Josie Maran does not want unauthorized parties selling its all-natural cosmetics on Amazon. The brand asserts in a new lawsuit that it maintains a strict resale policy that limits the extent to which resellers can use its trademarks, “only permit[ting] sales of [its] products to retail consumers and expressly prohibiting sales to customers that intend to resell the products” in order to avoid “brand dilution, tarnishment, and confusion as to the origin of the products.”
In the complaint that it filed in a California federal court this week, Josie Maran claims that an Amazon seller named Morning Beauty is on the hook for trademark infringement in connection with its unauthorized sale of authenticJosie Maran products. According to Josie Maran, since at least November 2018, Morning Beauty has been running afoul of its resale policy by offering up products bearing its trademarks but without authorization and without a few key elements associated with the authorized sale of Josie Maran products, namely, strict “quality controls related to packaging, storing and shipping of the products,” a “certain level of customer service,” and the consumer warranty that it provides in connection with its products.
Because its resale policy “specifies that any warranties associated with [its] products are only valid when sold by [authorized] resellers and are void if sold by resellers such as the defendant,” Josie Maran argues that the otherwise authentic products are now “non-genuine” and potentially of “inferior quality,” and thus, Morning Beauty is on the hook for various trademark-centric causes of action.
In case its own resale policy is not enough, Josie Maran points to Amazon’s marketplace rules, which “require that any product that is listed as ‘New’ come with the ‘Original manufacturer’s warranty, if any.’” Maran argues that despite the fact that the products that Morning Beauty is offering for sale “do not come with [the brand’s] warranty” as a result of the terms of its resale policy, Morning Beauty is nonetheless “listing the products as ‘New’” on Amazon’s Marketplace.
With the foregoing in mind, Josie Maran sent four letters to Morning Beauty between February and April 2020, alerting the seller to the allegedly infringing nature of its activities, and demanding that it cease sales of products bearing the Josie Maran name and other trademarks, but did not receive a response. All the while, Morning Beauty continued to sell the cosmetics, save for when the company “briefly took down its [Amazon] listing,” which Josie Maran argues is a “presumed acknowledge of the validity of [its] claims.”
Morning Beauty has resumed its sale of the products, including a Josie Maran Argan oil, and “continues to sell” them.
Fast forward to May 18, and a lawyer representing Morning Beauty responded to Josie Maran’s latest cease and desist letter, “indicating that Morning Beauty would agree to settle [the] dispute.” However, Josie Maran claims that “settlement discussions [have since] ceased, and [Morning Beauty’s] counsel is no longer responding to [its] correspondence,” prompting the brand to file suit.
Counsel for Josie Maran claims in its complaint that “because [Morning Beauty] does not abide by [its] quality controls or provide the necessary customer service, and because the products sold by [Morning Beauty] do not have a consumer warranty, these products are not genuine and are materially different from products sold by [Josie Maran] or [its authorized] resellers,” thereby, giving rise to a claim of trademark infringement.”
The element of “material difference” is critical here. Given that Josie Maran does not cite claims of counterfeiting and in fact, does not assert that the products that Morning Brew is selling are outright fakes (i.e., products that were not made by the brand and/or its manufacturers), it is safe to assume that the products are authentic ones that Morning Beauty purchased from an authorized retailer of Josie Maran’s and is not reselling them on its own.
On its face, such a scenario fits neatly within the First Sale doctrine, a trademark (and copyright) tenant that states that once a trademark owner, such as Josie Maran, releases its goods into the market, it cannot prevent the subsequent re-sale of those goods by their purchasers. In other words, if a purchaser of a product decides to resells it, he/she cannot be sued by the rights holder (again, Josie Maran) for trademark infringement for doing so.
It would likely appear that Morning Beauty would be shielded by the First Sale doctrine from trademark infringement liability in connection with its sale of Josie Maran products on Amazon. However, there is a catch: the First Sale doctrine does not apply when the product is “materially different” than the product sold by the trademark owner or its authorized dealers.
While the “material difference” exception most immediately applies to the products, themselves, and their packaging, Vorys attorney Whitney Gibson notes that generally, “courts have recognized that certain benefits accompanying the authorized sale of a genuine product can constitute material differences.” One such benefit? A warranty or money-back guarantee.
Because Morning Beauty is offering up products bearing the Josie Maran name without all of the benefits that the company provides with the sale authorized sale of those goods, Josie Marant’s argument is essentially that the First Sale doctrine does not apply, and Morning Beauty is engaging in trademark infringement.
As for consumer confusion, which is the central issue in a trademark infringement matter, Gibson states that confusion “can easily result when unauthorized resellers are offering the same products without the same associated benefits,” and that is precisely what is happening here, according to Josie Maran.
In addition to setting out claims of trademark infringement and dilution, and unfair competition, and seeking injunctive relief and monetary damages in connection with Morning Beauty’s alleged infringement, Josie Maran addresses what it says is the larger problem at play here: “In this e-commerce age, unauthorized resellers can obtain a manufacturer’s products from a variety of sources and sell them anonymously online.” This issue, according to the brand, is exacerbated by the fact that “the explosion of e-commerce websites, particularly Amazon, has created problems for manufacturers in terms of ensuring that products being sold are genuine, defect-free products.”
Josie Maran is the latest name on a growing list of brands to take issue with the sale of seemingly authentic – but “materially different” – products by a third party or a professional reseller. In furtherance of its rocky relationship with the resale economy, Chanel is currently facing off against luxury goods resale companies what Goes Around Comes Around and The RealReal for selling allegedly authentic but altered products, while Rolex recently settled suit the suit it filed against watch customizer La Californienne. And still yet, 3M has filed a number of trademark-centric cases against sellers of authentic N95 masks, which they were selling at “excessively inflated” prices.
This string of cases, which continues to grow, appears to show how at least some brands are coping with the rise and success of digitally-native companies and third-party marketplaces, and how these new(ish) market entrants have disrupted the ability that they once had to exclusively control how and where their products were sold, and at what prices.
UPDATED (August 14, 2020): Before Morning Beauty filed its answer, the parties appear to have settled their differences out of court. On the heels of a voluntary dismissal filing from counsel for Josie Maran, Judge Josephine Stanton ordered that “this action [be] dismissed without prejudice,” stating that the court had been “advised by the Plaintiff that this action has been resolved by a Notice of Voluntary Dismissal.”
*The case is Josie Maran Cosmetics v. Morning Beauty, 8:20-cv-01032 (C.D.Cal.).