First Sale Doctrine Ran Out of Time
Tuesday, 02 May 2017
A repaired Rolex may not be a Rolex. In Trademark Law, the “First Sale Doctrine” allows a consumer who buys a trademarked item to resell it without having to pay a license fee. But there are limits. In Rolex Watch USA, Inc. v. Krishan Agarwal, the defendant refurbished Rolex watches and then resold under the trademarked name. When Rolex sued him for trademark infringement, Agarwal asserted the affirmative defense of the First Sale Doctrine. The court rejected the argument. The court examined the impact of the modifications on the original product. If the modifications create a new product, it can no longer be sold using the trademark. In this case, Agarwal replaced dials and bracelets that weren’t authentic Rolex items. Agarwal offered to include a disclaimer. But the court held that the disclaimer would be confusing because the refurbished watch was really a new product.
WHY YOU SHOULD KNOW THIS. A business can thrive on providing aftermarket enhancements, refurbishments or changes. However, when dealing with branded goods, the changes can go too far and then resale can result in exposure to liability.