Discussion:
New York
My question involves the sale of AUTHENTIC trademarked clothing through my online clothing store. I will use "Hard Rock Cafe" as an example since it closely parallels the actual items and circumstances in question.
I own an online clothing store and I was able to obtain a large amount of "Hard Rock Cafe" clothing items (again, example only, not the real subject!). This is the actual legitimate merchandise, NOT knock-offs.
I am not a franchisee of "Hard Rock Cafe." None of the "Hard Rock Cafe's" own photos or original product descriptions have been used. I've personally modeled and photographed every clothing item I have in possession and written each product description posted on the website.
Furthermore, I've put a disclaimer at the top of my "Hard Rock Cafe" clothing page stating that my company is not a franchisee, authorized outlet, or licensee of "Hard Rock Cafe." I've even gone so far as to include this disclaimer in each individual product description. (I've been happy to do so, it helps my keyword density for search engine placement, yuk-yuk!)
I've done some research and it seems there's a legal precedent relating to this subject called the "First Sale Doctrine." Although the only information I've been able to find related to this subject involves intellectual property" as opposed to physical merchandise.
I would like feedback of potential pitfalls or problems that could be encountered, if any. Also, suggestions or examples for a comprehensive disclaimer, for that matter, is a disclaimer even necessary?
Thanks
Answer:
I've done some research and it seems there's a legal precedent relating to this subject called the "First Sale Doctrine." Although the only information I've been able to find related to this subject involves intellectual property" as opposed to physical merchandise. What the "first sale doctrine" says is that once a sale has been made to a consumer, the IP owner's rights are "exhausted" with respect to the actual object sold. For example, the copyright owner of a book has the right to control distribution of the book; however, once you go to Barnes & Noble and buy a copy of ther book, the copyright owner can no longer control distribution of THAT particular copy of the book -- that's the "first sale" doctrine.
However -- not ALL of the IP owner's rights are exhausted on "first sale" of a good. A trademark owner can still protect their trademark.
In your case, IF you acquired these t-shirts LEGALLY (i.e., you purchased them at retail from an authorized dealer, or from someone otherwise authorized to sell them to you), then, in principle, you could resell the shirts legally under the first-sale doctrine. HOWEVER -- if you purchased these shirts "wholesale" and not "retail," you need to be absolutely sure that the wholesaler you got them from was authorized to sell them wholesale to another. The reason is this -- the first sale doctrine only applies to LAWFUL transfers. Many times a trademark holder will sell to a retailer with the stipulation that the goods only be sold to "retail" customers -- if the retailer then sells their entire lot to another reseller, that would be in violation of their agreement, and the second retailer may not be protected by the "first sale" doctrine, because the "first sale" was not a lawful or authorized sale.
You need to make sure that everything is legit in the sale of the goods to you. However, as a practical matter, you still may have some problems even if the goods are legit. If you set up a storefront to sell the trademarked shirts, you are almost gauranteed to attract the attention of the trademark holder, who may sue you to protect their mark. Even if you are in the right, you'll need a lawyer, and that can get expensive.
Finally, even if everything else is kosher, you may STILL have a problem if someone can type in "hard Rock T-Shirt" in a search engine and end up at your page -- the use of a trademarked name to drive traffic to your site infringes (usually) on the trademark holder's rights -- if a customer is "confused" as to whether they are looking at an official licensee or not, there is infringement. The disclaimers on your site are insufficient, as "confusion" has already occured by the time the user gets to your site.
Your best bet, to avoid trouble down the road, is to sit down with a local attorney who has experience in trademark matters and ensure that what you are doing is on the up-and-up. This trademark stuff can get complicated in a hurry.
But the reality is -- at the end of the day, if the trademark holder is a big company and decides to take you on, how hard are you willing to fight -- and, more importantly, how much money are you willing to spend to fight it?
Answer:
That was a very thorough reply, Divgradcurl. Thank you for your effort. Your point about the wholesale aspect is an issue to consider. Initially, I purchased the items through a franchisee at a huge discount. The franchisee manager made money on the deal so perhaps the term "wholesale" could be debated.
Several weeks after posting the items on the website I refused a registered mail delivery of a large envelope with the return address of the law firm in the same state as the franchise headquarters. (Rule number 1- Never sign for any unknown registered documents, especially with a law firm in the return address).
I immediately plastered disclaimers on anything associated with the clothing and removed their logo which had been included in a separate information page as part of an editorial review of the franchise. After doing that, I've never received any more registered law firm correspondance and it's been almost a year. Again, I can't be absolutely certain the initial letter I refused was related to this subject but it is a strong coincidence.
Now getting back to my source, here's where it gets a little wild. There was a back-order on my initial order through the franchisee. For some reason the franchisee had the merchandise contractor drop ship it directly to me. Somehow, I ended up on the merchandise contractor's mailing list as a franchise through no action or manipulation on my part. I've been getting mail solicitations with a mailing label addressed to the franchise name at my address.
I needed more merchandise, so I thought "What the heck" and gave them a huge order under my name. I did not falsify anything and faxed a list of items after speaking to them briefly by phone. The faxed order was submitted under my name, address and paid for with my personal credit card with absolutely no mention of the franchise. I monitored my credit card statement online for five days without the charge appearing so I thought it was a no-go but then the charge showed-up. They even shipped a sizable back-order separately two weeks later.
As far as I'm concerned, they solicited me for a sale, I took them up on their offer and paid for it fair and square. I was not asked to verify any franchise related credentials. For all I know, they may be tacitly allowing it to go through, feigning ignorance because it was a VERY hefty order for this market niche. Over the course of a year, I could probably become one of their largest accounts, no individual franchise could beat my volume and only a couple of the multiple location franchise buyers will do as much.
Again, they operate as a designated merchandise contractor for the franchise headquarters. Furthermore, there's been turmoil and change of ownership in the franchise corporation and this may have had something to do with the sale going through.
On a side note, there is a common misconception that "brick and mortar" stores can't compete with online stores. This simply is not the case, in fact, I can't compete with physical stores where they can simply walk in, try something on, and pay for the same amount or less for it without shipping charges, and have it instantly. In fact, what makes my business successful is lack of availability. The number one comment I hear from my customers is "I can't find this stuff anywhere around here." (refering to the type of specialty apparel I sell, not just the franchise at issue here).
You seem to have played down the importance of my disclaimers. Do you believe they offer little protection? If they are of some value, can you offer some suggestions for points to include.
Thanks again
Answer:
You seem to have played down the importance of my disclaimers. Do you believe they offer little protection? If they are of some value, can you offer some suggestions for points to include. The disclaimers are of little or no relevance here. If someone wants to come after you for trademark infringement, if they can type their trademark name into a search engine and end up at your site, then that is quite likely enough to show "confusion" sufficient to sustain a cause of action for infringement. They might not win, of course, but there is a whole line of cases that suggest that by the time you get to the site, "confusion" has already occured, and any disclaimer on the site is too little, too late.
If you are, in fact, such a big customer, you might want to see what it might take to become a legitimate franchisee -- that would certainly save you some worry down the road.
As far as the rest of your post is concerned, whether or not what you are doing is kosher with the trademark holder is dependent on the trademark holder themselves and what kind of contractual obligations they place on their wholesalers and franchisees.