WAG: You can’t resell them. And if you planned on using the name Yoda’s Doughnuts then you’d be using a trademark so you’d get busted.
There is a very basic principle in commercial law known as the “first sale doctrine.” Part of this doctrine is the idea that once you buy goods, you are allowed to do with them as you please, including selling them to someone else.
The trademark infringement argument is weak here, because in order to resell goods, you have to be able to tell your potential buyers what they are. This is a fair use of the trademark. Specifically, it is nominal fair use of the trademark – that is, you have the right to call something by its name.
The trademark issue might come into play only if you are seen as setting up a business that sells a product that is otherwise sold only through licensed vendors. Casually buying a bunch of doughnuts and selling them to your office-mates, I think, would be a hard case to make.
You are not breaching any contract here, because in an ordinary transaction in goods, there are no implied terms regarding resale, etc. You, as the buyer of doughnuts, have not manifested any assent to terms that restrict your alienation right (that is, the right to sell something you own).
The real key here, as has been said before, is that in most jurisdictions you need a license to sell food.
My head hurts a little after reading acsenray’s post. Legalese!
But that “first sale doctrine” does not apply across the board to all products - if I buy Windows 98 and sell a copy of it to someone, I’m breaking the law, right? But if I sell the original, that’s ok?
Ah, well, software. That’s a whole nother story.
Let’s deal with the easy question first – if you make an unauthorised copy of software, you are infringing someone’s copyright. That’s where you’ve gone wrong. You’re in trouble not because you’re selling something you own, but because you’re selling an illegal copy of a copyrighted work. So the first sale doctrine doesn’t apply here.
On to more painful subjects –
The software industry would have you believe that when you are buying software, you are not purchasing goods. In fact, they say, you are not buying anything. They say what is happening is that you are paying for the right to use the software under certain conditions.
This is a licensing agreement, they say, not a sale of goods, so even though you have paid your money, you are not in possession of something that belongs to you. You are paying us for the right to use this software but you may use it only in the manner in which we say. So accompanying the software will be a license (a type of contract) – usually in the form of a “shrinkwrap agreement” (inside the box) or a “clickwrap” agreement (Click “I Agree”) – which will say this is what you can do and this is what you can’t do and under these conditions we have the right to take this away from you.
There is currently a big fight going on in the legal world as to whether software companies can do this. Many courts have enforced such agreements against consumers and the software companies are trying to get this practice reinforced by enacting a whole new law that explicitly takes away traditional consumer rights in sales of goods (look up the Uniform Computer Information Transactions Act, or UCITA).
There are a lot of things that software companies want to be able to do to control the way you use their products and to bar you from claiming that faulty software has harmed you in some way. (Companies that have lost millions as a result of using buggy software have often been awarded no more than the price they paid for it.)
Those arguing on the side of consumers say, hey, there’s no reason why consumers should lose their traditional rights under commercial law just because this is software and not, say, a book, which is also a good that is mostly comprised of information that can be copied. Copyright infringement is already illegal. So long as you don’t have proof we’re doing that. they shouldn’t allow software companies to act under a presumption that they can tell us what to do with stuff we’ve bought.
Thanks, that did explain it well. I also imagine that the issue of copying software for the purposes of having a backup - as opposed to deviantly wanting to sell it - is a sticky one that’s not very cut and dry.
That’s right, it’s not cut and dry. Your licensing agreement might prohibit it or might actually authorise a backup; however, there are those who argue that you do have the right to make a backup whether or not the license says you can.
Sony Corporation of America v. Universal City Studios, 464 U.S. 417 (1984), the so-called “Betamax case,” explicitly gave consumers the right to record shows off of television for the purpose of “time shifting.”
There are some cases and principles (and maybe even a federal statute) that seem to support the idea that a consumer should be able to make backup copies of various kinds of media, but I can’t put my finger on them at the moment.
ascenray, I have a couple of questions about “clickwrap” software license agreements. Suppose the software is purchased not by an indivdual but by a corporation, and the person who does the “clicking” is a lower level employee and not an officer authorized to enter into contracts on behalf of the corporation. Will the courts rule that the corporation is contractually bound?
And let’s take it a step further. Suppose it isn’t even off-the-shelf software, but software that has been customized and installed by the publisher. Can that software publisher still use a “clickwrap” software license, say one that is clicked on by the first user from a corporate customer after installation is complete? Again, the premise is that the clicker is not an officer formally authorized to bind the corporate customer contractually.
That’s right, it’s not cut and dry. Your licensing agreement might prohibit it or might actually authorise a backup; however, there are those who argue that you do have the right to make a backup whether or not the license says you can.
Sony Corporation of America v. Universal City Studios, 464 U.S. 417 (1984), the so-called “Betamax case,” explicitly gave consumers the right to record shows off of television for the purpose of “time shifting.”
There are some cases and principles (and maybe even a federal statute) that seem to support the idea that a consumer should be able to make backup copies of various kinds of media, but I can’t put my finger on them at the moment.
By the way, I should have disclaimed … let me do it now – I am a lawyer, but nothing I say here is legal advice and if you have an actual legal problem consult a competent, licensed attorney in your jurisdiction …
Sorry, Susan100, I don’t know enough about agency law to be very helpful here. I don’t know of any cases in the clickwrap area that have addressed this issue, either. However, I would imagine that there are a fairly well-developed set of principles regarding when employees can take on legal obligations on behalf of an employer, but as how they might be applied in a clickwrap context, it might be just as unsettled as it is for consumers.
I would imagine that in your second hypothetical that there might already be a contract in effect and the clickwrap terms might be construed as an attempt to modify or add terms to the contract. If that’s the case, then there’s a fairly developed set of legal principles for additional terms (see Section 2-207 of the Uniform Commercial Code – the text is probably available at http://www.nccusl.org – by the way, this section might be changing within the next few years).
Having thought about this a little bit –
There are a lot of factors that might play a role, principally –
– Is the employee doing this in the course of his duties with regard to his employment and is the software work-related?
– Has the employee done this before?
– Does the software vendor have reason to believe that the employee has the authority to do this?
I’ll try to look into this more to see whether I can dig up more.
Hi! Jinx here! Everyone’s given me some food for thought (no pun intended). A better example for my question is a corner hot dog vendor. Let’s say I am your corner hot dog vendor is not a francise, but a one-man team - me. I rent a hot dog cart, get a license, set up shop on a street corner with all the permits and zoning issues resolved.
The question is that the cart is “clad” with Frito-Lay products and Coke and Pepsi products. Also, I mention I have Oscar Meyer hot dogs on a hand-written sign along with other tradenames. Yet, other items are on display selling themselves. I might even pass out flyers mentioning said brands to drum-up some business!
Now, do I need permission from Coke, Oscar Meyer, and Frito Lay to sell their products? Let’s assume I did enter into any contract with a distributor representing said brands. Let’s say I’m buying on my own form various up-and-up sources…and let’s put the health laws, etc., outside the scope of this question - assume I’m following health codes, and such side issues.
The Question: Is this ALL OK?
- Jinx
Oops! I was a little drunk at the time! 
Let me re-edit and try again!
Hi! Jinx here! Everyone’s given me some food for thought (no pun intended). A better example for my question is a corner hot dog vendor. Let’s say I am your corner hot dog vendor, and I am NOT buying francise, but rather a one-man team - me! I rent a hot dog cart, get a license, set up shop on a street corner with all the permits and zoning issues resolved.
The question here is that the cart is “clad” with Frito-Lay products and Coke and Pepsi products. Also, I mention I boast that I have Meyer hot dogs on a hand-written sign along with other tradenames. And, other items are on display selling themselves. I might even pass out flyers mentioning said brands to drum-up some business!
Now, do I need permission from Coke, Oscar Meyer, and Frito Lay to sell their products? Let’s assume I did NOT enter into any contract with a distributor representing said brands. Let’s say I’m buying on my own of such foods from various reputable sources…and let’s put the health laws, etc., outside the scope of this question - assume I’m following health codes, and such side issues.
The Question: Is this ALL OK?
- De Ja Jinx!!!
acsenray, thanks for thinking about my issue. As you may have suspected, I have a RL reason for asking about this, but I’m also just plain interested in how far this clickwrap idea can stretch the “meeting of minds” concept that’s supposed to be at the core of every contract. Some meeting of minds!
Jinx, let’s say you’re not buying from a licensed distributor, but from a supermarket. acsenray knows more about intellectual property law than I do, but I still smell a trademark infringement problem. It’s only a theoretical problem, rather than a practical one, because I doubt that any of those big companies will stoop to stomp on a one-cart vendor. Once you own a whole fleet of carts, though (as I’m sure you will in record time), you might actually come to their attention and receive a “cease and desist” type letter. I’ll be interested in seeing what acsenray thinks the likelihood of this is.
Frankly, I don’t see a trademark infringement or dilution issue here. If you’re selling something and it’s otherwise legal, then you’re allowed to tell people what it is. If there are exclusive licensing deals and exclusive distributors, then there might be restrictions on how you represent yourself. But if you’re selling Oscar-Meyer weiners, I can’t see a court making you take down the sign.
A court is likely to say, hey, the manufacturer is getting a commercial benefit from this anyway.
I doubt very much that there is law that says that if you got your hands on something legitimately that the original producer can stop you from selling it, but I have a vague recollection of cases in which an “authorised dealer” has brought suit against someone who’s selling brand-name products without such authorisation.
I can’t say I know too much about these kinds of issues, so maybe someone else will step in – it’s really a matter of whom the manufacturer chooses to sell to and that manufacturer’s contracts with those distributors. The manufacturer can refuse to sell to you and can make its distributors sign contracts to say that they won’t sell to you, but other than that, I don’t see how they could stop you from selling something you got legitimately.
My best guess, though, is that this isn’t really a trademark issue. It might be something else, though.
Uh, back to Jinx’s question –
I would think that if you’ve got all the required permits and you’ve secured all the proper suppliers, then there is no reason for you to go back to all the original manufacturers and seek permission to sell their products. After all that’s why they make them and sell them. They’ve put their goods into the stream of commerce; what do they expect will happen?
Anyway, I would think that if you did need extra permissions, then you could find out from your suppliers. I highly doubt it, though. Can you imagine hundreds of thousands of retailers making requests to manufacturers for permission to sell their goods? It sound ridiculous. Hey, you sold it to a distributor whose business it is to sell to retailers. I’m a legitimate retailer; what do you think is going to happen?
Hmm…I wonder if “cease and desist” would constitute restriction of free trade? Does the law have definite answers to any of these questions…or does it all boil down to “let the best lawyer win”? It just seems like every legal question has no definite answer - until actually tried in court.
Thanks all, and buy Yoda’s!
- Jinx
Some more anecdotal support… stores like Gordon Food Service and to a certain extent Sam’s Club and Costco exist for the purpose of selling brand-name items to people who resell them.
I’ve never heard of a cause of action called “restriction of free trade.” In any case, I don’t think that a “cease-and-desist” letter (only courts can issue “orders”) can usually be the basis of a cause of action. If you’re the person sending the letter, then from your point of view all you’re trying to do is protect your rights by initiating a conversation with the person you think is violating your rights. Now you may very well be mistaken about the extent of your rights, but it’s the other person’s responsibiilty to figure out to what extent you are right or wrong before complying with any such request.
Sometimes there are solid answers, but usually it’s hard to find a definitive answer to any specific question, especially if it’s a question about real life, because there might be any number of factors and circumstances that didn’t exist in previous situations.
Uh … I don’t really think so. First of all, a lot of these issues involve rather complex commercial context. The purpose of commercial law in general is to let people do what they want until they get into a dispute they can’t settle themselves, rather than to set down in advance a comprehensive set of rules for people to learn and follow. The idea is that if no one has gotten into a fight about it, then it’s not a problem that needs to be addressed. It would be impossible anyway to anticipate every situation.
A lot of the questions people ask are very specific questions that haven’t been directly addressed. And there are so many possible situations that it’s impossible for any one lawyer to know about all of them. That’s why lawyers always tell you to consult a lawyer competent in the field. That’s the person who’s supposed to be able to figure out the relative risks.
Second, many of these issues are decided by judges, who rely a lot more on legal scholarship and serious consideration rather than which side has the best lawyer. If you’ve ever read an appeals court or supreme court opinion, there are a lot of references to precedent, principles, and evidence.
They take a rather long time to write and so any individual lawyer’s courtroom performance is less important. In fact, it’s interesting to see when an experienced plaintiff’s lawyer – like a personal injury lawyer – tries to put on his best performance for an appeals court, who clearly don’t care about all that stuff.
That was an extremely interesting post, ascenray.
Would you agree that many judges decide many cases based mainly on their gut reaction about which party is in the right on the facts, and therefore look for a legal theory to hang their hats on? In these situations, the “good lawyer’s” job is to give the judge convincing legal theories he or she can use to support a decision for the lawyer’s client.
I certainly wouldn’t argue that this happens all the time, but that it happens more frequently than is openly acknowledged in our legal system. What do you think?
Sure it happens. But when we’re talking about commercial disputes, there are a lot more situations in which neither party can be tagged as either a villain or a victim. A lot of these issues are pretty obvious, too, and judges don’t need a lawyer to point them out, not to mention that appeals court judges (especially federal ones) have a tem of clerks to do their research for them).
I would think that in a lot of cases, it’s not so important to have the better lawyer, but just to make sure you don’t have a bad lawyer.
Lawyers do most of their gaming on procedural issues and settlement talks. In a lot of these areas it’s a lot more difficult to “game” the facts and the legal theories then a lot of people might think. Sure, the lawyer is going to write the pleadings in a manner that puts his side in the best light. But I don’t think many of them think they are actually putting one over on the judge.