The Mark of a Resold Good

Abstract

Over the past ten years, the Internet has revolutionized the resale market ― casual resellers have migrated from garage sales, swap meets, and classified ads, to eBay and Craigslist, turning hobbies into lucrative businesses. This has affected the sales of new goods and troubled manufacturers, who seek to curtail the growth of this secondary market.

Most of these on-line resales should be protected by the first-sale doctrine, a well-known defense to infringement claims that applies across patent, copyright, and trademark law. Simply stated, once a manufacturer sells a product, it may not interfere with secondary sales of that product. Yet in an effort to stifle independent resellers, manufacturers are increasingly relying on spurious claims of trademark infringement. Specifically, they claim the reseller is causing initial source or sponsorship confusion based on the distribution channel, even though there is no confusion as to the source of the genuine good. Small resellers are faced with either defending themselves in court or ceasing operations.

We argue that courts are weakening of the first-sale doctrine’s function of limiting manufacturers’ power to control alternative distribution channels of genuine goods. We assert that, in the context of the Internet secondary market, whether the distributor is affiliated with the manufacturer is irrelevant, as long as the goods are genuine and the reseller disclaims any association with the mark owner. Courts should apply a presumption of no affiliation between the reseller and the manufacturer, and actual deception should be required for any Lanham Act claim. We also propose a legislative strengthening of the trademark first-sale doctrine as applied to on-line sales so that it more closely resembles the doctrine’s application in a brick-and-mortar setting.

Keywords: trademark, resold goods