Unauthorized online resellers have become a real problem for US manufacturers. They seem to be able to sell your products for less than you do. This is because they have no overhead or advertising expenses. Some have access to grey market goods—your products sold for less in other countries and then made available to US consumers online. You might be familiar with the first sale doctrine which allows an individual who received your product as a gift but doesn’t want it, to put it up for sale on Ebay, and not be accused of trademark or copyright infringement.
- Supply chain: Mark or tag your products so that you can track back product purchased online from unauthorized resellers. Be sure to have strong language in your contracts with authorized resellers preventing them from selling to anyone other than end users.
- Copyright: If the unauthorized resellers are using your advertising text or images, then they are committing copyright infringement. The first sale doctrine protects their ability to resell the product; not to use the advertising. You don’t even have to have registered a copyright in your advertising to have a copyright, however, if you intend to sue based on this, you would need to register.
- Trademark: If the products sold by the unauthorized reseller are materially different from yours, then you have a cause of action for trademark infringement. This is because a material difference—something that the consumer would consider relevant—creates confusion over the source of the product and results in your loss of good will. What qualifies as materially different has quite a low threshold. Even though it is your genuine product in the original packaging, the difference may be that you don’t offer warranty service to anyone other than the original purchaser from an authorized dealer. If so, your warranty should make this clear. Publish your warranty on your website and post a list of all authorized dealers.
- False Advertising: The unauthorized reseller can’t state or imply that it is an authorized dealer or that the product is covered by a manufacturer’s warranty, and it if does, you have a claim under the trademark Lanham Act and state unfair competition statutes.
- Take down notices to websites: Consider sending take down notices to Amazon or Ebay to get the unauthorized listings removed. This can have limited effectiveness as persistent resellers will just create a new posting.
- Cease & Desist letters: If the unauthorized reseller is violating your copyrights or trademarks, or falsely advertising, send a cease and desist letter. While responding to a letter is voluntary, it is often effective.
Angela Washelesky focuses on trademark prosecution and marketing law. She advises clients, from small entrepreneurial start ups to large multi-national corporations, with regard to trademark clearance, trademark prosecution, international trademark strategy, trademark enforcement, compliance with advertising and trade practice laws, including substantiation of claims, sweepstakes and contests, privacy issues, and dispute resolution.