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Canon v. Gray Market Retailers Update

December 6, 2015 By Eric Reagan

Canon-Gray-Market-Lawsuit

Canon USA filed an Amended Complaint last week against F & E Trading, LLC (aka Big Value, Inc., Electronics Valley and others) in its ongoing battle against gray market retailers who are undercutting the market in the US on DSLR sales. I have obtained a copy and embedded it at the bottom of this post for those who want to read the fine print.

In its Amended Complaint, Canon USA doesn’t really add on any additional egregious actions, but rather takes aim at pinning the alleged misconduct on Albert Houllou, who appears to be the principal owner/operator of F & E Trading.

Canon USA slices out several facts in an attempt to paint Houllou as the real wrongdoer in its trademark violation case. This strategy is a common tactic in lawsuits against companies.

Canon cites the following YouTube video as evidence that Houllou is the controlling party for all of the companies’ actions.

As someone who used to practice corporate law, I can tell you that it is always a big win to get an individual (typically an owner or executive) on the hook for the wrongdoing (aka “piercing the corporate veil”). This allows the plaintiff (e.g., Canon USA) to hold a person (not just a company) personally liable for the wrongdoing. If you can get at a person’s assets, then you can apply a whole lot more pressure in settlement negotiations or drive them into bankruptcy.

The more I look into the actions by the various gray market retailers Canon USA is suing, the less sympathetic I am with Canon’s cause.

As Canon Rumors pointed out after this story initially broke, Canon USA created the boom of gray market discounted by cameras by setting and strictly-enforcing Minimum Advertised Pricing (MAP) for its products in the US. Read the comments at Canon Rumors for a good overview of people’s feelings toward Canon’s attitude toward gray market and MAP policies. Planet5D also has a good overview of MAP and how it is legal.

Based on the feedback I have received from Photography Bay readers, along with the pro-gray market discussions elsewhere online in reaction to these cases, I can’t withhold recommendations that you don’t purchase gray market camera products anymore. I do caution you to understand what you are purchasing regarding warranty and non-native power cords; however, the warranty questions were always a consideration.

I’ll continue to listen to your feedback and continue to follow these cases and update you as they progress.

Filed Under: Canon, Legal Tagged With: Canon, Canon USA, gray market, lawsuit

 

Comments

  1. Oberoth says

    December 6, 2015 at 3:02 pm

    Isn’t it funny, Canon USA is comparing about cheap imports into the US and I buy stuff from the US because it’s so much cheaper than the UK!

    I think global prices should be much more equal (without taxes) and local government’s should do more to tax imports in such a way so there’s no gain in buying gray imports. This is a fair way for everyone to be on an even playing field.

    Although, the main reason i buy US stuff is i would much rather have 30fps than 25fps (60 vs 50, 120 vs 100). Some cameras let you change to NTSC internally but a lot don’t.

  2. Rafael says

    December 6, 2015 at 8:37 pm

    Canon looks here like a corporate bully. This whole MAP issue is a mix bag and I can see valid points on both sides. However the part that makes me squeamish in this article concerns the legal steps Canon is taking… in particular this quote: “it is always a big win to get an individual (typically an owner or executive) on the hook for the wrongdoing (aka “piercing the corporate veil”). This allows the plaintiff (e.g., Canon USA) to hold a person (not just a company) personally liable for the wrongdoing. If you can get at a person’s assets, then you can apply a whole lot more pressure in settlement negotiations or drive them into bankruptcy.”
    Looks like they’re after destroying that guy. I’m far from a legal expert, but if this sort of thing is possible then what stops people in similar fashion suing small business owners, such as us photographers, who think we are safe as S-Corp or LLC. Photographers being mostly solo acts are pretty much always “controlling party for all of the companies’ actions”.
    On the other hand CEO’s responsible for the financial crisis of 2008 got away scot-free.
    It really feels like the larger the corporations are, the less likely they are to apply to themselves the same standards they expect from others.

    • Eric Reagan says

      December 6, 2015 at 9:20 pm

      Hey Rafael,

      I’m not going to break down piercing the corporate veil jurisprudence here (it varies from state to state) but it’s a common practice to go after an owner. It often fails – but it does apply pressure to the individual in a manner that can be motivation to settle.

      One reasonable avenue in Canon’s approach may be to involve him solely for the injunction (i.e., prohibition against future conduct). Say Canon wins an injunction against F&E… what’s to stop the individual from forming another LLC and continuing the practices there? I think that’s probably a fair concern.

      However, if Canon could hold onto him for damages though, that puts Canon in a strong position for negotiations to settle before trial. I would wager that whenever F&E’s Answer (that’s the response to the Complaint) is filed that it will seek to remove him individually from the law suit because Canon has only alleged facts of wrongdoing against the company.

      It is a bit of legal gamesmanship but the stakes are still pretty high.

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