7 April 2022TrademarksAlex Baldwin

Ninth Circuit green lights ‘first sale’ defence in Fiat’s Bluetooth lawsuit

The US Court of Appeals for the Ninth Circuit has given Fiat Chrysler Automobiles (FCA) a chance to revisit a“first sale” defence against a Bluetooth standards organisation's claim of trademark infringement.

In a precedential opinion handed down on Wednesday, April 6, the circuit panel vacated a Washington court’s decision to grant a summary judgment of trademark infringement to Bluetooth SIG.

The panel considered whether a trademark doctrine known as “first sale”—which holds that the right for a producer to distribute its trademarked product can’t extend beyond the ‘first sale’ of the product, but gives the purchaser the option to stock and resell the product—extended to trademarked products being “incorporated” into a new product.

The lower court had sided with SIG that FCA violated its trademarks by marketing the official Bluetooth-capable entertainment products manufactured by third-party suppliers for its cars without signing a specific agreement with SIG.

SIG claimed that, in order to use any of the Bluetooth marks, including the word mark “Bluetooth” and the design mark, a manufacturer must first join the SIG and sign the licensing agreement.

FCA claimed that its actions were protected by the first sale doctrine.

The district court granted a summary judgment in favour of SIG, claiming that the doctrine was inapplicable because FCA’s conduct went beyond “stocking, displaying, and reselling a producer’s product”.

But on appeal to the Ninth Circuit, the three-judge panel claimed that the lower court’s analysis of the doctrine was “narrow”.

On appeal, SIG relied on its view of the first sale doctrine based on prior Ninth Circuit precedent in Sebastian v Longs Drug Stores(1995), which states that the doctrine only protects purchasers that “do no more than stock, display and resell a producer’s product”.

However, the Ninth Circuit panel disagreed with SIG’s characterisation of the doctrine and said that “Sebastian never purported to articulate the outer bounds of the first sale doctrine. It simply captured that the unauthorised resale of genuine goods presents an easy case for protecting a downstream seller.”

The appellate court vacated the district court's grant of a summary judgment to SIG on the first sale issue and remanded for further proceedings.

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