Legal Question in Intellectual Property in California
advertising products for sale
I have been purchasing products from a manufacturer located in California for almost 3 years. The only agreement between my company and the manufacturer is a letter received from the manufacturer when we initially began our business relationship that outlined how my purchase price would be calculated using percentages of the manufacturers list prices. In December '07 they increased my purchase percentages. I explained to them I could not continue business with them at the new percentages. I have used my company website for selling these products since the beginning of our relationship, and am now using it to liquidate the manufacturers products still in my inventories. The website is set up to receive customer inquiries and purchases. I recently received a demand over the website customer inquiry form from the manufacturer to delete all reference of their company products from my website. The products I am advertising on my website were purchased by my company from the manufacturer at the full knowledge of the manufacturer for the sole purpose of resale by my company. There are no agreements, verbal, written, or otherwise that complicate the issue. Does the manufacturer have a legal basis for their demand?
1 Answer from Attorneys
Re: advertising products for sale
I'd say no; it is possible and legal for a manufacturer to sell its products with strings attached, such as minimum prices, but once you have bought the goods with the seller's full knowledge that you have purchased them for resale, I can't see how it could successfully sue to prevent such resale, including identifying the goods by trademark.
On the other hand, if your Web site makes extensive use of the manufacturer's trademark (in addition to just mentioning the name in plain text), I would advise taking that off your site. The right to limit use of a trademark is different from and stonger than any right to prevent a resale that was intended at the time of the initial sale.
Even as to the use of the trademark, I think you would have a defense, if you continued to use it for a reasonable period after being cut off from purchase of more goods for resale. I have seen cases where a reseller was given (by a court) some grace period to dispose of trademarked goods and continuing to use the supplier trademark while amortizing its investment in signs, advertising, etc. However, I'd be somewhat cautious abould continued use of any trademark....it is better not to be sued in the first place than to be sued and win.
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