Legal Question in Business Law in California

Internet Minimum Pricing

I have an ecommerce business in Calif & I have a manufacturer restricting the prices that we can display online. We display pictures of their products and they claim that since they are the owners of this intellectual property (photos) they can establish a min. price point that can be displayed online.

I am disputing the fact that they dont allow discounting the prices with the use of a coupon. I currently list all of this vendor�s products at the min. prices but once the product is added to the user�s cart, a coupon discount is given. Is this legal?

Excerpt from their policy:

''Prices advertised on Internet web sites must comply with our Advertising Policy. This means that if prices are mentioned anywhere on an Internet web site, they must be equal to or greater than the min. advertised prices

Internet pricing policy covers prices that appear anywhere on a web site, including purchase order forms, and to prices that don�t appear on the web site itself, but which are accessible through the web site by means of a hyperlink. References to discounts including promotional discounts or coupons are strictly prohibited under this policy. Prices communicated by any of these means must comply with the min. advertised prices''


Asked on 5/20/03, 11:28 pm

2 Answers from Attorneys
Martin Snitow

Re: Internet Minimum Pricing

Before you give up, go to your local bar association and ask for a referral to an antitrust attorney. Even if you have to pay for an hour of consultation, you could be surprised. The big stick of antitrust litigation is recovery of three times your actual damages plus attorney fees. So if you have a good case, you will find a lawyer willing to take it on contingency.

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Answered on 5/21/03, 7:56 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Internet Minimum Pricing

This is a sticky and often-litigated area of trade law where principles of free trade and trademark or brand protection collide.

I think the manufacturer would prevail if this issue were litigated. You might be able to work around their IP claims by not using the pictures but in the long run you are tilting at windmills. Sooner or later the manufacturer would cut you off from easy access to their product. Unless you have a lot of money and a lot of enthusiasm for litigating on principle, play the game their way. If you want to be a hero, I'll take your case for a big retainer and no promise of success.

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Answered on 5/21/03, 1:59 am


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