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Tuesday, July 17, 2007

Comments

Neil

My impression is that the problem is starts when the manufacturer starts giving discounts to the bigger sellers, who then sell at a lower price to the eBay sellers, thus undercutting the smaller B&M sellers. If the manufacturer sold to everyone at the same price, the large sellers wouldn't be able sell to the eBay folk so cheaply. The way I see it is that the bigger sellers are the villians, and forcing higher prices helps them, not the consumer. You don't have to try to shut down all the eBay sellers; stop selling to the larger distributors who are doing the undercutting. The manufacturers leave them alone because that's where they sell their volume.

Aexia

If a reseller is buying increased quantities to qualify for a discount and then passing it on at cost to someone else, then isn't the issue solely centered around the reseller who's breaking its contract with the manufacturer by selling below the agreed price?

jonathon

If the manufacturer has an issue with sales at less than there Minimum Retail Price, then the manufacturer needs to train their distributors in what constitutes good customer service. Then train their distributors in how to do retail product sales. People will pay for quality products. People will pay for good customer service. But when you get bad quality products, or shoddy customer service, or both, then the consumer dollar is going to go to the retailer that has the lowest price. There is no divine right for a brick and mortar to stay in business. Likewise, there is no divine right for a manufacturer to stay in business. If they can't, or more likely won't provide adequate customer service to stay in business, well they do not deserve to stay in business.

Ghost of Mao

Kill all the lawyers.

Richard

People have the right to sell things for whatever price they wish to sell them. If companies do not like that, they can refuse to continue selling them their products.

The real problem that we have is that we have "unfair competition" laws on the books and not only do we have them, it is the federal government that has them on their books and is enforcing them, which is unconstitutional outside of Indian reservations, U.S. territories and Washington D.C.

In my opinion, Leegin Creative Leather Products v. PSKS was a step in the right direction. Now if only we could get laws against anticompetitive behavior taken off the books; if that is done, all of these lawsuits that claim that lower prices is anticompetitive will disappear.

Ari

Easy to avoid if this becomes a problem for discount sellers on the net.
Sell with a "tear" in the box; a paint "mark" on the
box; as new but "open"
box. etc.

Robert Krawitz

Eric,

If in my assessment I can do better ("increase my utility function") by buying something on eBay, why shouldn't I? I don't expect an authorized dealer to help me out in this case. I'm perfectly capable of taking my laptop apart; I just need the parts for it. I can also service my own lawnmower. I don't mind paying full retail price if I really do plan on needing service, and I've done so at times.

If you as an authorized retailer don't want to service someone who bought something on eBay, why do you do so? Evidently you've decided that the goodwill from doing so outweighs the loss on the sale, but that's your call. It's not my obligation to help you out. If you take a hard line and refuse to service gray market equipment, you'll find that some people won't be happy, but others who do want the service are happy to pay the premium.

If everyone decides to buy on the net, then that says something about the level of service people really do expect. Maybe people really do want to buy just the goods without any personal service. Or maybe you, as the dealer, can buy goods off eBay, resell them to your customers at 10% markup, and provide them -- and only them -- with service. But again, that isn't my problem, from a consumer standpoint.

The problem in the telecom industry is that the major players are keeping everyone else out through regulation. Note that Europe and the Far East have much more aggressive competition in the telecom industry. Note that in the US Apple was all but forced to pick one provider to partner with. That's a cartel. It's not the result of "unfair" competition, other than the big telecom providers stacking the regulatory deck to keep competitors out.

John

There is nothing more ignorant than a layman who fails to read the law fully. There is nothing more dangerous than a lawyer who fails to ethically research a subject and violates Rule 11 by advancing arguments that do not exist.

The law is not really that hard -- people just refuse to really read it.

Fluke

So called "high-end" retailers should be careful about Leegin as it may open the door to employee or customer class action suits against the high end retailers themselves.

If the reasoning to Leegin is that the higher price provides additional services/quality when performing the sale or supporting the product then the customer should be able to treat the higher price as a defacto contract that such higher quality WILL be provided.

Does Merle Norman Cosmetics pay any of it's employee's minimum wage? Can the company show that the quality of additional sales services is actually be provided at the price they pay their employees? Does every employee have to go through a week+ long training period or shown a 2 hour video?

Do any of the materials to make up Innovate! Technology parts come from China? Can they show the implied additional quality is still continually being provided when buy parts or labor from overseas?

My personal experience has been that retail store employees are for the most part mindless robots anyways. I find it much easier to get additional pre-sales information from Newegg than BestBuy. Detailed information about the specifications of the product is available immediately from Newegg. I have been told by BestBuy employees that if the information isn't given on the back of the box then they don't have the answer. Also, if the display model of a product, such as a digital camera, is broken then Best Buy employees state that there is nothing more they can do. It has also been much easier to get Newegg to honor it's extended warranty than Best Buy.

So, if Best Buy decides to leverage Leegin to force Newegg to match it's minimal prices, then they better have the same (or better) quality of support (detailed product descriptions, specifications, customer reviews, etc) as Newegg. If instead they continue to provide mindless minimal wage bots that perform worse than Newegg while forcing Newegg's price to go up then I will feel obligated to file a class action lawsuit for failure to provide the additional services that Leegin claims is implied as being provided with the additional price.

Matt

Geoff and James and Bud and others are essentially expressing the same sentiment: Private property rights are quickly disappearing in America. There is a fundamental disconnect between the Fascis..er, Republican leadership and the "vulgus" who "voted" them in. The impressionable masses bought into the lipservice paid to protecting privacy, private property rights, gun ownership, free market economics, etc while the leadership have gone about preventing anyone who doesn't have money from making any. This trend, sad to say, will continue, but Leegin didn't start it. We owe that debt of gratitude to the 7th Circuit Court of Appeals and the rash of "law and economics/Chicago school" judges who've held sway therein. It all started with ProCD v. Zeidenberg, the foundational case dealing with shrinkwrap agreements. At one time, under the common law, contract formation required "a meeting of the minds" and valuable consideration. A party to a contract had to be aware of its terms in order to be bound. Today, however, I can sell you a box of nails with a draconian "contract" printed on the inside of the box, which refers to additional terms hyperbolicly sealed in a capsule located on the bottom of the Mariana trench. By opening the box and using a nail, you have agreed to all the terms, which I can change without your consent at my sole discretion (read: whim). The contract is a licensing agreement: you are granted a license to use the nails, so long as you comply with my terms, but I retain legal title to the goods. Should you sell one of the nails to another, he is now bound by the contract as well, even though he had no way of knowing about the agreement between you and I. Leegin only furthers this charade.

But what about consumer protection statutes, you might say? Isn't this contract unconscionable? Doesn't it violate some fair trade practices statute? Maybe, but statutes are no obstacle for the shrewd contract wordsmith. I just put a little clause in there about waiver--by opening this box, you agree that you waive your rights to any cause of action (etc etc) provided under . As long as the statutory protections purported to be waived are not found in the Securities and Exchange Act of 1934, you can waive them. You can contractually waive your Constitutional rights as well (including some of those which are supposed to be "inalienable").

Now the 9th Circuit Court of Appeals might take issue with this scheme, but they'd be the lone holdout, as pretty much every other circuit has adopted in some form or another the reasoning train wreck started by the 7th Circuit in ProCD. Fair use, First Sale Doctrine, etc etc etc only apply to GOODS WHICH YOU BUY. If all you're buying is a LICENSE TO USE, you never OWN the goods. And that is where we're going. We have this common law doctrine called the "Rule Against Perpetuities" which is, at least in part, intended to curb dead hand control over property [in an inheritance context] and to promote (relatively) free alienation of property. But we don't have a similar proposition for commercial sales contexts - I guess because corporations will never have "dead hands." These companies want to control what you can do with their products ad infinitum, and if people keep spending money on those products, they'll eventually get their wish.

As bad and horribly ill-conceived as ITI's construction of Leegin and intellectual property law is, the real crime here is that they can actually MAKE THE ARGUMENT AT ALL. It's a testament to how desensitized we as a society have become to unbridled greed. Our President and VP wouldn't hesitate to slit their mothers' throats for a few extra nickels; they openly and admittedly steal from the people at every turn; and they scoff at conflicts of interest. And we just sit here, posting on messageboards and blogs and whining -- and keep buying sh*t from companies that bankroll more fascist agendas, more unfettered greedmongers. Is anyone ever going to get angry enough to DO SOMETHING ABOUT IT?

Douglas W. Goodall

This seems like price fixing to me. No more or less. I agree that if the manufacturer's web site says that there is a copyright on the web contents, then the ebay seller cannot directly use their graphics or verbage. I see no problem though with the ebay sellers providing a link to the manufcturer's site where a potential buyer can review the product. ebay provides people with a way to sell their old stuff to a larger audience. Sometimes it takes an infrastructure like this for the average person to get fair value back for a used item. When you license soft goods like software to people, you get a lot to say about what they can do with it and they get to agree or not to the license. When you buy hard goods, and you are not copying them, there are not copyright issues and you should have the rigt to sell at any price that you consider worthwhile. I do not approve of price fixing, in any form. I think it is clear to most people when they buy items from ebay that service is not what is being sold, just the item. In my experience, when I was reselling gift items, the manufacturer claimed they were treating the dealers fairly, but people down the street from the manufacturer's seemed to be able to get back-door deals that allowed them to unfairly compete against me. I hate that.

John

I am a 21 year old ebay seller of name brand tanning products. I am currently on my fourth user ID, and now sell under an alias. Bear in mind that this is my full time living. Manufacturers of these products will do virtually anything to eliminate competition of any kind, including manipulating the ebay market through VERO. As a result, I have been suspended from three prior accounts, one with over 9,000 feedback at a 99.4% positive rating, in addition to receiving threatening letters.

Their claim is that I tortiously infringe on the manufacturer-distributor contract by purchasing from the distributor (who knowingly and willingly sells me). What's more unsettling is to know that the law is most likely not on my side. If regular suppliers (salons in my case) go out of business because I am undercutting them, they obviously were doing something wrong. They should have considered reducing their product prices to market value instead of attempting to gouge their customers. I'm sad to see our country moving further and further away from a laissez faire philosophy.

James

One other thought: who owns my house??? Do I? Well, do I? Or does Dupont for the insulation, or Lowe's for the wood used to make it, or Dutch Boy for the paint on the walls? If I sell my house, do they have to approve the pirce I set? That's exactly where this is going. I bought a product. It's mine to do with as I please as long as I don't break a law or harm someone with it. If I want to sell it, then it's mine to sell . . . at whatever price I wish. Next thing we'll hear is the British suing us because we broke our contract with them and set up a new country. They owned it first and so therefore still own it. They own all our land. Everyone get your redcoats out. Blimey it's feelin' rainy today.

James

So, if I were to buy some makeup from Merle Norman and never use it and then sell it at a garage sale a couple years later, are they going to sue me because I only charge 50 cents??? Goodbye summer garage sales. "Sorry ma'am. You can't sell that 1974 lawn mower because it doesn't meet our minimum advertised price of $300. It'll have to go to a landfill and pollute the water table instead of going to someone who can fix it up and use it. Oh, it's not our fault. It's the courts! They said it's illegal, not us!" Give me a break. Sometimes our legal system make me absolutely sick.

Bud Fields

Joe Public isn't supposed to BE a seller. JP is supposed to be a consumer. From the looks of things, a final consumer at that. I don't need a reseller's contract to sell goods I own--or do I?

It seems to me that the one thing sadly missing here are the rights of consumers. If I buy a widget legally from the widget manufacturer (or his distributor), and sell it, isn't that my right? I am, after all the legal owner. Transfer has been established. What I, as the consumer (reseller or NOT!) set as the price is none of Widgets-R-Us' business--or is it? What direct relationship exists between myself and Widget? Am I, as a customer, constrained from selling what I legally possess just because it is Widget's product? Forever? I think not. I don't care if I've owned it for less than a moment. I own it. Period.

If I, as that same consumer, go to eBay, set up my reseller's account, and offer this same product for MY price, that's my determination to make, as the legal owner. If, however, I go to the Widget website, rip their graphics, manuals, and logo--well then, that's a criminal act.

But if I don't, and do not associate myself with widget, his distributor, or the Pope, they have no justifiable cause against me!

Capitalism? I think not. Corporatism? You bet. And, Leegon is only the tip of the iceburg. We'd better stop this now, or life is gonna get really dicey.

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