The "first-sale doctrine" is a legal concept that applies to combination hardware and software products. Essentially it holds that the copyright of any combination of a piece of intellectual property (e.g. Cisco IOS, or the information in a textbook) and a physical product (e.g. a router or the actual copy of a textbook book) is exhausted after the first sale. [0]
Now, there are court-recognized exceptions to this rule in various circuit courts (most significantly by the 9th Circuit in Vernor v. Autodesk, SCOTUS cert denied) for digital goods under the so-called "shrink-warp licensing" exception. [1]
So given that the highest court has allowed the ruling to stand in a large circuit, yet has consistently expanded the first-sale doctrine for four decades [2], the precedent is unclear.
Cisco does rely on Vernor and its progeny as it's justification for blacklisting resold items. But that argument is unlikely to hold water outside of the software-laden 9th Circuit.
The question, stated in layman's terms, is, "To which is a Cisco router or switch more similar, a copy of Windows or an iPod?" This is an open question from a legal standpoint, and thus we must unfortunately resort to that most unreliable of legal tools: reason.
Both options are almost equally unpalatable to the Supreme Court for policy reasons. Expand the shrink-wrap exception to cover Cisco and you risk encompassing all products that contain firmware, from TVs to microwaves, and thus strangling the half-trillion dollar secondary sale market for electronic goods. Keep the exception narrow and you choke off the single largest source of revenue (all told, including gains from new purchases, maintenance contracts, and paid software updates close to $20 Billion, or 40% of annual revenue) to the government's largest IT hardware provider (over 85% of DoD in particular), leaving the government stranded with vast networks of legacy Cisco hardware with little to no new development from the company.
The existing legal precedent creates a tough needle for the Court to thread. As a result, we have the current state of limbo, and thus discussion of "grey markets," which are neither clearly legal nor clearly illegal.
[0] https://en.wikipedia.org/wiki/First-sale_doctrine
[1] https://en.wikipedia.org/wiki/Vernor_v._Autodesk,_Inc.
[2] Most recently in Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697 (U.S. Mar. 19, 2013)