Wednesday

AUSTRALIA BY WAY OF INDIANAPOLIS-AS I KEEP SAYING: THE INTERNET CHANGES EVERYTHING

All you sun worshippers pay attention. Bet you didn't know that your AUSTRALIAN GOLD tanning lotion ain't from down under- its from INDY!! And Australian Gold, Inc. is the latest company to have its business model undermined by the Internet. Eric Goldman has commented on this case at his blog site TECHNOLOGY & MARKETING. And Ron Coleman, author of the LIKELIHOOD OF CONFUSION blog site was the attorney for the defendant. He too has provided a link to the case.
In a nutshell: Australian Gold tries to control how its tanning products are sold. It sells its products only to authorized distributors who, under the terms of a distributorship agreement, may only resell the Australian Gold products to "authorized" tanning salons. The sleazeball defendant somehow got hold of genuine products and began selling AUSTRALIAN GOLD tanning lotion on the Internet at half price.

The case is of some interest because a court in the Second Circuit once again has concluded that buying keywords or placing terms in the metatags for one's website does NOT constitute trademark use.
But, it is the battle hardly mentioned in the case that is most interesting to me. Almost every case involving the sale of unauthorized but genuine goods is a case where a brand owner is asking the courts to become an enforcer for the brand owner- against the brand owner's own customers!!

In the most recent Australian Gold case the Court accepted without question that the defendant only got its product from rogue retailers. And the District Court, in denying the defendant's motion to dismiss a tortious interference with contract claim, seemed willing to consider such a claim as valid even though the defendant had no direct contact with distributors. So what you say?

Here's what. Only if Australian Gold and its distributors ignore reality can an Internet retailer get enough product to survive. Imagine that you are an Australian Gold distributor. And suddenly, one of your retailers starts ordering unnaturally large quantities of tanning lotion. What do you do? Do you aggressively seek out an explanation? Or do you happily accept the increase in business?
And the same logic applies to Australian Gold. If the Internet retailer is success full then SOMEBODY is ordering more tanning lotion from Australian Gold. So what does Australian Gold do? Dig deeply into the ordering patterns of its distributors to find anomalies? Or book the orders. That is, until retailer and distributors who are not part of the informal distribution channel start to complain.

Several years ago I worked for a famous American motorcycle company. At that time, the authorized dealers complained bitterly about unauthorized American dealers who bought bikes in Canada, brought them to the States, swapped out the speedometers for one's that read in miles per hour and sold the Canadian bikes at a handsome profit.
So I did a bit of digging. And it turned out that a few authorized dealers had been ordering hundreds of speedometers from the parts and accessories dept of the company. Did the exec responsible for parts and accessories raise an uproar and immediately stop filling suspicious orders for American speedometers?

I'll let you guess.

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