Learn About The Material Difference Exception:

Effective Unauthorized Seller Removal & eCommerce Channel Management

For ultimate brand protection on third-party seller platforms:

You need a strong legal basis to shut down unauthorized sellers.

Protect your brand, reputation, and intellectual property rights.

In the United States, the most common claim used to protect brands is the federal Lanham Act.

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 consequently,
(3) the unauthorized use of the trademark created a “likelihood of consumer confusion.”

However, as many brands who deal with unauthorized sellers know, infringement claims are overcome by the First Sale Doctrine.

Accordingly, this doctrine provides protection to unauthorized sellers as it allows the resale of authentic products by anyone who has them in their possession.

While this may sound like a closed door for brands seeking to eliminate unauthorized sellers, there’s good news…

There are 2 major exceptions to the First Sale Doctrine which would allow you to take brand protection to a new level.

Unauthorized sellers are not provided protections when they sell products materially different from a manufacturer’s condition.

Products are considered materially different from a manufacturer’s when they’re sold without the same quality controls & benefits.

Likewise, products sold through a brand’s authorized distribution channel will have warranties, guarantees, or other services.

Thus, when there are differences in quality controls between items sold by authorized vs. unauthorized sellers, the First Sale Doctrine does not apply.

Product quality controls are a simple and effective way to protect your brand IP.

Stop unauthorized sellers from stealing your sales, infringing on your rights, and damaging your brand’s reputation.

For this exception to the First Sale Doctrine, the trademark owner must show that they have:

(1) established legitimate quality control procedures
(2) follow these procedures, and furthermore that
(3) the unauthorized seller does not follow these procedures, which has effectively decreased the value of the trademark and created a likelihood of consumer confusion.

Materially difference can vary, but generally, if products from authorized sources comes with certain pre & post-sale benefits / services (such as quality controls/warranties/guarantees, those products sold by unauthorized sellers, without those benefits are considered materially different from manufacturer’s condition.

In short, because the trademark owner is the sole owner of the trademark, when legitimate quality controls are implemented & documented, they have the ability to decide exactly who sells their products, where they’re sold, and the condition the products are sold in.

This is because an unauthorized seller does not and cannot offer the quality controls that the trademark owner provides, the First Sale Doctrine does not apply.

How does the quality control & material difference exceptions lead to effective brand protection?

By actively enforcing your intellectual property rights and working with the right law firm to implement / enforce these arguments, brands gain the tools needed to go after unauthorized sellers who pose a threat to their business interests effectively, but also in line with the law.

The law firm of Rosenbaum, Famularo & Segall, P.C. prides itself on its dedicated practice of “Brand Protection, the Right Way.”

The quality control exception to the First Sale Doctrine just makes sense.

Brand owners should be able to control how their products are sold to protect the value & good will associated with their trademark & brand identity.

Additionally, consumers appreciate & recognize the difference between a product sold by a reputable seller vs. an unauthorized seller.

Brands know that the customer experience is ruined when items arrive damaged / defective due to distribution leaks & unauthorized sales.