Legal Question in Business Law in California

Do we have the legal right to sell a customer's private label product?

We are a manufacture of Stone Fabrication Diamond Tooling. Aside from our own brands, we private label our products for many of our customers. Most agreements are that we do not stock private label products, the customer places an order and takes 100% when product is ready. We made an exception for one customer. The agreement was, we would stock 2 months worth of product for immediate delivery to the customer.

As of 2 years ago, this customer has stopped purchasing the products, and has defaulted on $40k. The $40k is not our concern, as we have written than off. What is of concern is the private label product we currently have in our possession. Obviously we cannot ship to the customer... they will not pay.

Do we have the legal right to resell this product, anywhere in the world, even though it has our customer name/brand on it?

Can we sell on our own e-commerce site, with pictures of the product showing the customer name/brand?

Do we need to deface the name/brand somehow (such as crossing it out with a marker or with an etching device)?

Any supporting documents would be greatly appreciated. Thanks in advance.


Asked on 2/02/13, 8:06 am

2 Answers from Attorneys
Kelvin Green The Law Office of Kelvin Green

Since you are in California. I would refer you to the California Commercial Code sections 2703 and 2706 that describe how a seller can sell products. I think if you give the old buyer reasonable notice and follow the other procedures regarding either public or private sales, you'll be ok... If you could put a cheap label over thiers it may solve the issues you are concerned about...

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Answered on 2/02/13, 8:52 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I agree with Mr. Green; you own the products, you don't own the former customer's trademark. I would, however, go further in removing the old mark than merely sticking a cheap label over the old one; I'd prefer that you completely remove all evidence of the other guy's marks.

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Answered on 2/03/13, 2:32 pm


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