How do brand owners successfully remove unauthorized sellers from online listings?
The First Sale Doctrine Material Difference Exception For Brand Protection
How do brand owners successfully remove unauthorized sellers from online listings?
By taking advantage of Material Difference exceptions to the First Sale Doctrine.
The Lanham Act is a statute that provides trademark owners with rights to protect their intellectual property with trademark infringement claims.
(1) they own the valid trademark,
(2) the defendant used the trademark in commerce without the trademark owner’s authorization, as well as
(3), the defendant’s unauthorized use of the trademark created a “likelihood of consumer confusion.”
It states that any person legally possessing a product has the right to resell that product without authorization from the trademark owner.
When a product is “materially different” from the trademark owner’s authorized products, the First Sale Doctrine does not apply. Generally if a product from authorized sources comes with certain benefits or services, it is considered materially different from those products sold by unauthorized sellers.
The understanding of what makes a product materially different varies but is usually a low threshold to meet. Typically simple differences suffice, but the difference must be one that the consumer would recognize and appreciate such that the lack of such would confuse the customer about the origin of the products.
Courts regularly hold that products sold without a manufacturer’s warranty or guarantee are materially different from genuine products and the sale of such materially different products, therefore constitutes trademark infringement. This and other post-sale consumer benefits have been recognized by courts as constituting a material difference between authorized trademarked goods and those sold by unauthorized sellers.
Many brands adopt policies in which their established warranty or guarantee will not apply to sales on Amazon or other e-commerce platforms without valid proof of purchase from an authorized seller. By adopting, and equally as important, placing consumers on notice of such a policy, brands are in a position to remove unauthorized sellers by arguing that products sold by the unauthorized sellers do not come with the manufacturer’s warranty, therefore are not protected by the First Sale Doctrine, and thus, infringe upon the brand’s trademark.
In our article about the Quality Control Exception to the First Sale Doctrine, we explained that providing specific product knowledge to authorized sellers, supervising the storage and packing of the products, contractually restricting authorized sellers from commingling their inventory, and having direct communication with authorized sellers on consumer-safety issues are just some instances in which courts have recognized that brands have implemented legitimate Material Differences to the First Sale Doctrine in the form of Quality Controls.
Additionally, the warranty & guarantee applicability is another exception to the First Sale Doctrine that brand owners can add to their enforcement arsenal.
In these instances, products sold by unauthorized sellers are materially different from those products sold by the trademark owner and their authorized channels.
Consumers do appreciate and recognize the value of a manufacturer’s warranty or guarantee when purchasing branded items via online marketplaces. Whether unauthorized sellers are stealing your sales, damaging your brand’s reputation or both, there are solutions – the First Sale Doctrine can be defeated
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