Legal Question in Intellectual Property in Arizona

I was served (by processor server) with a letter from attorney for "Your Baby Can, LLC" stating that they are seeking Money Damages & Declaratory Relief based upon my violation of:

1. Federal Trademark Infringement (15 U.S.C. ss>1114/Lanham Act ss> 43(a)

2. Federal Copyright Infringement (17 U.S.C. ss>501 (2)

3. False Designation of Origin (15 U.S.C. ss>1125 (a)

4. Trademark Dilution (15 U.S.C. ss>1125 (c)

5. Unfair Business Practices (California Business & Professions Code ss> 17200)

This came after I had several craigslist ads up to sell multiple sets of Your Baby Can Read video sets. These were obtained in a lot of 10, as I gave several of them as gifts for baby showers & birthday gifts. I was selling the remaining sets. A 2-1/2 page letter is threatening to file suit if I don't pay $10,000 & give them info on where I purchased them; how much I made; turn over the rest of the goods to them. Attached is a 16 page "boiler plate" looking complaint that you would file in court (not filed yet!) listing the Plaintiff & Defendant & has the title "UNITED STATES DISTRICT COURT; CENTRAL DISTRICT OF CALIFORNIA". I don't even live in California. Can this even be filed in California if I am in Arizona? I was simply trying to sell new & used items on craigslist & now I am being sued?


Asked on 8/27/10, 10:53 am

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

Sorry to break the news to you. Manufacturers have a right to control who resells their branded products downstream. It doesn't matter that you are selling genuine articles purchased from the manufacturer or an authorized source.

If you want to deal in products made and branded by XXX, then XXX has a right to require you to obtain authorization from them before you sell and XXX can refuse to authorize you.

There is an exception known as the "first sale doctrine" which traditionally allowed a consumer buying an article for personal use to re-sell the article as "used" via a garage sale, to a pawn shop, as part of an estate, and so forth. The rise of non-traditional channels of e-commerce, including eBay and Craigslist, have created confusion and litigation as to how far the "first sale doctrine" goes to prevent people from running unapproved distributorships through electronic media. In your case, you sold multiple sets, so you're probably well beyond this exception anyway.

If you're sued in a California court, you will have to respond or a default judgment will be entered. Depending on the facts, you may be able to get venue changed to AZ. But the venue fight is very expensive.

Consult with a good business attorney in your area as soon as possible for specific advice.

Kevin B. Murphy, B.S., M.B.A., J.D. - Mr. Franchise

Franchise Attorney

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Answered on 9/01/10, 11:38 am


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