Is Motorola Trying To Ban Reselling Phones?

from the hopefully-not dept

We've seen video game execs freaking out about the second-hand sales market, and apparently that may be expanding to other arenas. The Register has an unnamed source (so make of that what you will) claiming that Motorola is asking people to sign contracts on a new phone that ban the buyer from reselling the phone to anyone, other than back to the manufacturer. Of course, this is an economically dumb argument. The resale market helps add value to the primary market, and allows the company to charge more for its product initially. As Mathew Ingram points out, some are suggesting that this move would violate the first sale doctrine, though that could depend on a variety of factors. I would imagine that the terms could establish the situation as a "lease" of the phone rather than a purchase, but that might be difficult to get the courts to accept. Also, my understanding of first sale doctrine was that it only applied to intellectual property -- not physical goods, so I'm not sure it would really apply here. Either way, it would seem to be dumb, whether or not it's legal. If you want to decrease interest in your product, adding such a clause seems like a reasonable way to do so.

Filed Under: economics, first sale, phones, resale
Companies: motorola


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  1. identicon
    Jack, 4 Nov 2008 @ 1:13pm

    Things to ponder?

    Motorola has always produced a quality product. In this day and age with our present economic condition putting restraints on a buyer about reselling a purchased product will only pull market shares away from that company no matter who it is. So if the pending information is true than Motorola maybe performing economic suicide. But I am sure that this has been all played out to maximize profits, so only sales will tell if this is a good decision or a costly endeavor. Will Motorola be able to financially overcome the fallout from this management decision?.

    In the cell phone industry, service providers choose the types of phones that are being used, thus the suppliers also have a controlling interest in this piece of the money pie. This is a very interesting financial endeavor which is taking place. This will also fall over into other markets if successful.

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