When asserting normative fair use, the issue of concern is whether the confusion as to whether the defendant was sponsored or endorsed by the trademark owner was created by the defendant’s reference to the mark in question. On the other hand, courts usually consider a number of issues when evaluating an assertion of the descriptive fair use defense by a defendant. These considerations include the use of a trademark (1) in good faith, (2) in a descriptive manner, and (3) other than as a mark.
To move this discussion forward, we have hammered on the “First Sale Doctrine,” the fourth and final limitation on trademark protection in this post and Part VII of the miniseries.
First Sale Doctrine – Fourth Limitation on Trademark Protection
Codified at 17 U.S.C. § 109, the first sale doctrine provides that a person who knowingly purchases an item or product bearing a trademark receives the right to display, sell, or otherwise dispose of that particular item or product without incurring liability for trademark infringement. This is because it is improbable that consumers would be deceived about the origin of such a genuine item or product bearing a true trademark. This implies that a store owner who simply stocks a product and then resells that product does not incur liability for trademark infringement.
It is critical to note that it is only where the trademark owner has authorized the initial sale of a product that the first sale doctrine is applicable. The doctrine also requires the resold goods to be materially similar to those produced and sold by the trademark owner. Under the trademark law, any substantial change in the physical product itself would be considered a material difference since consumers would consider it vital in making the decision whether to buy that product or not.
This doctrine is chiefly attributable to what is referred to as the “gray market.” When it comes to profit-oriented entities, it is considered economical to purchase manufactured or processed products and goods from abroad and import them to the U.S., where they can be resold profitably at lower prices because such parallel domestic versions fetch higher prices than U.S.-made products cost in other nations. As long as the imported goods are materially similar to the domestic version, trademark law does not prohibit such sales, although the manufacturer may not have authorized them. Otherwise, the trademark law provides trademark owners with a number of statutory remedies to either rejoin the sale of such products and goods or hinder their importation if found not to be materially similar.
However, in cases where a consumer uses a genuine article and then a third party refurbishes and resells it, the material difference standard is not applicable. When evaluating such cases, courts consider the clarity of labeling on an article so that consumers are not deceived into believing that they are purchasing a new article, inasmuch as they would expect the refurbished and new article to have a material difference.
With that, we have exhausted our discussion on the four limitations of trademark protection, namely, “acquiescence,” “laches,” “fair use doctrine” (normative fair use & descriptive fair use), and “first sale doctrine.” In the next blog post and Part VIII of the series, we shall switch gears and hammer on “Trademark Ownership and Rights in the United States.”
Stay tuned for more legal guidance, training, and education. In the interim, if there are any questions or comments, please let us know at the Contact Us page!
Always rising above the bar,
Isaac T.,
Legal Writer, Author, & Publisher.