Legal Question in Technology Law in California
Is it legal for me to buy a OEM product such as a OEM computer and then modify it and then sell it with my own brand name?
2 Answers from Attorneys
Congratulations! You yourself are now an OEM (Original Equipment Manufacturer). Depending on the type of product you could conceivably be liable to third parties for patent infringement, or to customers for breach of implied warranties or even products liability, for example if smoke comes out of the unit when plugged in. You would probably void the original OEM's express warranty if there is one, and you might not be able to claim the benefit of the original OEM's UL safety certification (which might matter a great deal to some customers). On the other hand, go for it! If your business takes off, you could be in a position to license all of the above from the original OEM, and you might even be able to manufacture the unit yourself, eliminating the original OEM's markup.
The manufacturer retains limited rights to control downstream modification and resale of its trademarked products; not all manufacturers exercise such rights, but many do, and I would expect that a computer manufacturer would. Although there is a "first sale" doctrine in trademark law that in general allows the original buyer of, say, an H-P computer to resell it as a used (or even as new, if it is)) computer, there are some fine distinctions in the law that say that right does not extend to people who modify a product that remains identifiable under its original trademark. The key is that the resold product must be "genuine," and a modification of any significance will destroy the genuineness. This results in possible trademark dilution. I'm not saying the manufacturer will seek to stop you, or that if it sued that it would necessarily win, but both are distinct possibilities. Your best bet is to find an OEM that will give you a license to modify and resell as you intend. This eliminates your risk of infringing and could result in a better price for the OEM hardware you buy.