We are continuing to dig into Canon USA’s case against gray market retailers here in the US. Specifically, Canon is targeting popular gray market retailers Get It Digital, LLC, All New Shop, LLC and F & E Trading, LLC (aka Big Value, Inc., Electronics Valley and others) as they cut into Canon USA’s profit margin by importing Canon cameras direct from Japan and selling them in the US.
However, this isn’t the first time a camera manufacturer has gone after a retailer selling gray market cameras on ebay. In fact, I recently discovered that F & E Trading has been sued under very similar circumstances before. The outcome of that lawsuit could foreshadow what is the beginning of the end for gray market cameras in the US.
Back in July 2014, Olympus Imaging America, Inc. (now Olympus America, Inc.) sued F & E Trading in federal court, alleging trademark infringement and Massachusetts state law violations for unfair and deceptive business practices and tortious interference with contract.
The alleged facts against F & E Trading were much milder than what Canon alleges in the current lawsuit. The crux of Olympus’ case centered around simply importing cameras from Asia for sale in the US, which allegedly violated trademark law. The legitimacy of such legal conclusions in Olympus’ lawsuit are somewhat questionable; however, those claims were not challenged.
In the Olympus lawsuit, F & E Trading never filed a response and settled out of court.
I obtained a copy of the settlement agreement, which provides a truer look into what exactly exclusive US distributors like Olympus America or Canon USA are really interested in.
Key Terms of Olympus America and F & E Trading Settlement Agreement
- F&E agrees not to sell, advertise, purchase, import, ship, or in any way trade in Olympus products.
- F&E is given about one month to sell off current stock of Olympus products.
- F&E agrees not to disseminate or publish false or deceptive statements about Olympus or its products.
- F&E agrees to pay an unknown amount of money to Olympus.
- F&E agrees to provide Olympus with all sources and contact info of sources that relate to its purchase of Olympus products over the previous two years.
- F&E agrees to provide a list of Olympus inventory, along with serial numbers for E-M1, E-M10 and Stylus 1 cameras.
- F&E agrees to provide a list of any and all affiliates related to F&E.
- The settlement agreement is binding on F&E’s principals, trustees, directors, officers, employees, parent companies and affiliates.
- Strict confidentiality of the terms of the settlement agreement by both F&E and Olympus.
These terms are just plain awful for F&E’s business as a gray market importer. Obviously, this agreement killed its retail business as it related to Olympus cameras and other products.
As of today, none of the current companies involved in lawsuits with Canon USA offer any Olympus products for sale online.
This is exactly what Canon USA is after in its lawsuits against F&E, Get It Digital, LLC and All New Shop, LLC. If Canon wins or can pressure these companies hard enough through protracted litigation, we will see gray market sales dry up – at least to the extent that they exist now.
Interesting parallels that you’ve uncovered. Canon’s business seems larger than Olympus is/was, even at the time these restrictions were put in place. That being said, I do not see this as a “good” sign of things to come for the Canon photography business segment. They obviously are trying to increase their profit margins and I’m not sure the results of this move will be “enough” of an impact for the shareholders and execs.
If that’s the case, then what’s the move? Increasing prices from a company that is already pricing themselves at the top of the market across their photo/video business? Maybe becoming more innovative in their photo/video tech may lead to more of those desired end-results (profits)…
Mark Goldberg says
I personally avoid buying gray-market merchandise either new or used and ask about US product legitimacy on possible eBay purchases. At the same time, if gray market retailers disappear, this source of competition will disappear and we may see higher prices / lesser service.
Ian Rivlin says
I believe in a free market. The fact that Olympus can stifle another company selling the same product that Olympus (US) is offering seems to violate natural justice and all anti-trust laws. Canon want to rip the U.S. consumer off and the courts are complicit in perpetuating this outrage.