The First Sale Defense and the Effect of Post-Sale Confusion of Non-Purchasers

Is the "first sale" doctrine always a reliable safe harbor for resellers of authentic trademarked goods? Should we analyze the likelihood of confusion only of purchasers of allegedly infringing products, or should that analysis extend after purchase to non-purchasing consumers who encounter an infringing product in the marketplace and are confused as to its origin? In this Analysis, Andrew Gold discusses Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133 (9th Cir. Ariz. 2010) [enhanced version available to lexis.com subscribers /  unenhanced version available from lexisONE Free Case Law], a case in which the Ninth Circuit tried to untangle these concepts. He writes:

     Beginning in the early 1990s, Auto Gold produced and sold four products bearing Volkswagen and Audi trademarks without permission from the automakers. Three of the products used replicas of the respective trademarks. The fourth product, a marquee license plate, used actual VW badges purchased on the open market from a Volkswagen dealer. Auto Gold purchased the badges, altered them, and mounted them on license plates. The plates were packaged with labels that explained that the plates were not produced or sponsored by Volkswagen.

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     . . . [T]he Ninth Circuit asked the district court to determine whether the marquee license plates are protected under the "first sale" doctrine because the plates use lawfully acquired VW badges, and their packaging disclaims any association with Volkswagen.

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     Post- Purchase Confusion: Here, the court went beyond the point of sale and looked at the effect of the presence of the underlying trademark on non-purchasers, and considered the possibility of post-purchase confusion. In other words, when non-purchasers (who had not seen the packaging making clear that the license plates were not produced or sponsored by Volkswagen) saw the marquee license plates with Volkswagen badges, would they be confused as to the source of origin of the products.

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