Legal Question in Business Law in Minnesota

Sale of Authentic Licensed Merchandise by Non-Licensed Company

I run an Internet Store selling clothing. I had tried to purchase an apparel line directly from a vendor but they refused because I don't own one of their franchise licenses. However, one of their licensed franchise owners (confidentially) ordered the items in for me through his store as a favor.

The bottom line is, I now have the authentic merchandise in my possession (Not Knock-offs!). Hard-Rock Cafe T-Shirts would be a good parallel example since selling food, not t-shirts is their central focus and the company I'm concerned with also has clothing sales as a sideline. If you did not own a Hard Rock Cafe franchise but were able to obtain the authentic T-shirts through an undisclosed franchise are there any criminal or civil liabilities for the re-sale of the product? If so, this would seem to fly-in-the-face of capitalism. But then again, some states do it with ticket scalping so who knows?

What disclaimers, if any should I include on the website in reference to the company?


Asked on 2/08/04, 12:42 am

1 Answer from Attorneys

Maury Beaulier Attorney at Law

Re: Sale of Authentic Licensed Merchandise by Non-Licensed Company

If the product is sold as NEW it would violate trademark laws.

The Hard Rock company can argue that their distributors are trademark licensees by the terms of their agreements and the policies and procedures. As such, they have agreed to use company trademarks pursuant to a license, and the license defines the boundaries of the distributors' permitted use. Pursuant to the license contained in the policies, distributors agree not to advertise product in any way other than by using advertising and promotional materials supplied by the company. Distributors are also typically prohibited from marketing on the Internet or displaying information through any unauthorized web-sites.

As a result, your use of new Hard Rock clothing would be using trademarks on sales in violation of Internet policies and trademark licenses. Courts have long upheld the right of a trademark owner to restrict the method of distribution of products bearing the trademark.

On the other hand, a seller of used trademarked items is not subject to a license agreement and needs no permission to sell trademarked products on the Internet or elsewhere. Such sales are allowed, so long as consumers are not deceived into thinking that the seller is somehow authorized or affiliated with the trademark owner, or there is otherwise confusion as to the source of the product.

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Answered on 2/09/04, 9:06 am

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