Resellers of large brand new sealed products through lg online platform. Brand send C&D and threatened legal action.

Question

We are small resellers of brand new sealed technology products on a large online platform backed by a full return policy. The brand just started peppering us with C&D letters. We have asked to be approved as authorized resellers but they are not entertaining the notion and don't provide a reason. Since the items are legitimate and customers have been pleased, we're not sure if they are just blowing smoke and trying to scare us or if trade laws in the US support them. 
The EU has laws allowing sales of any product where you want if you buy from another company in the EU, US or UK. IF we are selling in good faith with a full return policy, what's the problem? We're not exactly the size of Best Buy and would happily comply with the authorization process.

James L. Arrasmith · Answer

This situation touches on complex areas of law, including trademark law, the first sale doctrine, and antitrust considerations. Here's an overview of the key issues: 
 
1. First Sale Doctrine: In the US, the first sale doctrine generally allows resale of genuine, lawfully acquired products without permission from the trademark owner. This could potentially support your position. 
 
2. Material Differences: However, brands can sometimes argue against unauthorized resales if there are "material differences" in the products or warranties offered, which could affect the brand's reputation. 
 
3. Authorized Dealer Networks: Manufacturers have some legal rights to control their distribution channels through authorized dealer networks. This practice is generally allowed if it doesn't violate antitrust laws. 
 
4. Trademark Infringement: Brands might claim trademark infringement if they believe your sales could confuse consumers about the source or authenticity of the products. 
 
5. Platform Policies: The online platform you're using may have its own policies regarding authorized resellers, which could impact your ability to sell there. 
 
6. Warranty Issues: If you're not an authorized reseller, the manufacturer may not honor warranties for products you sell, which could be a concern. 
 
While the EU has stronger protections for resellers (known as exhaustion of rights), the US legal landscape is more complex. The brand's cease and desist letters suggest they believe they have a legal basis for their demands, but this doesn't necessarily mean their position would hold up in court. 
 
Given the complexity of this situation and the potential legal risks involved, it would be advisable to consult with a lawyer specializing in e-commerce and trademark law. They can review your specific circumstances, the exact wording of the C&D letters, and advise on your best course of action. 
 
In the meantime, you might consider: 
1. Documenting your sourcing to prove the products are genuine. 
2. Reviewing your marketing to ensure you're not implying any official connection to the brand. 
3. Clearly stating your reseller status and return policy to customers. 
4. Continuing to seek authorized reseller status, perhaps through different channels in the company. 
 
Remember, while you're operating in good faith, large brands often have significant resources to pursue legal action, even if their case isn't strong. A legal professional can help you weigh the risks and benefits of continuing your current business model.

Q: Resellers of large brand new sealed products through lg online platform. Brand send C&D and threatened legal action.