Seller beware. Marketplaces are growing increasingly reluctant to allow the sale of new goods on their sites unless sellers can prove they are authorized dealers. A reader says he fears the crackdown he experienced on a niche site called Reverb may be spreading to larger sites like eBay. (Note: be sure to see the update below.)
Reverb told the reader that in order to list *new* items on its marketplace, a seller must be an authorized dealer and must have explicit permission from the brand to sell the item on Reverb.
From Reverb's policy page
under "Images, not allowed", it says it prohibits the use of stock image - with the following exception: "We do permit authorized dealers to use stock images on Brand New items only"; and it prohibits boxed gear images, clarifying: "Potential buyers must be able to assess the physical condition of an item before purchasing. In cases of sealed items, authorized dealers may use stock pictures, but individual sellers' images must show the item out of the packaging."
The reader referenced the Lanham Act and said the First Sale Doctrine allows owners to sell their own items. "Is Reverb so obtuse/afraid - that they would let business walk away - even when those sellers are following the law????"
But it is a more complicated issue, especially as brands continue to pressure marketplaces. The July 2014 issue of the American Bar Association's Business Law Today magazine
delved into the issue and offered advice for brands. It summed up:
"There is nothing per se illegal about an "unauthorized" sale of "genuine" goods. The first sale doctrine under both trademark and copyright law prohibits brand owners from controlling downstream sales in the first instance.
"However, such sales can constitute trademark or copyright infringement if material differences exist in the product. One of the more common avenues is to attack such sellers on the grounds that their "genuine" products are not covered by the manufacturer's warranty, and thus are materially different from authorized goods.
"Additional remedies can be available under business tort theories such as interference with contractual relations. Further, outside the courts one can approach the Customs Service or seek administrative relief through the International Trade Commission if imported goods are involved."
The EcommerceBytes reader explained there are numerous ways for unauthorized dealers to obtain new inventory for resale, including importers, self-styled distributors, closeout places, liquidation places - "plus dealers themselves who backdoor items," he said.
His overriding concern was what the policy on Reverb might mean for more mainstream marketplaces. "What will eBay do? That is the question of the day. Amazon already gates brands and demands invoices and letters - will eBay go that direction too ?"
Update 10/20/17: Reverb reached out with the following statement from Kevin Drost, Director of International Strategy at Reverb.com:
"It's inaccurate to imply that Reverb.com only allows users to list new items if they're an authorized dealer or have explicit permission to sell the item on Reverb. Reverb.com is a music gear marketplace that welcomes the buying and selling of both brand new instruments and used instruments. In the instance of the reader featured in your article, they were not prohibited from listing their item on the site, they were prohibited from categorizing the item as "Brand New." Reverb, like other companies across a variety of industries, defines "brand new" as an item that is sold by an authorized dealer with the original warranty - nearly every manufacturer voids a warranty if the product was not sold by an authorized dealer. The reader featured in your article could have still listed and sold the item under one of our seven other "condition" categories, such as "Mint Condition" which means the item is essentially in its new, original condition. He could have also further explained the excellent condition of the item in the product description."