NHR calls for change to parallel importation laws
Refurbished kit dealer joins trade body in calling for overhaul of legislation that enabled Oracle to defeat M-Tech
Refurbished kit giant Network Hardware Resale (NHR) has joined calls for an overhaul of the laws that allow vendors to be the first to bring their kit into the EU.
The legislation, which dates back 40 years and was famously used by Levi's to stop Tesco importing its jeans, was recently affirmed when Oracle defeated UK parallel importer M-Tech Data in the Supreme Court.
Talking to ChannelWeb, NHR chief executive Mike Sheldon branded the legislation "silly" and "unfairly protectionist".
He claimed the European Economic Area's (EEA's) interpretation of trademark law had created two global markets for goods: Europe and everywhere else.
"Unless you believe that making Cisco, Juniper and Alcatel more money in Europe by fleecing the European consumer is a good thing, the law should be changed," Sheldon (pictured) said.
"I think a fair and modern evolution of that law would be to say that manufacturers have the first right to the first sale of their product somewhere, once - they get the right the first time. But the way Europe has interpreted the law over the years is that they get the right to the first sale in Europe even if it has been sold multiple times somewhere else. I think that is an unfair and unneeded protectionist sentiment to the manufacturer."
Growing calls
Joseph Marion, president of the Association of Computer Dealers International (ASCDI), which represents 400 traders of IT and telecoms kit globally, said his organisation would press for a change, or at least a clarification, of the laws concerning parallel importation.
Taken to its natural conclusion, the legislation could mean honest consumers selling iPhones on eBay could be breaking the law, Marion said.
"It is outdated and did not anticipate the international trade community we have today," he told ChannelWeb. "It just creates a barrier, when everybody benefits when trade is open."
Despite US-based NHR's addition to the cause, Sheldon said the M-Tech ruling - and Cisco's more recent legal spat with UK parallel importer KX Network Solutions - had had no impact on his business as "we were already aware of the restrictions".
He argued the Cisco install base in Europe is large enough to support brokers working only within the EEA's borders, estimating it to be worth about $80bn (£49bn).
But Sheldon added: "If the law were changed it would allow us to be more liberal, particularly in terms of sharing inventory with our European office. We are a very large asset recovery company and we do multimillion-dollar buybacks every month. If we did a buyback in the US for 10,000 switches, it would certainly help me if I could ship 2,000 into Europe."
Grey market "not a disease"
Sheldon also hit out at vendors for portraying the grey market in a negative light when it is in fact a "child of their own making".
Just 10 per cent of NHR's sales come from unopened box products that have been diverted from vendors' authorised channels, with 90 per cent coming from refurbished kit.
The last-known research on the size of the grey market, from anti-grey body the Alliance for Grey Market and Counterfeit Abatement, pegged the value of grey market product at $58bn in 2007.
"I do not use the term grey much - I call it the independent or secondary market," Sheldon explained. "The secondary market is items the manufacturer or its channel has legitimately sold to someone for a fair, negotiated price and I do not think there is anything grey about that. What is often lost in the grey market discussion is that the manufacturer profited from the initial sale.
"They use the word ‘grey' because it's just a shade lighter than black, and somehow that's bad, right? To suggest that it is a disease that is out of their control is incredibly inaccurate."