First Sale Defense Bars Trademark Infringement Where Trademarked Component Is Adequately Disclosed

A US Courtroom of Appeals for the Ninth Circuit panel vacated a grant of abstract judgment in favor of the plaintiff, holding that the primary sale doctrine applies when a trademarked product is integrated into a brand new product. Bluetooth SIG Inc. v. FCA US LLC, Case No. 21-35561 (ninth Cir. Apr. 6, 2022) (per curiam).

Bluetooth SIG administers requirements for Bluetooth expertise. SIG owns and licenses the logos beneath to product producers:

Fiat Chrysler Vehicles (FCA) makes automobiles that comprise Bluetooth-equipped head items. The pinnacle items are made by third-party suppliers which have been certified by SIG, however FCA has not taken steps to qualify the Bluetooth capabilities in its automobiles. FCA makes use of the SIG logos on its head items and publications.

SIG sued FCA underneath the Lanham Act for trademark infringement. In its protection, FCA asserted the primary sale doctrine. Underneath the doctrine, the correct of a producer to manage the distribution of its trademarked product doesn’t prolong previous the primary sale of the product. For instance, a purchaser who shares, shows and resells a producer’s product underneath a producer’s trademark violates no trademark rights underneath the Lanham Act. The district courtroom granted partial abstract judgment for SIG on the primary sale situation, discovering that the primary sale doctrine was inapplicable as a result of FCA’s conduct went past “stocking, displaying, and reselling a product.” FCA appealed.

The Ninth Circuit discovered that the decrease courtroom erred when it took a slim view of the Ninth Circuit’s 1995 choice in Sebastian Int’l, Inc. v. Longs Medicine Shops Corp., through which the Courtroom said that “it is the essence of the ‘first sale’ doctrine that a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark violates no right conferred upon the producer by the Lanham Act.” The panel famous that the Sebastian Courtroom by no means presupposed to articulate the outer bounds of the primary sale doctrine; as a substitute it merely captured the unauthorized resale of real items.

The Ninth Circuit defined that the primary sale doctrine additionally applies when a trademark is used to consult with a element integrated into a brand new finish product so long as the vendor adequately discloses how the trademarked product was integrated. The Courtroom cited to the 1925 Supreme Courtroom precedent in Prestonettes, Inc. v. Coty, which successfully extends the primary sale doctrine past the examples said in Sebastian. In Prestonettes, the Supreme Courtroom held that trademark regulation didn’t prohibit a producer from utilizing a trademark, to not point out the products, however to say that the trademarked product was a element in a product being provided as new and adjusted. The Ninth Circuit additionally famous its 1998 holding in Enesco Corp. v. Worth/Costco, through which it discovered that the primary sale doctrine protected a retailer that resold dolls in allegedly insufficient packaging to the extent the repackaging was disclosed. The Enesco Courtroom defined that if the general public was adequately knowledgeable that Worth/Costco repackaged the product and the product was subsequently broken, the general public wouldn’t be confused as to the reason for the harm.

The Ninth Circuit famous that in Prestonettes and Enesco, the main target was on the vendor’s disclosure of how a trademarked product was integrated into the brand new product and whether or not satisfactory disclosures had been made. As a result of the district courtroom by no means reached this situation, the Courtroom remanded to the decrease courtroom to handle it within the first occasion.

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