Yanmar settles ‘gray market’ lawsuit

Yanmar Company of Japan and Yanmar America Corporation have settled a lawsuit involving the alleged illegal importation of “gray market” Yanmar tractors. The Yanmar companies filed suit against Wallace International Trading Company of Anderson, Calif., and its principal, Michael D. Wallace, alleging the defendants facilitated and brokered the importation to the United States of used tractors intended for sale and use only in Japan. Products imported into a market not intended by the trademark holder and without its consent are called gray market products. Yanmar claimed the importation and sale of the gray market tractors constituted unfair competition because confusion was likely between those tractors and Yanmar tractors designed and intended for the United States market and sold through authorized Yanmar distributors. While the gray market tractors comply with Japanese safety standards, they often do not comply with U.S. safety regulations, posing a potential risk to U.S. consumers, the Yanmar entities stated in the lawsuit they filed in the U.S. District Court for the Eastern District of California. As part of the settlement, Wallace admitted to willful and intentional infringement of Yanmar’s trademarks and unfair competition. The settlement terms call for Wallace International, which had a nationwide network of more than 30 gray market dealers, to cease and desist its activities and send notices of its dissolution to its dealers.