What is the Trademark “First Sale” Doctrine? featured image

What is the Trademark “First Sale” Doctrine?

by John DiGiacomo

Partner

Trademark

The first sale doctrine is a defense to trademark infringement. In the US, federal trademarks are governed by the Lanham Act. The Lanham Act prohibits unauthorized persons or entities from using a registered trademark “in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” See 15 U.S.C. § 1114. When a trademark is registered with the Trademark Office, after a while, that registration confers upon the owner the presumptions that the trademark is valid and that the owner has the exclusive right to use the mark nationwide.

If a person or entity uses a trademark without authorization, the holder/owner of the trademark may bring a lawsuit for trademark infringement. To win, the trademark holder/owner must show two legal elements:

  • A valid trademark
  • That the infringer’s use of the same or similar trade mark is likely to cause consumer confusion

However, depending on the facts of the case, there are several defenses that an accused infringer can raise, including what is known as the “first sale doctrine.” In general, the Lanham Act only protects the first sale of manufactured goods. This means that if an individual RESELLS trademarked items, there can be no claim for trademark infringement (as long as the goods are genuine and bear a true mark). This is true even if the original manufacturer does not authorize the RESELLING of its goods. Courts have held that the first sale doctrine flows from the text of the Lanham Act and from the public policy principle that a manufacturer has only the right to control the original distribution of its products. To allow otherwise would endanger the free flow of products in the marketplace.

Where a defendant invokes the first sale doctrine as a defense to a claim of trademark infringement, the defendant must first prove that the trademark holder/owner authorized the first sale of the goods. Usually, proof of that is straight-forward; but not always. A recent case involving Hallmark greeting cards provides an interesting example where the first sale doctrine was rejected as a defense. See Hallmark Licensing, LLC v. Dickens, Inc., Case No. 17-cv-2149 (E.D.N.Y. October 21, 2020). In that case, Hallmark sold 20 truck trailers of greeting cards to a pulp and paper company. This was after Hallmark closed one of its processing and manufacturing centers. The trailers of greeting cards were destined to be destroyed and recycled.

However, instead of destroying the greeting cards, the pulping company sold them and, eventually, a subsequent buyer, defendant Dickens, began to sell the greeting cards to the public. This prompted Hallmark to sue Dickens for various causes of action including Lanham Act trademark infringement. Dickens defended by raising the first sale doctrine. Dickens highlighted the undisputed fact that Hallmark sold all the greeting cards to the pulping company.

However, the court rejected the argument. In simple terms, the “sale” to the pulping company was not a “sale” as contemplated by the Lanham Act. The “sale” was not for the purpose of injecting the goods into the stream of commerce; but rather for the purpose of having the greeting cards destroyed. As such, there was no “first sale” and, therefore, Hallmark retained its rights under the Lanham Act to control the distribution of its goods. Dickens was found to be infringing Hallmark’s trademarks. For more information or if you have questions about creating and registering a trademark or if you need legal services related to trademark litigation, contact the trademark lawyers at Revision Legal at 231-714-0100.

Extra, Extra!
Recent Posts

2025 Changes to Trademark Fees

2025 Changes to Trademark Fees

Trademark

There are some significant changes coming to the United States Patent and Trademark Office (USPTO) that will affect trademark filings beginning January 18, 2025. These changes include the introduction of the Trademark Center, new fees, and revised application requirements. Here is an overview of the key changes: The USPTO will retire the TEAS system, which […]

Read more about 2025 Changes to Trademark Fees

Automated Decision-Making Technology: California Releases Proposed Regulations

Automated Decision-Making Technology: California Releases Proposed Regulations

Internet Law

In today’s competitive e-commerce landscape, automated decision-making technology is becoming more and more important. From personalized product recommendations to targeted advertising and streamlined logistics, these systems help ecommerce businesses adapt and grow. But new regulations are on the horizon, and these changes could reshape the way e-commerce businesses use automation. The California Privacy Protection Agency […]

Read more about Automated Decision-Making Technology: California Releases Proposed Regulations

FTC Adopts Final “Click to Cancel Rule”

FTC Adopts Final “Click to Cancel Rule”

Internet Law

The Federal Trade Commission (FTC) has issued final amendments to its trade regulation rule concerning negative option plans, also known as the “click to cancel rule.” This rule aims to address widespread deceptive practices that prohibit customers from cancelling services in the same manner in which they signed up. Here’s a detailed summary of the […]

Read more about FTC Adopts Final “Click to Cancel Rule”

Put Revision Legal on your side