First Sale Doctrine Fails To Free Unauthorized Online Retailer From Infringement Claims

• Published date: 15 December 2021
• Subject Matter: Consumer Protection, Intellectual Property, Trademark, Dodd-Frank, Consumer Protection Act
• Law Firm: Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Author: Mary Kate Brennan and Margaret A. Esquenet

Many brands consider gray market goods sold on Amazon a perennial problem. In Otter Products, LLC, et al. v. Triplenet Pricing, Inc., the United States District Court for the District of Colorado granted partial summary judgment in favor of the trademark owner, holding that the first sale doctrine did not immunize Triplenet from Otter's trademark claims.

Otter Products, LLC and Treefrog Developments, Inc. ("Otter") sued Triplenet Pricing Inc., Triplenet Pricing, LLC, and Eric Sypes, ("Triplenet") for trademark infringement, unfair competition, false advertising, and deceptive trade practices in violation of the Colorado Consumer Protection Act. Otter sells mobile phone and tablet cases under its OtterBox and LifeProof Brands. It provides a warranty for products purchased directly from it or authorized sellers. Without authorization and so without Otter's warranty protection, Triplenet sold products bearing Otter's trademarks on the internet including on Amazon. In its Amazon listings for Otter branded products, however, Triplenet represented that purchases included an "OtterBox limited lifetime warranty." Otter argued that although the products were manufactured by Otter, the missing warranty turned the products into gray market goods. For its part, Triplenet filed counterclaims seeking declaratory judgment that it did not infringe Otter's trademarks and alleging tortious interference with contract, intentional interference with prospective economic advantage, and deceptive and unfair trade practices.

Otter moved for partial summary judgment on its trademark infringement and unfair competition claims, as well as its false advertising and deceptive trade practices claims. It also sought summary judgment on all of Triplenet's counterclaims.

In opposition, Triplenet argued that the first sale doctrine shielded it from liability arising from Otter's trademark and unfair competition claims. As the court acknowledged, "the right of a producer to control distribution of its trademarked product does not extend beyond the first sale of the product." Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1240-41 (10th Cir. 2006). Nevertheless, courts have recognized two exceptions to the first sale doctrine: (1) the "material difference" exception, and (2) the "quality control" exception. If either applies, an alleged infringer may not be protected by the first sale doctrine.

Here, the court held that both exceptions applied, stripping Triplenet of its first sale...