A Legal Blog by Aaron | Sanders, PLLC

It Happens Even to Fancy Companies: Downstream Intellectual Property Liability

Don’t Ignore it; Manage it.

Let’s say you’re a retailer. You buy stuff from a reputable manufacturer or middleman and turn around the sell it to the general public. You’re pretty safe from most intellectual-property concerns, right? If what you’re selling turns out to be counterfeit, that’s not your problem, right? You did all you could to avoid counterfeits, mostly by making sure your sellers are reputable. Besides, you didn’t do anything wrong—whoever made the counterfeit did. The same thing goes for patent infringement—not your fault, right?

It might not be your fault, but it is, unfortunately, still your responsibility, as a recent case involving Fossil and Macy’s demonstrates. Intellectual property law cares not (much) about morality and “fault,” but can and will impose liability on parties we’d otherwise think of as blameless. As a business owner or manager, all you can do is take sensible steps to reduce your company’s exposure.

What Is Downstream Liability?

Welcome to the horrible world of “downstream liability.” Unfortunately, it is an infringement of trademark and patent rights to sell infringing items; and it’s an infringement of copyright to “distribute” copyrighted materials. Patent, copyright and trademark laws don’t care very much about “fault.” If someone up your…

Hmm, but is it genuine? Better check the clasp. Photo by Ben Schumin, licensed under Creative Commons Attribution-Share Alike 2.5 Generic license.

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UCC Doesn’t Save Homeowner From Careless Installment Contract or Unsatisfactory A/V System

Great Expectations for $100K Are Nice, But You Should Still Put Them in the Contract

I probably like Article 2 of the Uniform Commercial Code more than most lawyers, but even I have to recognize its limitations. Article 2 governs sales of goods, from candy bars to billion-dollar offshore platforms. It even applies to custom-made goods. It’s designed to minimize the amount of drafting (and legal expense and bother) necessary for even complex purchase-and-sale agreements. Without it, commerce would be a lot slower, and might even grind to a halt. The way it does this is by “gap fillers.” You can think of them as default settings for a purchase-and-sale agreement: delivery times, delivery destination, FOB, warranties, even price, among a great man other “defaults.” Only quantity must be absolutely specified by the parties (and even then they can talk in terms “all I need” or “all you’ve got”). You can agree on different terms, of course, but you don’t have to go in that level of detail if you don’t want. It’s designed to be common-sensical to business folks (which may be why lawyers have such a hard time with it!).

Article 2 gets wonky when services are throw into the…

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