apparel/wholesale/ reselling

[babybuggs]

What is the name of your state? North Carolina

1) I understand that to resell items or purchase wholesale, one only needs a seller's permit, business license, and tax ID. Is this accurate?

2) What are the legal issues of which I should be aware when purchasing branded apparel from wholesale manufacturers abroad (China,India, etc)?

2a) What constitutes a legal import vs. and illegal import?

3) Will I have to retag items according FTC regulations and/or trafficking laws (i.e. if I am not sure that the product is a factory overrun, can I retag what would potentially be counterfeit items to bear a name other than that of the registered service mark?)

4) If an item is not tagged, but I do not know the original manufacturer or brand, what is my recourse ? For example, if the goods are found to be indistinguishable from a particular product on the market, but there is no mark, is there still a potential case for "reverse-passing off"? Is the appearance of apparel items themselves protected under this law (a grey pinstriped suit or a white dress)? Or is it only the mark?

5) If I am in fact selling genuine apparel, do I need to have authorization from the original designer/manufacturer ? Am I impeding competition in any way by not doing so?

6) Could my imports qualify as "gray market goods" if I know they are from the original manufacturer?

7) In the event that I am fuzzy on whether apparel is "genuine" or "authentic", which is common with imports, would replacing the tag still qualify as "reverse-passing off" if it is in fact NOT authentic? Apparently, the government does not have to prove that such conduct resulted in actual confusion because "the statute expressly requires only the likelihood of confusion." (United States v. Yamin, 868 F. 2d 130, 133 (5th Cir. 1989),) I read that SS 2320 also allows for proof of mistake or deception. So I suppose the question is would retagging a non-authentic version of manufactured goods result in the "likelihood" of confusion?

8) How would I go about finding and verifying the authorized manufacturers for these goods?

9) If I purchase from a seller that states that their goods are from the original manufacturer, do I need only their endorsement to protect myself legally...or am I still subject to criminal penalty in the event that I was misled, and resold these items under those pretenses?


Thank you. i want to make sure that i am not violating any intellectual property by importing items. Please help.

 

[clueless3]

Well, from your questions, it sounds like you are not in the apparel industry, or at least not a long time. My suggestion: in this industry, as in a number of other industries, you MUST be in it for at least 2-3 years to gain the experience needed, not just to avoid legal problems, but just to make a profit. By all means, apprentice with an experienced resaler. If you jump in with both feet, you'll find out that you'll sink very quickly.

1) I understand that to resell items or purchase wholesale, one only needs a seller's permit, business license, and tax ID. Is this accurate?

Yes, if you simply want to be a Sole Proprietor. If you want to set up a Corp or an LLC, then you need to file with the State too. Also, depending on what kind of items you resell, you will also need to get an approval from the original manufacturer.

2) What are the legal issues of which I should be aware when purchasing branded apparel from wholesale manufacturers abroad (China,India, etc)?

Are you IMPORTING the stuff yourself? or are you buying FROM an importer whose goods is ALREADY in the US? If you are an IMPORTER, then you must follow all US Customs regulations regarding tagging, and you must get an authorization from the original manufacturer if the goods are branded. If you are buying from an importer, then things are simpler.

2a) What constitutes a legal import vs. and illegal import?

Big question. Contact US Customs.

4) If an item is not tagged, but I do not know the original manufacturer or brand, what is my recourse ? For example, if the goods are found to be indistinguishable from a particular product on the market, but there is no mark, is there still a potential case for "reverse-passing off"? Is the appearance of apparel items themselves protected under this law (a grey pinstriped suit or a white dress)? Or is it only the mark?/QUOTE]

You're in black water. These items must be coming into the US illegally. All legal imports bear tags. As an importer or a resaler, importing and buying untagged items risks losing all items and fines. If you want to do it this way, your profit margin may be big, but you can't expect to be in business for the long term.

5) If I am in fact selling genuine apparel, do I need to have authorization from the original designer/manufacturer ? Am I impeding competition in any way by not doing so?

Yes, you must get authorization, else you risk a lawsuit. But you already knew that, didn't you?

7) In the event that I am fuzzy on whether apparel is "genuine" or "authentic", which is common with imports, would replacing the tag still qualify as "reverse-passing off" if it is in fact NOT authentic?

Well, if you have been in the industry for a number of years, you couldn't possibly be "fuzzy" on whether an apparel is genuine or authentic, can you?

8) How would I go about finding and verifying the authorized manufacturers for these goods?

You MUST be in the industry for a while. In many cases, you will need to travel to the country where the factory is. There are LARGE conventions held annually in Asia to showcase all kinds of manufacturers. You need to be there.

 

[babybuggs]

Well, from your questions, it sounds like you are not in the apparel industry, or at least not a long time. My suggestion: in this industry, as in a number of other industries, you MUST be in it for at least 2-3 years to gain the experience needed, not just to avoid legal problems, but just to make a profit. By all means, apprentice with an experienced resaler. If you jump in with both feet, you'll find out that you'll sink very quickly.



Yes, if you simply want to be a Sole Proprietor. If you want to set up a Corp or an LLC, then you need to file with the State too. Also, depending on what kind of items you resell, you will also need to get an approval from the original manufacturer.



Are you IMPORTING the stuff yourself? or are you buying FROM an importer whose goods is ALREADY in the US? If you are an IMPORTER, then you must follow all US Customs regulations regarding tagging, and you must get an authorization from the original manufacturer if the goods are branded. If you are buying from an importer, then things are simpler.



Big question. Contact US Customs.

4) If an item is not tagged, but I do not know the original manufacturer or brand, what is my recourse ? For example, if the goods are found to be indistinguishable from a particular product on the market, but there is no mark, is there still a potential case for "reverse-passing off"? Is the appearance of apparel items themselves protected under this law (a grey pinstriped suit or a white dress)? Or is it only the mark?/QUOTE]

You're in black water. These items must be coming into the US illegally. All legal imports bear tags. As an importer or a resaler, importing and buying untagged items risks losing all items and fines. If you want to do it this way, your profit margin may be big, but you can't expect to be in business for the long term.



Yes, you must get authorization, else you risk a lawsuit. But you already knew that, didn't you?



Well, if you have been in the industry for a number of years, you couldn't possibly be "fuzzy" on whether an apparel is genuine or authentic, can you?



You MUST be in the industry for a while. In many cases, you will need to travel to the country where the factory is. There are LARGE conventions held annually in Asia to showcase all kinds of manufacturers. You need to be there.

thanks for the advice. I'm aware that travel is to Guangdong is an available option, and to your own point, I don't think I have to intern under Donatella Versace to be qualified to run a retail store. Just money and experts. That's not my next step, but I suppose that's the best you can do. Nevertheless, that wasn't the question. Regardless of how long I've been in any industry, if a valid claim is brought against me for "likelihood of confusion", which you forgot to address, I'm screwed. At a minimum, I simply don't want to be subject to criminal penalty. Civil suits are not preferred, but they are very commonplace. Look at Pfizer. Experienced or not, EVERYBODY CAN GET SUED. I'm simply trying to get a feel for best practices. I have not received untagged items as I have not yet begun, but my questions stem from both personal research and the experiences of local retailers, who I suppose are in black water according to your assertions. I believe that customs only requires that tags (any tags) be affixed to the items and they meet flammability standards. Difficult, albeit, but possible. Didn't see anything about confiscation, but maybe I should look again. I do know, that there have been LARGE manufacturing companies, retailers, designers, and small-time entrepreneurs like myself who have ALL been prosecuted for infractions commited whether knowingly or unknowingly. So really, those BIG BIG companies who were in the business for a "number of years", were really only as safe as their lawyers could make them according to the law. Sorry, "years of experience" doesn't count as time served.

I would like to address a post by divgradcurl, https://forum.freeadvice.com/archive/index.php/t-299907.html, who mentioned that one MAY still be able to sell genuine items not obtained through an authorized source, but "you may not be able to use the manufacturer's name or the designer's name to sell them." which is in direct contrast to your comment that "Yes, you must get authorization, else you risk a lawsuit. But you already knew that, didn't you?" Perhaps you should have read my question more carefully. I thought they were rather direct, IMPO.

Just looking to do the right thing. Any comments on reselling genuine articles without authorization? And next steps for me if I verify these items are genuine. According to the IPMA manual, gray market goods are not violations of intellectual property. Further, if I were to repackage them (i.e., tag with my own name) once I tag a counterfeit item with a genuine mark, the item is no longer counterfeit because the mark is genuine. See III.C1-5. The only question is can a federal prosecuter prove that this "deceived the public" or "damaged the mark-owner's good will?" Further, all trademark owners of the brands I am importing allow gray market goods. One does not need a license to import apparel. An import number is recommended. All I was trying to clarify is what constitutes "trademarked goods legitimately manufactured and sold overseas, and then transported into the United States through channels outside the trademark owner's traditional distribution channels"? Does anyone have a caselaw example that can further clarify what this means?

I've been carefully reviewing the cases in this article: http://www.cybercrime.gov/ipmanual/03ipma.pdf

I realize that a lawyer will help down the line, but as you can see there is much confusion with SS 2320. It is very much a living document. I mainly want to completely avoid criminal penalty, and if you have suggestions for avoiding civil suit or the statutes affecting my particular case, that would be gravy.

Oh, and by the way Clueless, if you put Versace to the pepsi challenge, she herself wouldn't know the difference between her own and an identical garment replicated by another manufacturer. Ways and means are transferable. What makes it counterfeit is that the fact that production of the replica was not authorized by the trademark-owner. Simple as that. You would know that if you had been in the fashion industry for "a number of years"...Counterfeits are a major epidemic that can fool even the trained eye. I believe the government refers to them as "High-Quality Counterfeits".

 

[clueless3]

You're right: you don't need to work for Versace to be a retailer of apparel products. All I'm saying is that a 6-month stint in the Fashion District of downtown Los Angeles (or a similar district in New York) should equip anyone with plenty of experience about apparel, importing, distribution, retailing, and the laws relating to such goods. I assume that you have been there. If you have not, it's an experience of a lifetime.

BTW, if you have been in the apparel industry for a while, you should have known that Versace is a male. And yes, counterfeits are very high quality indeed. But there ARE subtle differences though. One visit to a manufacturer tradeshow in Hong-Kong will open anyone's eyes to what can and cannot be done with high quality replicas nowadays, and how to identify many replicas.

 

[babybuggs]

You're right: you don't need to work for Versace to be a retailer of apparel products. All I'm saying is that a 6-month stint in the Fashion District of downtown Los Angeles (or a similar district in New York) should equip anyone with plenty of experience about apparel, importing, distribution, retailing, and the laws relating to such goods. I assume that you have been there. If you have not, it's an experience of a lifetime.

BTW, if you have been in the apparel industry for a while, you should have known that Versace is a male. And yes, counterfeits are very high quality indeed. But there ARE subtle differences though. One visit to a manufacturer tradeshow in Hong-Kong will open anyone's eyes to what can and cannot be done with high quality replicas nowadays, and how to identify many replicas.

ok fair enough. still appreciate the input. visiting china will help. But for today, I need to get a handle on the laws I need to be referencing and where I can locate this information. So far, I've looked at the Us dept of commerce,US customs, Intellectual Prpoerty Laws, USPTO, b2b websites and here. although i still welcome more advice as it pertains the federal laws i mentioned in prev post, i'd like to introduce that my exporter said the dresses fall under the " 10% leakage paragraph". does this qualify under the authorized defense of "gray market products"?

thanks for the input.