brand protection attorney

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.

Effective Unauthorized Seller Removal and E-Commerce Channel Management

 

Understand how providing services or benefits with products can fight off First Sale Doctrine claims with the Material Difference exception to the Lanham Act.

 

The Lanham Act is a statute that provides trademark owners with rights to protect their intellectual property with trademark infringement claims. 

 

For a successful trademark infringement claim to be made, the trademark owner must show that:

(1) they own the valid trademark,
(2) the defendant used the trademark in commerce without the trademark owner’s authorization, and
(3), the defendant’s unauthorized use of the trademark created a “likelihood of consumer confusion.”

 

However, when it comes to removing unauthorized sellers from Amazon and other platforms, the First Sale Doctrine provides a defense to the trademark infringement.

 

It states that any person legally possessing a product has the right to resell that product without authorization from the trademark owner.

 

So how do brand owners beat the First Sale Doctrine to successfully remove unauthorized sellers from their online listings? By taking advantage of the “Material Difference Exceptions” to the First Sale Doctrine.

 

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.

 

It is important to recognize that Material Differences DO NOT have to be physical differences between products sold by unauthorized e-commerce sellers.

 

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.

 

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.

 

Just like with Quality Controls, the Warranty and Guarantee exception to the First Sale Doctrine makes sense for brands and consumers. 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

Material Difference - Brand Protection Attorneys

If you would like to know more about how to legally remove unauthorized sellers from your brand’s listing on Amazon or other e-commerce platforms, please call 212-256-1109

Copyright 2022 – Rosenbaum, Famularo & Segall, P.C., the law firm behind Amazon Sellers Lawyer – All Rights Reserved – New York – Illinois