Manufacturer Claims eBaying Its Car Parts Violates "Intellectual Property Rights"

Manufacturers are getting eBay auctions canceled for selling their products “too cheaply,” reports the Consumer Law & Policy blog

Innovate! Technology shut down Colon’s auctions because he wasn’t complying with their minimum advertised pricing. Colon buys his stuff from authorized wholesalers. In responding to Colon v. Innovate! Technology, Inc., No. 07-21349 (S.D. Fla.) [big PDF], IT cited the recent Supreme Court decision, Leegin Creative Leather Products v. PSKS, which overturned an 80-year old law against price-fixing, saying, “manufacturers have the right to sell [their] products at the retail level at a minimum price.”

In Merle Norman Cosmetics v. LaBarbera, No. 07-60811 (S.D. Fla.), eBayer LaBarbera says she buys the makeup at flea markets. Merle says she buys it from salons, which violates an agreement Merle made with the salons to not sell the makeup online. Merle asserts its right to “require dealers to charge certain resale prices to promote interbrand competition,” and that “the law is well settled that manufacturers like [Merle Norman] have the right to control the manner of distribution of their products.”

Both these suits are pretty ridiculous (come one, getting sued for violating someone else’s contract??), but it just shows how the Leegin ruling gave succor to the crackpot forces of anti-competitive, anti-consumerism.

Companies Claim Right to Interfere with eBay Auctions for Charging Too Little [Consumer Law & Policy]
(Photo: Ryan Fanshaw Photography)

Comments

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  1. CumaeanSibyl says:

    Whoa. Wait, whoa. This is huge. Have we really created a loophole that makes it illegal for private individuals to resell products they’ve purchased? Can this possibly be construed in that way?

    At the very least, I hope this only applies to new products, or else garage sales are doomed.

  2. banned says:

    Thank God I live in Canada AND Ebay has a Canadian site.

  3. gorckat says:

    Its companies going after people who buy from wholesalers and then resell at a price in-between retail and wholesale.

    Hope it fails.

  4. not_seth_brundle says:

    “Both these suits are pretty ridiculous (come one, getting sued for violating someone else’s contract??)…”

    It may or may not be applicable here, it’s not so ridiculous generally–it’s called tortious interference.

  5. dbeahn says:

    @rocnrule: Yeah, cause Canada doesn’t have any issues at all. We’re all so pleased with the Canadian Company “Menu Foods” for conspiring with China to poison as many pets as they could…

  6. SBR249 says:

    So by the same token, if I was sitting in my room and my neighbor started blasting music, the RIAA can sue me for copyright infringement because I don’t have permission to listen to music someone else bought? Wonderful. I hear Canada is a nice place to live :)

  7. enm4r says:

    On a somewhat related note, how is it that Bose controls pricing? I have never seen a Bose unit on sale, store sale or company sale, and I’ve always wondered how they controlled the pricing without some rogue company undercutting everyone else to get them in their store…

  8. Steel_Pelican says:

    @enm4r: They enter into an agreement with the retailer that says “if we catch you selling this product for less than $X, we won’t sell them to you anymore.”

  9. alhypo says:

    Hmmm. I was actually unconcerned about that supreme court ruling since I thought it only applied to retailers. Not surprisingly though, the manufactures just have to take it too far.

    Well, I’m switching sides now. I say we make it explicitly illegal for manufacturers to influence price at the retail level. If that is the punishment they need so they learn to keep their grubby paws of eBay, then so be it.

    Anyway, it is the wholesalers they need to go after. And isn’t buying an item at a salon considered retail? Certainly once an item has been purchased from a retail outlet the manufacturer no longer has any influence over price.

  10. gatopeligroso says:

    @enm4r: The offer back end “Marketing Funds” as long as they agree to not advertise a product below MAP Pricing. So, a retailer can sell at whatever price they want, but Bose can take away any extra money that they are providing to the retailer for not complying.

  11. KIRZEN2007 says:

    Honestly,

    I call bullshit.

    In my current position it would make the entire world spin backwards if we could control exactly where a product can and cannot be sold. It would be of incredible use to be able to limit the sale of product in the market to authorized members of the distribution chain…

    But, as far as I know there isn’t a single legal principle that a business could use to keep someone from selling something to someone else. Other than import and export law, I don’t beleive you can actually prevent the sale of a product any more than you can prevent me giving it away, prevent me smashing it with a hammer, or prevent me trading it for a pack of cigarettes.

    Its my property, and I’ll do whatever I like with it. I’d love to see a law that an suggest otherwise, when you engage in price fixing as a manufacturer you fix ‘your’ prices, and the prices of the people you’re selling to (you force them to sell at a perticular price, or you pull the contract and refuse to sell them additional product, or hit them for breach of contract) you can control them, but controlling someone outside the process? I’d -love- to see that law. And then I’d love to see it in court.

  12. Jiminy Christmas says:

    I don’t get it. How can someone be penalized for violating the terms of a contract they’re not a party to? IANAL, but it seems to me that if the eBay seller is indeed getting products from a salon then the issue is between Merle Norman and the salon that is violating their licensing agreement.

    If indeed the eBay seller is getting products from a flea market, then WTF? There are all manner of legitimate ways products make their way to resale markets: fire sales, business liquidations, etc. Are these things all subject to preapproval now?

  13. alhypo says:

    @SBR249: Hey, that might be a great way to get the neighbors to turn down their music: threaten to turn them into the RIAA for illegal public performance.

    But just the thought of it makes me feel so dirty.

  14. Moosehawk says:

    @rocnrule: Yes, we all know you live in Canada. Thanks.

  15. Squishy says:

    BS – Mfg, sell your product for whatever you can get for it to whomever wishes to purchase it. What profit margin they can live with should be up to them. If the Mfg has a problem with a wholesale purchaser who is breaking a contract or an agreement go after the wholesaler. The mfg has NO agreement with the 3rd party and they should be able to sell it for what they wish. So much for capitalism and free enterprise.

    eBay, you’re wrong to do this!!!!

  16. enm4r says:

    @Steel_Pelican: @gatopeligroso: I figured it was something along those lines, didn’t think about the back end compensation though.

  17. banned says:

    @dbeahn:
    lol. America has NEVER been guilty of exporting tainted products! Now exactly what does that have to do with e-bay auctions!?

    @Moosehawk:
    Okay, I’m sorry, is “Thank God I don’t live in the USA” better then!?
    Excuse me for pointing out other countries have better laws sometimes. No wait, I’m wrong, the US is right 100% of the time, on every issue.

  18. What’s next corporations employing cops in a RIAAesqe fashion to enforce product pricing at yard sales?

  19. DeeJayQueue says:

    I think the crucial difference here is Used vs New products.

    If you own something and it runs out of usefulness and you decide to sell it, that’s your business and nobody can stop you from it. If you have a yard sale to purge all your old junk, that’s perfectly legal and fine.

    If however you make a business from buying and selling new product on ebay or anywhere else, then you qualify as a retailer and must abide by the regulations that wholesalers have with retailers. It doesn’t matter if you’re selling on ebay or out of your trunk or whatever. If it’s new product, you’re a retailer.

    As far as price-fixing goes, companies like Bose and Select Comfort are big names in their respective industries. They bring people into stores and they know it. This gives them the power to make contracts with retailers that say “If you lower your price past X% we will pull our product and term our agreement and you will never see us again.” The people who sell these brands are usually smaller boutique stores that only carry a couple of brands so to have a big name pull out would do serious damage to the company. That’s not to say it doesn’t happen, but it’s on the hush-hush and you’ll never see an advertisement for it.

  20. nequam says:

    I’m glad I don’t live in Canada. If I did, I’d have to spend all my time monitoring and commenting on US consumer blogs.

    Canadian: “Canada has better laws! Ha ha! Eat it, USA!”
    American: “Did you just hear something?”

  21. chimmike says:

    @CumaeanSibyl:

    um, no, it’s not about products in general. It’s about reselling products at a price much lower than what the manufacturer requires per agreements with wholesalers on NEW items.

    Don’t make issues with things that are not being specifically argued. That’s called paranoia.

  22. chimmike says:

    @DeeJayQueue:

    Thank you. You understand this issue completely.

  23. KIRZEN2007 says:

    @DeeJayQueue:

    Regardless of who or what you are, you don’t have to abide by any agreement that you haven’t made yourself because there is nothing ‘legally’ that they can do to you if you refuse to comply.

    They can’t sue you for breach of contract, because you don’t actually have a contract with them.

    They can’t refuse to sell additional product to you, because they didn’t sell it to you in the first place.

    They ‘could’ refuse to support the product if it has an after-purchase warranty, but this damages their brand name, and doesn’t really harm the third party retailer because they just finger the manufacturer, only a lawsuit from the customer to the retailer could really trigger punishment for the third party.

    This isn’t a problem with the manufacturer and the third part retailer to work out, this is a problem between the manufacturer and the distributor, because the distributor isn’t controlling the price properly.

    $20 Cost > $50 MSR > $40 on E-Bay? WON’T HAPPEN
    $20 Cost > $30 Under Table > $40 E-Bay? WORKS

  24. Geekybiker says:

    I thought the new ruling was that manufactures could legally enforce minimum price contracts. They were arguing that such contracts violated some laws, but the contracts were upheld. So that doesnt really change much from how it was before. If I have no contract with the maker of my product, and no contract with the person I bought it from, I have no obligation to sell it for a given price. However Manufactures can refuse to honor warranties for product bought outside of authorized dealers. This is just common gray market stuff that has existed forever.

  25. balthisar says:

    @DeeJayQueue: >>If however you make a business from buying and selling new product on ebay or anywhere else, then you qualify as a retailer and must abide by the regulations that wholesalers have with retailers. It doesn’t matter if you’re selling on ebay or out of your trunk or whatever. If it’s new product, you’re a retailer.

    What “regulations”? This flies completely in the face of contract law and the first sale doctrine. If you’re a retailer without a contract with the manufacturer, then there are no “regulations” because you’re permitted to dispose of your goods any way you see fit due to first sale doctrine.

  26. CapitalC says:

    I know that Pioneer Electronics, for one, will not honour the manufacturer warranty for products purchased on eBay (or dealers on their “unauthorized” list). Makes sense as a strategy to have (potentially) fewer consumers buying grey-market products.

  27. gruffydd says:

    @DeeJayQueue: Count Apple long with SelectComfort and Bose.

  28. TechnoDestructo says:

    Reading the suit, it looks like they’re mainly suing this woman to get at the retailer she was buying from, who they have been unable to identify for certain.

    It still sucks that they’re able to sue THEM, but at least that makes SOME sort of sense.

  29. DeeJayQueue says:

    @balthisar:

    Ok, the first sale doctrine applies to copyright law not car parts or cosmetics.

    Plus, Retailers DO have contracts with wholesalers, that’s what keeps the general public from being able to buy from them. When you start an arrangement with a wholesaler or manufacturer you have to show them your business license. At this point some (not all) will get you to sign a merchant agreement with them. The contents of these agreements are different for each mfr, but some include language that indicates minimum retail pricing, and whether or not you can put the product on special sale or clearance. This is also the time when the wholesaler discusses things like minimum quantity monthly ordering and all that stuff.

    Mister Best Buy can’t just to to Sony’s house and say “gimme a thousand PS3s so I can sell ‘em.” What happens is Sony says “Ok, we’ll sell you a thousand PS3s for $300 a piece and you can sell them for 40% over that if you promise that you’ll move all of them, and another thousand next month.” Except on a larger scale than that.

    This is also why companies have buyers. They don’t go buy anything, they make agreements for store space and visibility versus product cost and sales margin. “We’ll agree to buy 10,000 blenders and put them on leading endcaps for 6 weeks but only if we can have them for 10 points under cost.”

    The same thing applies to people reselling cosmetics or car parts on ebay only they don’t know it. If they’re selling things advertised as New, and have an inventory of them, that qualifies them as a business. If a wholesaler is selling to someone without a business license then they’re at fault for that, and so is the person who’s doing the reselling and they both should get sued. If a manufacturer has sales guidelines, then it’s their business to make sure they’re upheld, even if that means suing ebay sellers and the wholesalers they’re buying from.

    It sucks, because it’s easy to make this evil. However it keeps brand integrity high by not allowing people to say, sell Bose speakers for less than cost but make the money back on house brand cables. Bose takes a hit because now they’re seen as a cheaper, less desirable brand and in the long run might sell less speakers as a result. Not every store has house brand cables or other high-margin add ons, and so can’t compete with these prices without losing money, so they either lose a little money by selling the speakers at below cost or lose a lot of money by not selling them at all because they’re too expensive.

    We all want to root for the little guy, and we all want to hate on big corporations, believe me I’m in that camp. I don’t like seeing big companies stomp on individuals. That doesn’t mean that individuals have carte blanche to just make up the rules for buying and selling and running a business. They have to abide by them the same as everyone else does, and when they don’t, they get sued.

  30. Buran says:

    Where’s the doctrine of first sale?

  31. banned says:

    @nequam:
    I’m sorry, I didn’t realize this was a US site only. I guess when they run stories like porn with pizza in WINNIPEG, that is for the benefit of Americans only.
    News Flash – US exports culture, so this affects us all.

  32. awall25 says:

    I used to make a living selling on ebay, but got kicked off by the manufacturers of the products I was selling. It was actually a very similar situation. I was buying from a legitimate wholesaler who had a deal w/ the manufacturer. However, the manufacturer was telling me that I wasn’t abiding by a contract that I had never seen, much less signed. I also had auctions pulled for simply using the name of a company. They said it was trademark infringement, even though I was selling their product. They also had a MAP policy and I was adhering to it, but they still had the listings pulled.

    @CapitalC – From my research it is illegal for companies to not honor warranties based on where or for how much a product is sold. It’s part of the first sale doctrine as well.

  33. BII says:

    I work for a distributor of aftermarket auto parts, and MAP (minimum advertised pricing) and indeed, we are not typically allowed to resell to wholesalers that will sell on eBay and/or under MAP. Typically in these contracts, there are also enforcement clauses, where WE (the distributor) are responsible for policing our wholesalers.

    Of course, in the internet age, enforcing these MAP policies becomes an exercise in futility, and since the manufacturer is not policing their distributors, those of us that follow “the rules” get punished. Eventually we force them to drop their policy. This why many MAP agreements now offer incentives to follow MAP, rather than punishments for not doing so (things like referrals, deeper discounting, dating purchasing plans, co-op advertising, etc).

    One manufacturer (a big name in the aftermarket) started a very strict MAP policy with no incentive to follow it, and they’re sales sank like a lead balloon. Of course, now they’re stuck, they can’t reverse policy without angering distributors promised a certain margin.

    Personally, IMHO, MAP is bad idea in today’s age, you can’t enforce it, and you sell less product. However, I am OK with limiting warranty coverage to products purchased through vetted distributors, but that’s more of a quality assurance issue than price fixing.

  34. nequam says:

    @rocnrule: You’re correct, it’s not by any means a US only site. But the “thank god for Canada” posts are becoming as predictable as “you shoulda got a Mac.” Which is the same point I believe MOOSEHAWK was making above.

  35. RulesLawyer says:

    @DeeJayQueue: If a wholesaler is selling to someone without a business license then they’re at fault for that,

    If they’ve got a contract that states so, as in your example, yes. They’ve got a cause of action for breach of contract.

    and so is the person who’s doing the reselling and they both should get sued.

    I’m not seeing a cause of action here. What is it? It’s not breach of contract, because the reseller isn’t a party to the contract and “it goes without saying that a contract cannot bind a nonparty.” (EEOC v. Waffle House). It’s not
    tortious interference
    either, because neither party to the contract is being induced to breach.

  36. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    @DeeJayQueue:
    “Ok, the first sale doctrine applies to copyright law not car parts or cosmetics.”

    I stopped reading your post here because it’s obvious you have no idea what you’re talking about.

  37. nequam says:

    @Jaysyn: Where has it been applied outside of patent and copyright? It does not apply to goods generally, I don’t think, but I’ll welcome being corrected on that point.

  38. KIRZEN2007 says:

    @DeeJayQueue:

    The same thing applies to people reselling cosmetics or car parts on ebay only they don’t know it.

    Wrong.

    You cannot be forced to comply with a contract that you have not agreed to, and that you have no prior knowledge of. You cannot be forced to follow a policy or an agreement that was not in place when the product was purchased because that contract is a binding part of the transaction, enforcing compliance requires that the agreement was fully disclosed, and the proof of that disclosure and agreement is the written contract that exists between manufacturer and wholesaler, and between wholesaler and retailer. Without that binding agreement, it doesn’t matter what sort of agreements are in place between wholesaler and manufacturer, the retailer is not bound to them.

    Just because someone is a business, does not require that they follow someone elses contract unless there is a seperate agreement (binding, recorded, and fully diclosed by both parties) to stipulate that the person buying the unit wholesale agrees to follow the guidelines provided to the wholesaler by the manufacturer. And just because you sell something to someone, does not mean you require a business liscense (disclaimer: business liscenscing requirements vary from country to country, state to state, and even city to city).

    Lets run your circus through the courts. (IANAL)

    Manufacturer : Your honor, this guy is selling my product too cheaply!
    Judge : What’re you sueing him for?
    Manufacturer : Breach of Contract!
    E-Bayer : I didn’t agree to any sort of contract when I bought them!
    Manufacturer : The contract was signed by the wholesaler that you bought it from!
    E-Bayer : But not by me!
    Judge : Prove to me that E-Bayer knew about the contract, and agreed to the contract.
    Manufacturer : Umm… Err… Uhh… Can I change my suit to “Intellectual Property Rights?”
    Judge : Exactly what intellectual property has he damaged, stolen, or wrongfully distributed?
    Manufacturer : He’s making us look cheap! He’s devauling our brand name.
    E-Bayer : Umm, no? I’m selling -below- MSRP… Every other store in the known universe is selling at or above MSRP!
    Judge : Prove he’s damaged your brand name?
    Manufacturer : Uhh…
    Judge : Thought so, case dismissed.

  39. Marko_Vulvic says:

    @ All in the Canada Vs. USA Debate:

    I think one small, but important, part of it is in Canada you need to prove you lawsuits validity BEFORE it reaches court, not during the proceedings. This makes it very difficult for frivolous and predatory lawsuits to make it past first reading.

    But enough of this US bashing please! I mean, where would we get our 9MM Handguns and .01 MPG Hummers from if not for them?

    :D

    I kid…I really do like your double cheeseburgers, blondes with fake tits and unilateral foreign policy! Honestly!

  40. KIRZEN2007 says:

    @awall25:

    @CapitalC – From my research it is illegal for companies to not honor warranties based on where or for how much a product is sold. It’s part of the first sale doctrine as well.

    Actually, companies can choose not to honor warranty based on where the product was purchased if the owner cannot prove that the product is new product.

    Manufacturer > Wholesale > Retail > Customer

    I can choose to decline your warranty if you cannot provide information that proves that the unit you purchased at the retail store has ‘warranty attachment’, which is to say that it is new product covered under the manufacturer’s warranty. Because there are companies that will refurbish product, repackage it, and sell it to retail establishments claiming it has a one year manufacturer’s warranty. (I see this on a semi-regular bases where I work, we’ll see a product that hasn’t been in the market for 6 years being called in for warranty, with someone saying they bought it last week at “Billy Bob’s Discount Superstore”, and Billy told him -himself- that it has a one year warranty from the manufacturer, and is brand new.)

  41. awall25 says:

    @KIRZEN2007:

    I’m talking about new items though. Not refurbished. Typically a serial # is enough to prove an item is new.

    Of course you can deny warranty on a used/refurb, but not on a new product.

    I am saying that it is illegal to deny warranty on a new item based on where or for how much it is purchased.

  42. nequam says:

    @Marko_Vulvic: And thanks for hockey. So I quess we’re square.

  43. KIRZEN2007 says:

    @awall25:

    Yes and no.

    There are many companies that refuse to track product by serial number. And it remains that if you cannot prove that the product is new, if they question it, they can push your warranty into the garbage can. (Most companies would never do such a thing, since it could do serious damage to their brand name by refusing a warranty claim, even if the details seem ‘slightly’ spurious).

    But that’s true. If the product is new they cannot disclaim your warranty based on the price that you paid for the unit. I’ve actually seen product come through under warranty that was sold for as little as 1/5th of its MSRP because a big box retailer was having a really huge clearance sale or was going out of business.

    They can however, refuse to repair your unit and instead choose to refund your purchase price annuling the sale and terminating warranty obligations.

  44. KIRZEN2007 says:

    @awall25:

    Oh!

    And, if you bought it from a retailer and then you sold it to your friend John, the warranty can be voided by the manufacturer.

    The reason being, that you cannot prove that ‘you’ didn’t take the unit out of the box and use it prior to selling it to selling it to your friend John.

    A warranty is a contract that applies only to the person who buys the unit, and is not transferrable. (We run into this frequently!) If you buy something on E-Bay, and the person selling it isn’t a retail establishment, your warranty may be voided based on the premise that the binding agreement between the manufacturer and the end user is between the manufacturer and the person ‘you’ bought it from, and is not transferrable.

  45. goodkitty says:

    It seems like the ‘founding fathers’ of the U.S. spent a lot of time protecting us all from the evils of government, monarchs, and self-appointed lords. I wonder if they could have considered the horrible impact that the corporation entity has had in just the last 50 years. I suppose that is the new overlord… they employ us, they feed us, they shelter us, and we are serfs, helpless to act independently. Small and independent businesses… it was nice knowing you.

  46. swalve says:

    Yes. Nobody anywhere says a manufacturer has to give you a warranty.

    To get a warranty honored, you do in fact have to prove that you were the legitimate purchaser of the product, because the contract is between the purchaser and the manufacturer.

    Many times, manufacturers will sell items at different prices based on the warranty given. At the end of a model run, for example, they might sell an item with a 90-day warranty, where six months ago the thing had two years.

  47. dbeahn says:

    @rocnrule: Isn’t Canada where they still use racist terms to describe couch colors?

  48. banned says:

    @dbeahn:
    You could be right, I haven’t heard that. BTW, isn’t america where you can still be pulled over for driving while black? And the Cleveland Indians, Atlanta Braves, etc. Didn’t they try to stop Tiger Woods from playing at the Masters about 10 years ago because he was black? I could go on and on but really, maybe we have racist terms, but any foreigner knows we are not racist, unlike another country I know!
    Not sure where all this comes from but I like this game so I’ll keep playing.

  49. kaikhor says:

    I work for a wholesale company (at least until the end of the week) and many companies have MAP pricing that the new Supreme Court ruling made enforcible. If you are a business owner, read the fine print you sign with the wholesaler which says you must abide by things like MAP pricing. The usual procedure is first threaten to not allow you to sell their products, and if you ignore the threat, they actually do it! Ebay has become a huge issue with that. It doesn’t apply to the normal guy who decides to sell his old nintendo or whatever, but the retailers who use it as a business and are selling brand new products. Please don’t, companies really hate that. Of course, if it’s a knife, right now I could care less, but for the rest of the companies, please don’t….

  50. balthisar says:

    @rocnrule: to be fair, I just finished spending almost a year working in the Greater Toronto Area, and the people I run into there are just as racist as the people I run into here in southeast Michigan. Maybe they’re not as open about it to your face if you’re a minority, but as a white guy talking to white southern Ontario-ians, I got to know them quite well.

    @kaikhor: keep in mind it only applies to people who actually sign a MAP agreement. The eBayers that are mentioned aren’t parties to the agreement. It doesn’t matter if they’re retailers or a normal guy selling his old Nintendo — you (1) have the right to sell what you legally acquire barring contract prohibitions, and (2) you have the right to mention what you’re selling, including the use of a trade mark (you can’t use the mark in a way that implies you have a relationship, though).

  51. philipbarrett says:

    Shaklee sent me a cease & desist e-mail during an auction on ebay. I told them politely to prove it or F-off. They chose the latter!

  52. guymandude says:

    @goodkitty: The founding fathers were well aware of the problems involved with commerce and banking. You can (mostly though not exclusively) thank both Lincoln and FDR for the problems that exist today. This is what happens when you bend the rules so far that no one recognizes them anymore. You cannot read the Constitution and tell me that the great bulk of it is anything but ignored. So IMNSHO it has far more to do with corruption in government than any kind of legal defect overlooked by the founders.

  53. Xenuite says:

    I sort of agree with the manufacturer. It is their product and they should be able to say “no you can’t sell our stuff… yes, even through that loop-hole.”
    Buying at wholesale and then reselling is a stupid practice in my mind. Yes it makes money, but why not just open a store up or get an agreement directly with the manufacturer? Then you are being legitimate and not just selling out of the back of a van like you picked up some counterfeit jeans in Mexico.
    The companies aren’t going after the guy who sells his laptop to a friend, they are going after the guys who sell hundreds of laptops below competitive prices and take away their right to decide who is acting as a retailer for their product.

  54. Cowboys_fan says:

    @Xenuite:
    You seem to forget this issue is only a week or two old, this is a slippery slope. Maybe today they only go after mass sellers, but like the record companies, it won’t be long before they go after you for selling your laptop. Sony should NOT have the right to tell me I can’t sell my laptop below $X.
    If you buy a Porche in Canada, you have to sign a contract saying you won’t resell to another country for two years(cars are sold alot cheaper there apparently). Without such an agreement, I should be able to do whatever the hell I want with what I buy.

  55. Cowboys_fan says:

    @dbeahn:
    Actually you can chalk that one up to the Chinease poison Train as it was their software that mistranslated the color to “ni$$#r black”

  56. Tony1l says:

    How would this effect retailers going out of business.. can’t get rid of their inventory due to pre-pricing obligations? Or what if I decide to buy liquidated inventory and later have to worry about if the distribution will be contested by the producer who wants to protect their interests and contracted retail partners?

  57. Ozzie39 says:

    I would like to comment on this as I very familiar with one of the cases.
    First let me explain what is really going on here. These cases are not about Leegins and in fact have little to do with Leegins. In PSK versus Leegings, PSK had written contracts with Leegins in which they agreed to sell at a set price. Neither of these two cases have anything of the sort. These cases are about DMCA abuse by manufacturers trying to control the secondary market.
    This is what is happeneing. Manufacturers are utilizing the DMCA knockdown to terminate auctions on eBay that do not agree with their pricing policy, or worse. Some just do not want their product on eBay and they just knock down every auction they see.
    They tell eBay that the auction in question violates their intellectual property rights in some way: Copyright, Patent, Trademark etc… even though it does not. eBay does not look at these notices of claimed infringement. According to the DMCA section 512, if an internet service provider wants immunity from lawsuits, all they need to do is take the claimed offending material down and they are immune of any legal ramifications.
    So here is what has happened. Itt and Merele do not want their products sold under MAP price. They have filed false claims of infrigement against the sellers, claiming copyright, Patent, trademark infrigement and the auctions get knocked down by eBay.
    The sellers have in no way infriged on these companies Intellectual property rights. Selling under MAP is NOT a violation of your intellectual property rights so the takedowns are false and malicious.
    Now, you say how can this be? Well I have been selling parts on eBay for years and most sellers will not hire a lawyer to go after these companies as it is a David vs Goliath situation. Most of these manufaturers have been doin this for years and no one has stepped up to the plate to sue them.
    What is even worse is that if you get hit with 3 or more knockdowns by the same manufacturer eBay will close your account and your way ot making a living is over.
    The only legal choice you have is to file what is called a counter-notice under the DMCA section 512, or sue the manufacturer. On at least one of these cases the plaintiff filed a counter-notice which the manufacturer chose to ignore. Under the DMCA section 512 if a manufacturer does not sue the alleged infringer within 10 days of receiving a counter notice the internet service provider has to return the material to the seller and quit disabling access to it.
    Well what do you think happened after eBay gave the seller his auctions back? The manufacturer yet again knocked down the auctions with new notices of claimed infrigement. Now, there are two issues here, one mor knockdown and you way of making a living could be over.
    Why is Leegings even mentioned here? Because these manufacturers do not have a leg to stand on, and that is all their laweyers can come up with. You have to try to defend you actions somehow, and saying that you used a DMCA knockdown for the reasons thay gave eBay: Copyright, Patent, or Trademark when in fact they know none of these auctions infringed on ANY intellectual property is not going to fly, so they invoke Leegins as a last resort as they have had to admit that this was all about pricing.
    I know that at least one of these guys bought the product from a distributor, who sold it to a retailer (who has no written contract with the manufacturer), who in turn sold it to him.
    MAP means minimum advertized price. Some people have insinuated that if a dealer sells a product under MAP it infringes on their contract with a manufacture. That is usually not so as these contracts are exactly what they say, minimum advertized price. Which means you can not advertize the product under a certin price but you can sell it for whatever you want. So in fact no one here has violated anyones contract. The product was never advetized by anyone who had or could have had a contract with the manufacturer. It was sold under MAP which is perfectly under the rules.
    Question is, why should this bother you? Well I will give you an answer. Prices on a lot of consumer products have gone up tremendously for no reason. So these policies are costing everyone a lot of money. And this may not really bother you much as you have money to burn. Now you go and buy a whole bunch of itt, or Merele, or (put your favorite manufacturer here), and for some reason you end up not using it and spent a lot of money. You now go to eBay, Yahoo, etc… and decide to sell it as you no longer need it. Suddenly you get all these DMCA notices of claimed infringemet, your auctions get knocked down, your account with eBay, or Yahoo, or whoever who you have worked for years to get your reputation up is suddenly closed and you are now banned for life from using these services again. Think it can’t happen, I have seen this scenario happen dozens of times. It is unlawful, illegal and moraly wrong but what is a one guy to do againts a huge manufacturer with huge resources?
    BTW, the first sale doctrine says that after a product is sold by the manufacturer the first time they loose any and all claims they have on controlling the use or sale of that product.

  58. TVarmy says:

    This really, really sucks if they succeed. My family’s 1997 Camry (Recently traded in for a Prius) had a broken mirror, and we tried to get a new one from the dealer. Unfortunately, the dealer claimed there was “no way” for them to get a mirror in our car’s color, so it would just be either black or primer, depending on what they had in stock. Plus, they’d charge a ton.

    I looked on ebay and found the mirror for very little from a salvage lot. It was the right color, and it worked perfectly. Not being able to do that kind of limits how thrifty one can be.

  59. MaximuM_MayheM says:

    Wait, so if every company/manufacturer/whatever took this view on selling at a “minimum price”, then wouldn’t eBay as a whole (or at least 99% of auctions) be infringing on this? I think this is insane, and that once the product has been released by the manufacturer and an exchange of money has been completed, then the manufacturer should have no control over what price of where the item is sold. As long as they are making money, why should they care where or for how much the resold product is being sold? I have a feeling I am missing something.