Fair Use, First Sale Doctrine & Re-selling Branded Goods
Our Virginia Business Lawyers are frequently confronted with the following scenario: You want to sell branded clothing, or other branded goods that you buy from the original or post-original owners and don’t want to be sued by the original makers of the goods.
In the United States, trademark law includes a fair use defense, sometimes called “trademark fair use.” In the case of re-selling branded goods, you have the defense called “Nominative Fair Use”.
Your use will not infringe upon the property owner’s rights because you will not be claiming that you are the original manufacturer. If you find a Casio® brand printer and wish to resell it, you are permitted to advertise “Casio printer for sale”, as long as you don’t claim to have any business relationship to the owner of the mark. The primary principal to keep in mind is whether there is going to be any confusion among your customers as to the source of origin.
The affirmative fair use defense is codified in 15 U.S.C. §1115(b)(4) which explains that proof of infringement can be defeated by showing that the use is used only in good faith to describe the goods. In our case, your description of the printer for sale, by naming the manufacturer is used only to describe the goods and not used to fool the public into believing that you, yourself or your company is a Casio company. It is the plaintiff that bears the burden of proving a likelihood of confusion. Therefore, if you can show that your customers are confused as to who you are and that you are not affiliated with the original manufacturer, you may claim the Nominative Fair Use defense.
First Sale Doctrine
Under this principle, downstream resellers should be free to resell legitimate goods at whatever price they want, and be free to inform the public of their availability. In the case of Mary Kay, Inc. v. Weber (2009 WL 426470 (N.D. Tex. Feb. 20, 2009), the defendant, came a bit too close to the sun when they created a system to sell Mary Kay cosmetics that they purchased from Mary Kay distributors who were unable to sell those products.
The Defendant Weber, had been an independent salesperson for Mary Kay, technically called an Independent Beauty Consultant (“IBC”). As an IBC, she was required to purchase a minimum of $200.00 of Mary Kay products and sell those to her own clients. This was a task she was unable to attain, resulting in her losing her status as an IBC, and leaving her with unsold Mary Kay product on her hands. She began selling those products on eBay, and then started buying Mary Kay products from other people and re-selling them. Weber then created a website called “marykay1stop” (later changed to “touchofpink.com”)
When the First Sale Doctrine May Not be Claimed
The infringement suit which followed claimed that Weber could not defend itself claiming any First Sale doctrine because they were materially different as they were expired, they did not carry the same product guarantee and they were old, used, discontinued or otherwise defective.
However, the defendant claimed the defense of nominative fair use. Under that defense they were permitted to make such use as necessary as long there was no implied sponsorship or affiliation.
The court did find that the defendant went beyond permissible use. It determined that some of the ads such as “Mary Kay Sale 50% off” could imply Mary Kay sponsorship. It also found that ‘touchofpink.com’ was infringing upon the plaintiff’s rights.
Ultimately, Weber was enjoined from promoting any Mary Kay products using the name “Touch of Pink Cosmetics” or “MaryKay1Stop, from selling any products that were beyond their shelf life or expiration date, from revealing to customers that she was a former IBC, or selling any Mary Kay products in a manner suggesting endorsement or sponsorship by Mary Kay.
The moral of the story is perhaps, that if you want to resell branded items make as little use as possible of the brand itself, lest you be accused of claiming an affiliation with the brand owners. If you have a Trademark related question that you would like to consult with us about, then please call or email us at ADMIN at Moghullaw.com for help. Please note that we do not offer free consults.
