Unauthorized Use of US Trademark Name Oversees

[skincareowner]

We own a skin care line based in California and own a U.S. trademark on the company name. There is an individual in Hong Kong that purchases our products at full retail price from our website and has them shipped to herself in HK. She then posts them on her website and Facebook page for sale. We have an approved wholesale partner in her region that this is upsetting, because it infringes on their business potential. I have communicated to the HK individual that she is not an authorized re-seller of our products, but she refuses to take them down from her website or her FB page. She claims parallel distribution is legal in HK, however we do not recognize her as an authorized reseller of our products. Do I have a legal leg to stand on with her unauthorized use of our company name, since it is trademarked? She purposely does not use our photos when posting about us because she knows that would be copyright infringement.

In addition, to try to provide more information in anticipation of your response, we do not have an international trademark on our name yet, but we are working on it. Regardless, her website and Facebook page are accessible in the U.S., so how does that work?

Many, many thanks in advance for your insight!

 

[quincy]

We own a skin care line based in California and own a U.S. trademark on the company name. There is an individual in Hong Kong that purchases our products at full retail price from our website and has them shipped to herself in HK. She then posts them on her website and Facebook page for sale. We have an approved wholesale partner in her region that this is upsetting, because it infringes on their business potential. I have communicated to the HK individual that she is not an authorized re-seller of our products, but she refuses to take them down from her website or her FB page. She claims parallel distribution is legal in HK, however we do not recognize her as an authorized reseller of our products. Do I have a legal leg to stand on with her unauthorized use of our company name, since it is trademarked? She purposely does not use our photos when posting about us because she knows that would be copyright infringement.

In addition, to try to provide more information in anticipation of your response, we do not have an international trademark on our name yet, but we are working on it. Regardless, her website and Facebook page are accessible in the U.S., so how does that work?

Many, many thanks in advance for your insight!

It appears that the individual in Hong Kong is marketing the products under a first sale doctrine, which allows a purchaser of legal goods to resell these goods legally. If the individual is marketing the products under your trademark, the illegality would come from the way the products are marketed (how your trademark is being used).

An example: I can purchase product X and resell product X saying it is product X. I have violated no trademark law by doing this.

 

[skincareowner]

It appears that the individual in Hong Kong is marketing the products under a first sale doctrine, which allows a purchaser of legal goods to resell these goods legally. If the individual is marketing the products under your trademark, the illegality would come from the way the products are marketed (how your trademark is being used).

An example: I can purchase product X and resell product X saying it is product X. I have violated no trademark law by doing this.

Thank you for your quick reply. Really appreciate it. I'm somewhat familiar with the first sale doctrine, as it's come up in my searches on this topic. That said, how can we combat this practice? Do we have no leg to stand on? If there is heavy demand for a product and some are willing to pay more than the SRP, how can the manufacturers stop unauthorized reselling of the product? For example, if I bought a Macbook Pro for $1800 directly from Apple's website and resold it on my website in Hong Kong for $1900, but it made sense for the person buying it in HK because shipping was cheaper for them, how does Apple combat that? You have to believe Apple wouldn't be pleased about that and would attempt to stop the unauthorized re-seller.

Can I put a clause in the terms and conditions on my website that says no unauthorized reselling of our products without our express permission?

 

[quincy]

Thank you for your quick reply. Really appreciate it. I'm somewhat familiar with the first sale doctrine, as it's come up in my searches on this topic. That said, how can we combat this practice? Do we have no leg to stand on? If there is heavy demand for a product and some are willing to pay more than the SRP, how can the manufacturers stop unauthorized reselling of the product? For example, if I bought a Macbook Pro for $1800 directly from Apple's website and resold it on my website in Hong Kong for $1900, but it made sense for the person buying it in HK because shipping was cheaper for them, how does Apple combat that? You have to believe Apple wouldn't be pleased about that and would attempt to stop the unauthorized re-seller.

Can I put a clause in the terms and conditions on my website that says no unauthorized reselling of our products without our express permission?

You cannot prevent someone from legally purchasing your products and reselling these products at a higher price. If a consumer wants to pay a higher price for a product, it is not an especially bright consumer, perhaps, but the consumer is free to pay $1900 for a $1800 MacBook Pro.

If your trademark is being used to imply the reseller is an authorized reseller, however, then you might have some legal options to consider. No one can legally state or imply a relationship to the trademark holder that does not exist. It will be how your product is being advertised by the Hong Kong purchaser that is more likely to be an issue rather than the sale itself.

Here is a link to the World Intellectual Property Organization (WIPO) where you can find information on protecting your trademark overseas (explore the site): http://www.wipo.int/trademarks/en/

With that said, it can be possible for any manufacturer to limit the number of products sold to any one purchaser (i.e., limit of two per purchase at a time). In other words, you could cut off the supply. Whether this is to your benefit or detriment, however, is something you will need to decide. The decision is best made after a careful review of all facts with an IP attorney in your area.

Good luck.

 

[TimStudiesLaw]

There's an interesting story about grey market sales. Google Pirate Joes. They purchase products at retail from Trader Joe's in the US, take them to Canada, and sell at 30-40% higher. Trader Joe's has unsuccessfully sued them twice. You're likely in a similar situation as Trader Joe's.

ETA: You MAY have some teeth in a suit because you have a presence in HK, which distinguishes your case from Trader Joe's - they didn't have any retail in Canada.

 

[quincy]

There's an interesting story about grey market sales. Google Pirate Joes. They purchase products at retail from Trader Joe's in the US, take them to Canada, and sell at 30-40% higher. Trader Joe's has unsuccessfully sued them twice. You're likely in a similar situation as Trader Joe's.

It appears that way.

Because there are no international trademark laws, a trademark holder must rely on the laws of the country where their products are being sold to determine if they have any legal right to stop what they see as infringement. If the US trademark holder sees that their products are being sold overseas, the trademark holder would be smart to register their mark internationally. In the US, trademark rights are gained through the use of the mark in commerce and the first to use the mark will be the presumed holder of these rights. In other countries, it can be registration of a trademark that confers trademark rights.

But I see no infringement in what is being described here.

Here, for more information, is a link to Hong Kong's trademark laws, provided by Hong Kong's Intellectual Property Department: http://www.ipd.gov.hk/eng/intellectual_property/ip_laws/trademarks.htm