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, Califonia, and its principal, Michael D. Wallace, alleging the defendants imported into the United States used tractors intended for sale and use only in Japan.

Machines 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 consumers were likely to confuse those tractors with 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. Wallace was also instructed to post a link to the settlement’s consent order, judgment and permanent injunction on the company’s former website along with a link to Yanmar’s safety notice regarding gray market machines.

For each equipment type, Yanmar lists the most important safety-related differences between gray-market machines and those designed for the U.S. market. Gray market tractors, for example, have multiple PTO speeds for operation, while U.S. market tractors generally have one speed of 540 revolutions per minute. Another difference is that safety features such as rollover protective structures, seatbelts, power take-off master shields and guards and safety start switches are not available on gray market models. Operator manuals and warning decals for gray market tractors are written only in Japanese, and are not available in English.

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In its notice, Yanmar says that in addition to tractors, used wheel loaders and excavators the company manufactured exclusively for use in Japan and are being imported into the United States. You can read the complete notice at www.yanmar.com/news/grey_tractor.pdf.