the first to unite the two essential components of modern trademarks--a public
association of a mark with a known source of origin and a channeling of
economic returns to that origin--into a single effective device. Schechter's
musings that the mark was compulsory, or the user collective, missed this point.
Revealingly, Schechter defined "goodwill" simply as "the expectation of the
trader or manufacturer that he will be undisturbed in the custom or trade which
the merits of his wares or the ingenuity of his advertising have attracted from
the consuming public."83 The other component of goodwill--the expectation
of the consuming public--was absent from his theoretical framework and thus
could not provide him with a tool to distinguish certification marks from other
mandatory emblems. For Schechter, the role of public understanding in trade-
mark rights was thus a "somewhat metaphysical question,"
84 with little bearing
on practical issues. The influence of Schechter's writings on the "quality
assurance" function of trademark law,
85 which has endured to the present day,
has been an unfortunate source of confusion on the nature of trademark
"purposes" and "functions," as this study will later suggest.
For modern trademark lawyers, the problem of parallel importation has
transformed the law's latent uncertainty on the balance between public and
private interests into a concrete and vexing issue, demanding a clear answer.
As the following chapters will attempt to show, this issue is but one of several
important factors which governed the development of trademarks at the outset
and which continue to exert their influence in modern attempts to deal with
The term "gray market" generally has been used to indicate the doubtful legality of
parallel importation, which some see as lying in the "fringes of legality," Osawa & Co. v. B
& H Photo, 589 F. Supp. 1163, 1170 (S.D.N.Y. 1984), somewhere between a clearly proper
competitive activity and an illegal "black market." See El Greco Leather Products Co. v. Shoe
World, Inc., 599 F. Supp. 1380,1397 (E.D.N.Y. 1984), rev'd, 806 F.2d 392 (2d Cir. 1986); R. Staaf
, Law and Economics of the International Gray Market: Quality Assurance. Free-Riding
and Passing Off, 4 INTELL. PROP. J. 191, 192 ( 1988). Although this study will often use the
two terms interchangeably for convenience, it should be noted that the gray market actually
encompasses more than just parallel importation. The U.S. trademark owner might not, for
example, import the goods which it distributes, but might nevertheless suffer from a third
party's importation of genuine goods bearing its trademark. In this instance of gray market
activity, no "parallel" importation has occurred, because only one party imports the goods. See Vivitar Corp. v. United States, 761 F.2d 1552, 1555 (Fed. Cir. 1985). cert. denied, 474 U.S.1055 ( 1986). In truth, neither "parallel importation" nor "gray market" is an entirely
satisfactory term: one is incomplete and the other is value-laden. On the "myriad" variations
of the gray market, see John A. Young Jr., The Gray Market Case: Trademark Rights v.
Consumer Interests, 61 NOTRE DAME L. Rev. 838, 838 n. 1 ( 1986).
Stuart Taylor Jr., "High Court Backs Selling of Imports on Gray Market," N.Y.
TIMES, June 1, 1988, at 6, col. 3. Cf. Stephen Wermiel, Justices Uphold Customs Rules on
Gray Market, WALL ST. J., June 1. 1988, at 2, col. 2 ($6 billion estimate).