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)
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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!
@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.
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.
@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.
@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”
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?
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.
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.
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.