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The First Sale Doctrine Protects the Right to Resell Genuine Goods

Can a trademark owner stop you from re-selling its branded good?

In other words, can Tiffany stop sellers on eBay from selling Tiffany-branded rings to purchasers who want to buy used product? (What a boon to Tiffany if you had to go to its stores to buy Tiffany-branded jewelry! But what bust for someone who wanted to sell their Tiffany ring to pay the rent!)

In general, there’s nothing that Tiffany can do to stop a resale. In trademark law terms, the reason is the “first sale” or “exhaustion” doctrine. The first sale doctrine cuts off a trademark owner’s rights after its product is first sold. In other words, once a brand owner releases its good into the marketplace, its right to control the distribution of the good is exhausted. The resale of genuine trademarked goods, even if not authorized, does not constitute trademark infringement.

However, the doctrine is limited to selling the branded item in the same condition it was in when it was first sold. That limitation protects against confusing consumers into believing a “materially” changed good was made by the trademark owner. If a good is modified, it can’t be sold bearing the original trademark. A sale that voids a manufacturer’s warranty is considered a material change. Such a good can’t be resold as being on par with a new good that carries a warranty.

The doctrine also does not apply when a branded good has been repackaged, and the notice of the repackaging is inadequate. That limitation prevents someone from buying an item in bulk and re-selling it in smaller quantities without alerting the consumer what has occurred. As with most protections under trademark law, the intent is to protect the consumer from being misled.

Resellers can advertise they’re selling new, used, or reconditioned goods bearing the trademark, such as the Tiffany seller on eBay. They just can’t imply that they are authorized resellers or have some other special relationship with the brand owner that doesn’t really exist.

It should go without saying none of this authorizes counterfeiting — the placing of a trademark on a good that suggests it was made by the trademark owner, when the good wasn’t actually made by the trademark owner.

Can anyone tell I’m preparing a talk about the first sale doctrine? That’s one of the neat things about teaching. If you’re going to teach something, you have to first learn it yourself!

Posted on February 28, 2012 by Registered CommenterMichael Atkins in | Comments3 Comments

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Reader Comments (3)

How does the first sale doctrine and copyright apply to someone who sells a Tshirt with a copyrighted image on it and someone comes along and cuts apart the Tshirt and uses the copyrighted image in a quilt that is for sale?
May 24, 2012 | Unregistered CommenterJennifer
How does de "first sale doctrine" apply at licenses contracts ?
November 27, 2012 | Unregistered CommenterAdrian Arena
So what Amazon is doing in suspending numerous sellers for "intellectual property Right" violation, is they are NOT upholding the first sale doctrine? Because they are claiming they are NOT authorized sellers.

Yes, Amazon can suspend anyone for anything, because its their site, however to claim the above violation when in fact we are just listing against "Their"(Amazon) listing(s),is in fact a violation of the "first sale doctrine", correct? They are the one committing the "Intellectual property right infringement," because they are allowing the sellers to list against their listing?
We also know that there are some grey(other) areas of concern with this as well.

We would love to hear more about this. Please contact us and let us know your thoughts.
October 5, 2014 | Unregistered CommenterTim

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