Coordinators

Other Contributors

About Us

www.clpblog.org

The contributors to the Consumer Law & Policy blog are lawyers and law professors who practice, teach, or write about consumer law and policy. The blog is hosted by Public Citizen's Consumer Justice Project, but the views expressed here are solely those of the individual contributors (and don't necessarily reflect the views of institutions with which they are affiliated). To view the blog's policies, please click here.

« Consumer Law Questions for Presidential Candidates | Main | Consumers Opt In to Receive Text Message Ads »

Tuesday, July 17, 2007

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83451b7a769e200e008d967e78834

Listed below are links to weblogs that reference Companies Claim Right to Interfere with eBay Auctions for Charging Too Little:

» http://consumerist.com/consumer/see-i-told-you-so$%3E/index.php#279764 from Consumerist
Fallout from Leegin Creative Leather Products v. PSKS, which now allows companies manufacturers to dictate minimum prices: companies try to cancel eBay auctions for people selling products too cheaply. [Consumer Law & Policy]... [Read More]

» Companies Claim Right to Interfere with eBay Auctions for Charging Too Little from Stirrdup Trackback
This story has been submitted to Stirrdup. Your support can help it become hot. [Read More]

» Sentencia contra la venta en EBay de productos a menor precio. from NOTICIAS-TIC.COM
Una sentencia del Tribunal Supremo de Estados Unidos da la razón a una tienda que denunció a otra por vender los productos a través de eBay a menor precio. Esta sentencia puede crear una reacción en cadena que haga que los ‘chollos’ que se consegu [Read More]

» Hmm ... from We Like Sheep dot Org
So can we be honest, when we see court descisions like this one, and its abuse by the corporations in our age, we do not live in a free market system and one of the reasons we dont is that it is not in the interest of the corporations that run our go [Read More]

» eBay Bargains Soon To Be A Thing Of The Past? from AuctionWire
ScaredOfTheMan writes to mention that, as expected, companies are utilizing the decision in Leegin Creative Leater Products v. PSKS to force the take-down of auctions on eBay because auctions are priced too low or even stating the auction itself is an inf [Read More]

» Restoring the natural order from Clicked
Designed deterioration - Some things -maybe even most things- get cooler with use. Their design is such that the worn or broken-in look can be a good thing. The article uses a cast iron skillet as an example. I thought of jeans or sneakers. But tech... [Read More]

» July 2007 Quick Links, Part II from Technology & Marketing Law Blog
By Eric Goldman Virtual Worlds * After a remarkable run as media darlings, Second Life is now experiencing some of... [Read More]

» Resale Price Maintenance and eBay from Defending Scoundrels
Resale Price Maintenance (RPM) is, in a nutshell, a supplier imposing on its customers a minimum price at which they may resell goods or services acquired from the supplier. The result of RPM is to reduce or eliminate price-based competition... [Read More]

Comments

Rick Sparks

It amuses me when capitalists try to eradicate capitalism. Oh, the irony...

Tiffany

Your blog brings a lot of excellent information to public attention, but I think this post is slightly misleading. Although the companies may be motivated in part by pricing issues, neither of the cases described here is based on price restraints. In particular, the Merle Norman case, while its mention of the Leegin case in support of distribution restraints is ominous, is based on a blanket prohibition against internet sales by its vendors. Companies may, in fact, be TARGETING these sellers because they're charging too little, but neither is claiming the right to control the price at which an eBay seller sells.

John C

You have to wonder why ITI and Merle Norman's lawyers didn't read this ruling carefully before trying to use it in their cases.....

Reading the Leegin brief, it seems that it might apply to both of the cases mentioned above.... but not in the way either Merle Norman or ITI would hope....

Both LeBarbara and Colon could use Leegin as a defense of their own case, as they neither had a contract with the manufacturer nor bought the goods from the manufacturer.... Leegin Section IV B, "The text of the Consumer Goods Pricing Act did not codify the per se illegality for vertical price restraints. It rescinded statutory provisions that made them per se legal"

Specifically, the Majority Opinion mentions Congress repealing the McGuire Act -- which required adherence to pricing structures by everyone regardless of contract with the manufacturer.....

In this case, the companies might be doing exactly what the Court said Congress didn't allow anymore.

Greg

Tiffany, thanks for your comment. You are correct that Merle Norman claims the power to prohibit all sales on the Internet, regardless of price. However, it justifies this position by saying that store owners will have a difficult time competing with lower prices on the Internet. The company would have no need to clamp down on Internet sales that are priced the same as in-store products, because as its brief explains, "[Internet] buyers have little incentive to purchase products at or above prices they can obtain in Merle Norman studios."

As I mentioned in the post, the company also claims that it wants customers to purchase in the store to ensure that they have access to its trained "beauty consultants." This is exactly the situation that the Court in Leegin hypothesized to be procompetitive: eliminating cheaper prices on the Internet so that customers will have to subsidize greater levels of service in the store. I seriously question, however, whether customers will appreciate the requirement that they pay extra for this service.

As for ITI, it explicitly takes the position that selling below its minimum-price is a violation of its rights.

Some Guy

I know some of the main guys at Innovate -- Patrick (business) and Klaus (technical / development) and they are 2 of the nicest guys you could know.

Anyway, on the one hand I understand how hard it is for a small company to sell products and make any money. I've done it and it's damn hard.

But on the other hand, it's well-known and understood that with the internet, for better or worse, information spreads very very quickly. If the product is available for cheaper somewhere, that is to say somewhere reputable, eventually people will share this info and sales will gravitate there.

On the other hand, if a company tries to strong-arm a discount supplier (even if it's not an authorized dealer), the community will hear about it, and often will rebel or reject the product's company out of spite (in this case that would be Innovate.)

Hard to say what will happen here. I see both sides of the issue. The unpalatable but sometimes necessary step is for a company to ONLY sell directly to the consumer. Pros & cons there too.

Guess we'll have to see how this shakes out.

Some Guy

I know some of the main guys at Innovate -- Patrick (business) and Klaus (technical / development) and they are 2 of the nicest guys you could know.

Anyway, on the one hand I understand how hard it is for a small company to sell products and make any money. I've done it and it's damn hard.

But on the other hand, it's well-known and understood that with the internet, for better or worse, information spreads very very quickly. If the product is available for cheaper somewhere, that is to say somewhere reputable, eventually people will share this info and sales will gravitate there.

On the other hand, if a company tries to strong-arm a discount supplier (even if it's not an authorized dealer), the community will hear about it, and often will rebel or reject the product's company out of spite (in this case that would be Innovate.)

Hard to say what will happen here. I see both sides of the issue. The unpalatable but sometimes necessary step is for a company to ONLY sell directly to the consumer. Pros & cons there too.

Guess we'll have to see how this shakes out.

tunequest

Does the First Sale doctrine apply in either of these cases? Doesn't that allow people to do whatever they wish with a purchase once that purchase has been made? Assuming there's no binding contract between the two parties, of course?

Bob

IANAL, but I doubt that this strategy is going to last for too long - it seems patently frivolous. Random people on eBay aren't in privity with the initial manufacturers or distributors. Of course, this probably isn't going to stop companies from issuing take down notices on the "suspicion" that there "might" be a problem, but this seems like the kind of case that a first year law student would laugh out of court. Consumers are under no contractual obligation to respect prices, and so any such takedowns are ridiculous. I'd wonder if anyone whose auctions are taken down could file a suit against the person who filed the takedown claim for tortious interference.

r3dn3ck

I used to be a customer of Innovate Motorsports. No longer. This sort of MAP (minimum advertised price) BS is nothing short of legally sanctioned collusion between manufacturers and sellers. If I get your product at a low enough price that I can sell it for less than you, then it would seem to be your problem not mine right? Or more directly, would you be ok with every dairy farmer in the country being able to one day decide that they want 20 bucks a gallon and if you don't sell it for that they can have an injunction slapped on you? This is the core of everything that's wrong with capitalism.. which is strange cuz I like capitalism otherwise.

Innovate will certainly lose at least 1 customer from their mindless attempt to misuse intellectual property law. They just did.

r3dn3ck

I used to be a customer of Innovate Motorsports. No longer. This sort of MAP (minimum advertised price) BS is nothing short of legally sanctioned collusion between manufacturers and sellers. If I get your product at a low enough price that I can sell it for less than you, then it would seem to be your problem not mine right? Or more directly, would you be ok with every dairy farmer in the country being able to one day decide that they want 20 bucks a gallon and if you don't sell it for that they can have an injunction slapped on you? This is the core of everything that's wrong with capitalism.. which is strange cuz I like capitalism otherwise.

Innovate will certainly lose at least 1 customer from their mindless attempt to misuse intellectual property law. They just did.

Steve Taylor

How do Innovate actually "lose" anything if someone sells at less than the RRP ? Presumably it was sold on to whoever is selling it at a profit to Innovate ? The difference in price is the middleman's margin, and if he's crazy enough to cut it to the bone, well good luck to him.

Steve

Mort

So, if it is "not a good practice" to sell the products BELOW a certain $$ amount, how are these people buying these products at a lower $$ amount and how are they able to still mark up the price and make a living, AND STILL BE UNDER THE MSRP?
If it is possible to buy the products at a discounted price, then SOMEONE ELSE IS VIOLATING THE AGREEMENT...
What a bunch of MORONS...

Brian

I ran a software company until 2006 and had to use eBay's VeRO program a number of times.

I have no problem with eBay auctions of our product and I don't seek to control the street price.

What the article above fails to acknowledge is that many eBay sellers will rip-off the manufacturers marketing materials entirely in their eBay postings in order to make them look like a legitimate reseller. That's a clear violation of my IP and it has nothing to do with the price they are charging.

If you want to sell my product on eBay, either sign up with me as a reseller, or invest your own money in writing marketing copy, creating product graphics, logo design and images. If a seller thinks they can just steal these copyrighted materials from my website and post them in their auction with no repercussions, then they are both crooks and fools and they deserve to lose their eBay accounts.

It seems to me the Innovate! case mentioned above is a clear example of this, and they are well within their rights to take action against the eBay seller on those grounds.

Steve Taylor

Any way you look at it Brian, YOU, as the manufacturer have still made your money. Why whinge ? What you are seeing is capitalism working at its best.

Steve

Richard

I hope you stay on top of and continue to blog about this issue. How the courts interpret Leegin and the use there of is something I would like to continue to hear about.

The comments to this entry are closed.

Subscribe to CL&P

RSS/Atom Feed

To receive a daily email of Consumer Law & Policy content, enter your email address here:

Search CL&P Blog

Recent Posts

October 2014

Sun Mon Tue Wed Thu Fri Sat
      1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31