CABILLY & CO. BLOG

First Sale Doctrine

You received an ominous letter from a trademark owner (or worse, from their legal representative), claiming that you have violated their protected registered trademark rights, by selling their product on Amazon.

If the above scenario seems familiar, have no fear! You are not alone. Depending on the circumstances, you are probably clear of all wrongdoing!

No right is absolute! One such limit is called the “First Sale Doctrine”

No right is absolute. The rights provided by trademark registration have their limits. One such limit is called the “First Sale Doctrine”.

According to the First Sale Doctrine, anyone who purchases a branded item has a right to resell that same item in an unchanged state. That means that, if all you do is simply: stock, display and resell a genuine item bearing a trademark, in an unchanged state, while maintaining its quality – you are generally protected against trademark infringements claims.

The rationale behind this “First Sale Doctrine”

The logic behind this doctrine is to allow a flow of commerce. The rights owner already enjoyed the proceeds of the first sale of the item bearing its trademark and cannot continue to benefit from the sale of the same item twice. Once it was sold by the rights owner, the said owner loses the right to control the downstream sales of the item.

However, there are two exceptions to the application of the first sale doctrine that Amazon sellers must be aware of: Material Differences and Consumer Confusion.

Material Differences refer to the appearance of the product that would ultimately result in Consumer Confusion (such as different packaging, branding and markings, etc.). Material Differences can also refer to certain product characteristics, like quality control standards, satisfaction guarantees, money back guarantees and other warranties that must be offered and implemented by the sellers for products to be considered genuine on Amazon.

Some rights owners are aware of this doctrine and its exceptions, and do not “flat out” claim that you do not have the right to resell their brand. Rather, they try to maneuver around the issue, by using the exceptions. A popular ruse includes claiming that they cannot “verify” that you have not modified their product (or maintained their quality standards) during the resale, thereafter, requesting additional information. This may very well be a “trick” to cause you to reveal the identity of your supplier, that might be in breach of contract with the rights owner.

As we see it, there are 2 ways to respond such this letter:

Provide the required information to prove your source/origin of the product, and that you are maintaining their standards of quality. With this option you will need to divulge your supplier information.
Reply by quoting the “First Sale Doctrine“, maintaining that they have no rights in the resale of the genuine product (ignoring their request to reveal the supplier).

We recommend using legal services when applying both options – an answer from a legal representative is usually more effective.

Legal Disclaimer: The articles published on our platform are for informational purposes only and do not constitute legal advice in any form. They are not intended to be a substitute for professional legal counsel. For any legal matters, it is essential to consult with us or a qualified attorney who can provide advice tailored to your specific situation. Reliance on any information provided in these articles is solely at your own risk.