Is It Trademark Infringement To Resell A Product You Legally Bought?

from the here-we-go-again... dept

It seems like we have a few of these cases every year or so, where some company that tries to maintain strict control over its distribution channels freaks out about people reselling products online. A few years ago it was a shampoo company that said no one could resell their shampoo bottles. Now, it’s the famed cosmetics firm Mary Kay, who is claiming that an online retailer is violating its trademark.

The details of the case are pretty interesting. Basically, Mary Kay requires its “independent” distributors buy a certain amount of product every month to sell — and the amount required is often a lot more than they can reasonably expect to sell. So, one former Mary Kay distributor set up a pretty good business in buying the “remnant” inventory from others at lower prices (better than being stuck with it completely) and then reselling it online. It’s basically arbitraging the inefficiencies set up by Mary Kay’s ridiculous system that pushes excess product onto its distributors.

But, of course, Mary Kay doesn’t like any of this (despite the fact that it still gets paid for its product) — and, in theory it should have no case due to the always popular first sale doctrine (i.e., you can resell stuff you bought). Except, Mary Kay is trying to get around this by claiming that the online seller’s goods are “materially different” and thus first sale doesn’t apply. Why are the products materially different? Apparently, they’re old, expired and not supported any more — which doesn’t necessarily seem to be “materially different,” but perhaps a judge will find otherwise.

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Companies: mary kay

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Comments on “Is It Trademark Infringement To Resell A Product You Legally Bought?”

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Dustin (profile) says:

Re: Re: Re: Re:

Any time you have a main business with “independent” agents purchasing bulk quantities and then trying to sell them off you’re dealing with a pyramid scam. Just because it’s 45 years running doesn’t belay the fact. Ever heard of Amway? Quixtar? Just because it’s lucrative and people are rubes doesn’t mean you’re a fly-by-night operation. It simply means you need to have a large pool of rubes to pick from when you burn through your current batch.

Anonymous Coward says:

Bad Business Practices

Practices like that will ruin their independent sellers.

A couple of thoughts:
I know of one woman who sells Mary Kay cosmetics who actually turns a profit. The whole thing sounds like Amway to me (an ounce of success stories with a ton of folks who pay, realize they can’t sell the products, and … ).

Unlike Amway … at least from the perspective of one wife of one commentator … their products are great. My wife has very sensitive skin and for some reason, their cosmetics are the only things she’s found that don’t cause problems for her. They’re not perfect, but she likes to wear makeup and she can actually wear this stuff for more than an hour.

Assuming my wife’s opinion is accurate, they should focus on getting their products out in the hands of as many people as possible because if they really are that good, the secondary market (which may have a more limited selection) could increase sales in the primary market.

Anonymous Coward says:

Never take marketing advice from lawyers

From what little I know, an expiration date is strictly advisory, has no legal binding.

Sellers are not required to adhere to it, nor do consumers need to pay attention to it.

They can try trademark, but I think they’d have to prove the date is, in any way, meaningful to their brand?

Do they really want to run the risk that people find out that the reason for the date is to get them to throw out perfectly good product.

It’s too late now, but they should have “reformulated” their products so they don’t expire. Not they’re going to piss off sellers and buyers of their product. oh well….

David says:

This article is full of lies

Anyone selling to someone who has the intention of reselling their products through a retail establishment online or not is violating the contract they signed with Mary Kay. Willful violation of the contract is what has MK all upset over. Selling these products this way hurts the honest Mary Kay sales consultants.

Dan (profile) says:

Contract law issue

I think David (#18) is right. This is fundamentally a contract law issue, not a trademark law issue.

If this were a copyright matter — and it may be considering that product labels are involved — then a contract provision in the agreement between Mary Kay and the independent distributor that proscribes the resale of the purchased items would trump the “first sale” doctrine. See at pages 655-56.

I see no reason why the same principle should not apply in the trademark context as well.

In short, Mary Kay distributors may be breaching their agreements with Mary Kay by wholesaling their unsold product.

The question, however, is whether Mary Kay has a cause of action against the purchaser of those products bought at wholesale. I doubt it. But maybe.

Anonymous Coward says:

Mary Kay

I just read this article and wanted to clear something up. I, personally, am an independent beauty consultant with Mary Kay, and have been for over 7 years. In this article it states that the company forces it’s consultants to by an unrealistic amount of product to turn around and resale each month. This simply is not true.
The Mary Kay opportunity is a great one for those who are looking for an alternate avenue of income. The only requirement is that consultants need purchase $200 in wholesale dollars PER calendar year to stay active. So, you get $400 worth of products for only $200. And that is per year, not per month. And, if you fail to do this, it is only $20 to rejoin with Mary Kay. The company also gives a 90% money back guarantee for those consultants who decide that Mary Kay is not for them-which means the company itself takes a 90% loss risk when they allow a new person to enter into a contract with them. They will take back any product the consultant does not sell, and return them 90% of the money they spent on their products.
Mary Kay is a great company to be a part of and they truly do know how to treat their consultants. I have found that the only people who are disgruntled about the business are the ones who are not willing to follow the rules, which there are not many of. I am not writing this to “recruit people” for Mary Kay, I simply want the truth to be known that it is a good company and they do treat people right.

MDR says:

Re: Mary Kay

KUDOS! I, too, am an Independent Beauty Consultant, and it is a very rewarding career. I was going to point out the errors of the article, but you did it so well. One note I want to add – the other group of people who complain are the ones who chose to buy more than they needed to (or could afford) or didn’t work their business to sell their product, just as anyone in sales would have to do. We’re not #1 in America for nothing!

awesomesunshine says:

Well, as far as I am concern and know..once bought, you totally own that product and basically have the liberty to do whatever you wish with it. I believe that “3rd party selling” is crap because the product is basically paid the amount including taxes and such, so I don’t see why you can’t resell the product.

Mary Kay ALWAYS has issues..why be an MLM company then? If you need to sell the items to make a profit or fulfill the monthly expectations, then you should go all out to market and sell it. Plus, as far as I know, MK does not accept EXPIRED PRODUCTS back..

Misleading says:

Mary Kay

It is true that you only have to sell $200 a year but it is misleading. If you want to order at a discount rate then you have to have an order of $200 every 2 months and that just went up to $250. I also do not agree with initial $600 in product order. I do sell Mary Kay products but I have a crap load of stuff I can’t sell from this initial product order they ordered for me. I would love to get rid of it and have only what my customers order.

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