that a foreign owner can see what its Kenyan distributor agreement can and cannot be expected to protect.

Parallel imports are not counterfeits

The Anti-Counterfeit Act defines counterfeiting as taking certain actions without the authority of the owner of an intellectual property right. They are the manufacture, production, packaging, re-packaging, labelling or making of goods so that protected goods are imitated as identical or substantially similar copies, the making of a colourable imitation calculated to be confused with the protected goods, the making of copies in violation of an author’s rights, and, for medicine, deliberate and fraudulent mislabelling as to identity or source. Section 32 makes it an offence to import counterfeit goods, except for private and domestic use. The Act does not mention parallel imports or genuine goods. A shipment of genuine goods is not “the result of counterfeiting”, but because packaging, re-packaging and labelling appear in the definition, a parallel importer who alters goods should take care. We have found no Kenyan decision on the point. Our article on anti-counterfeiting enforcement explains what the Authority can do against real counterfeits.

Patents: the owner’s express consent

Section 58(2) of the Industrial Property Act provides that the rights under a patent do not extend to acts in respect of articles which have been put on the market in Kenya or in any other country, or imported into Kenya, by the owner of the patent or with his express consent. The section therefore looks beyond Kenya’s borders, and Kenya’s exhaustion rule for patents is international in that sense. Two conditions matter. The first sale must have been made by the owner or with express consent, so goods sold by an unauthorised party, or outside the territory of a licence, may fall outside the defence; we have found no Kenyan authority on the point. Secondly, the provision protects only acts in respect of patented articles, so it does not answer a trademark or copyright claim over the same goods.

Trademarks: section 7(3)(a)

Section 7(1) of the Trade Marks Act gives the registered proprietor the exclusive right to use the mark in relation to the registered goods and makes it infringed by use of an identical or confusingly similar mark in the course of trade. Section 7(3)(a) then provides that the right is not infringed by use in relation to goods connected in the course of trade with the proprietor or a licensee if the proprietor or licensee has applied the mark to those goods, or a bulk of which they form part, and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the mark.

The provision does not mention territory, and it looks to the proprietor’s own application of the mark and its consent. On its wording, genuine goods that the proprietor or a licensee marked abroad appear to fall within it, and a brand owner should not assume it can stop them on trademark grounds. We have not found a reported Kenyan decision applying section 7(3)(a) to parallel imports. A brand owner’s stronger positions are against goods on which the mark has been removed or obliterated, against counterfeits, and against goods misrepresented to the public, since section 5 preserves passing off. See our articles on trademark infringement and customs recordation; recordation is aimed at infringing goods and is not a tool against genuine grey-market stock.

Copyright: importation and infringing copies

Section 26(1)(c) of the Copyright Act makes distribution to the public by sale, rental, lease, hire, loan, importation or similar arrangement part of the exclusive right in literary, musical, artistic and audio-visual works. But the definition of an “infringing copy” in section 2 includes, where a copy is imported, a copy the making of which would have infringed the rights if made in Kenya by the importer. A genuine copy made abroad with the owner’s authority is not obviously within that limb. The Act has no exhaustion clause that we could find, and we found no Kenyan decision settling how the distribution right and the definition interact, so the position for books, software and media is uncertain.

Medicines: a separate licensing regime

The Pharmacy and Poisons (Parallel Imported Medicinal Substances) Rules, 2019 (Legal Notice 126 of 2019) regulate parallel importation of medicinal substances, including patented, non-patented and branded generic products. Under rule 4, a person may not parallel import unless it is a limited liability company, holds a certificate of parallel importation, is licensed for the substance, the substance is registered in Kenya, and it has a valid marketing authorisation in the country of origin. Rule 11(3) provides that the marketing authorisation holder shall not prevent importation or sale of a parallel imported medicine on account of holding a certificate of registration or the existence of a patent. For a pharmaceutical brand owner, that means the regulator, not the patent, is the gatekeeper; see our articles on drug pricing pressure and access to medicines and pharmaceutical manufacturing.

What a foreign brand owner can do

Because IP law offers limited control over genuine goods, contracts and product design carry more of the load. Distribution agreements can restrict the distributor’s sales outside its territory and require it to identify its supply chain, and serial numbers or batch codes help trace grey stock to its source. Territorial restrictions between distributors can raise competition questions; see our article on exclusive territory clauses. Keep the mark on the goods, register it, and record licensees, so that section 7(3)(a) and the removal-for-non-use rules work in your favour rather than against you.