The doctrine of post-sale confusion blocks a robust secondary market for upcycling and repair

IV. Repair or Remanufacture Creates Conflicts That Are Not Necessarily Constrained by Trademark Limitations

Given the fact that keeping a used and unwanted product out of a landfill generally requires some product modification, the doctrines of first-sale and fair use are occasionally in tension with the activities necessary for sustainability. It is true that the limitations work well in the context of an individual who wishes to privately resell a privately owned good or repair an item for continued personal use. However, when the goal is to create a robust secondary market in materials that would otherwise be discarded, trademark law creates some problematic and uncertain hurdles. Those hurdles are more likely to be erected by the owners of high-profile marks, and they will tend to impact those smaller entrepreneurs who have the greatest interest in engaging in repair or upcycling.

A. The Surprising Reach of Post-Sale Confusion

The doctrine of post-sale confusion concerns source misidentification that happens after a product is sold by someone other than the purchaser.[195] It could be viewed as a complement to initial interest confusion, which takes place before purchase and is actionable even if purchasing confusion never takes place.[196] The idea of post-sale confusion is that some other individual who interacts with the improperly marked product confuses it for the product of the trademark’s owner.[197] This confusion is problematic when the improperly marked good is of lower quality than the trademark’s own good, creating a disincentive for the viewer to purchase the authentic goods.[198] A variation of this argument is that third-party consumers viewing the trademark owner’s mark on goods in less elite contexts may see the brand as less exclusive.[199] Additionally, even if the quality is adequate, an individual seeing the mark on a good that is outside of the owner’s typical market segment may believe that it represents an extension of the owner’s brand and in turn curtail the owner’s ability to actually make a similar expansion.[200] According to many courts, any of these types of confusion can constitute infringement.[201] And even abstracted from true confusion, such incorrect association with a famous brand could be found to dilute the brand through blurring or tarnishment.[202]

Post-sale confusion is frequently alleged in the context of counterfeiting cases.[203] As one can imagine, a consumer who purchases a counterfeit Louis Vuitton handbag for twenty dollars on the streets of a large city may fully understand that the deal is too good to be true. The seller could plausibly argue that all parties to the transaction know what is occurring and that there is an absence of confusion. Additionally, a purchaser of a fake Louis Vuitton bag may not even have the resources to buy a real one (which can easily exceed $1,000), so there is not even a lost sale as a result.[204] The post-sale confusion argument helps to fill this gap by allowing the trademark owner to argue that other potential purchasers who view the counterfeit good and make negative conclusions about the quality or market positioning of the brand-owner’s goods are the source of harm.[205]

As one might imagine, the post-sale doctrine can be a somewhat problematic rule because it involves so many extra steps in comparison to a standard trademark case. An allegation necessarily relies on a rather convoluted assumption that an individual who sees a confusingly marked product will (a) believe it is made by the original trademark owner, (b) make an incorrect conclusion about quality or market presence, and (c) actually act on that conclusion to the detriment of the trademark owner (e.g., by not purchasing their products or thinking poorly about their products).[206] To be sure, that is a more indirect case than a standard infringement action. Moreover, the proof required for courts to impose liability is generally only the existence of confusion.[207] In other words, plaintiffs are rarely required to demonstrate that consumers would actually make all of the assumptions that result in trademark owner harm because the standard is likelihood of confusion or likelihood of dilution.[208]

Another facet that makes post-sale harm unusual is the indirectness in and of itself. The consumer who is confused is not a party to the transaction. Although it is not clear that such harm would have been covered under previous iterations of the federal trademark statute, a 1962 revision of the Lanham Act removed the limitation of purchaser harm and opened the door to harm from the behavior of potential purchasers.[209] Courts have agreed that this class can be considered as actionable infringement (depending on the extent to which a trademark can be perceived by third parties).[210] Commentators have noted that the confusion must nonetheless be theoretically connected back to a purchasing decision, as confusion in the abstract is not a harm unless one imputes a change in consumer behavior toward the trademark owner.[211]

In the context of product repair or upcycling, one can see that it could present a lingering issue, no matter what level of disclosure is made to the initial consumer. If a product is modified or remade into something different, and the trademark is still visible, post-sale confusion is a possibility. Note that the trademark may take the form of a traditional word or symbol but could also constitute “trade dress,” derived from the shape, color, or sound of the product.[212] An upcycled Coca-Cola bottle may always carry the trademark hourglass shape, regardless of whether the brand name is present.