The trademark first sale doctrine is a concept in trademark law that says that reselling goods that are covered by a trademark is permissible and is not a  trademark infringement. It allows a buyer who purchased via an authorized channel to  resell the goods without running afoul of intellectual property protections afforded to the original creator or manufacturer. The right of the trademark owner to control product distribution does not extend beyond the first sale of the product.

The trademark first sale doctrine allows a reseller to stock and resell genuine trademarked products without running afoul of the trademark laws, and courts take a very dim view of trademark owners’ attempts to circumvent the “first seller” rule. Courts have decided that there is no action for trademark infringement in the mere reselling of trademarked goods, and that unless the reseller implies some sort of relationship or false association with the trademark owner, the reselling will not itself be a trademark infringement.

What if the trademark owner stamps the product with some language that indicates that the product may only be sold by authorized resellers, will that circumvent the trademark “first sale” doctrine? No, that’s already been litigated, and the Ninth Circuit decided that since the trademark owner put the “authorized reseller only” language on the product, the trademark owner is responsible for any consumer confusion, not the reseller, so a trademark owner cannot create confusion in this manner and then claim “consumer confusion” as a way to circumvent the “first sale” doctrine.

Just like any rules, there are limits to the first sale doctrine. If the reseller merely resells the product, that is not a trademark infringement or unfair competition. But what if the reseller makes a material alteration of the trademark owner’s product in a way to alter the essential qualities of the product, and then resells it? Courts have held that if there are “material differences” between the trademark owner’s original product and the reseller’s altered product, then the reseller may be liable for trademark infringement. A difference is considered “material” if it is “any difference between the registrant’s product and the allegedly infringing gray good that consumers would likely consider to be relevant when purchasing a product.”

A trademark is used to tell consumers what to expect from a certain product or service. For example, if one walks into Nordstrom, one has a different expectation about the quality of the goods on offer than one would if one were at Wal-Mart. One has a different expectation of Chanel clothing than one does of Levi’s clothing, both in style and quality. If a consumer purchases a Nike shoe, the buyer has certain expectations of quality and performance that go along with the Nike brand reputation. A seller that materially y alters the product may compromise some of the original manufacturer’s product quality, which may compromise the look and performance of the product, such that the trademark owner’s business goodwill is damaged. When a reseller makes a material alteration, it can damage the trademark owner’s goodwill and business reputation, and is considered an infringement of the owner’s trademark rights.

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