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Davidoff & Cie, SA v. PLD International Corporation

United States Court of Appeals for the Eleventh Circuit
263 F.3d 1297 (2001)
ELI5:

Rule of Law:

The unauthorized resale of a genuine trademarked product constitutes trademark infringement if the resold product is 'materially different' from the original. A physical alteration that is noticeable to consumers and degrades the product's appearance is considered a material difference because it is likely to cause consumer confusion.


Facts:

  • Davidoff & Cié, S.A. manufactures DAVIDOFF COOL WATER fragrance and owns the U.S. trademark, with Lancaster Group US LLC as its exclusive U.S. distributor.
  • PLD International Corporation (PLD) acquires genuine DAVIDOFF fragrances that were originally intended for overseas or duty-free sale.
  • Before PLD acquires the products, the batch codes on the bottles are obliterated using an etching tool to conceal the source of the products from Davidoff.
  • The etching leaves a noticeable mark on the glass bottle, approximately one and one-eighth inches in length and one-eighth of an inch wide.
  • PLD then distributes these bottles with the etched marks to discount retail stores in the United States.

Procedural Posture:

  • Davidoff filed a complaint against PLD in the district court for trademark infringement under the Lanham Act.
  • Davidoff moved for a preliminary injunction to stop PLD from selling the altered products.
  • The district court found a likelihood of consumer confusion, concluded that PLD's actions constituted infringement, and granted the preliminary injunction.
  • PLD, as the appellant, appealed the district court's grant of the preliminary injunction to the U.S. Court of Appeals for the Eleventh Circuit.

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Issue:

Does the unauthorized resale of a genuine trademarked product, which has been physically altered in a way that is noticeable to consumers, constitute trademark infringement under the Lanham Act?


Opinions:

Majority - Anderson, Chief Judge

Yes, the resale of a genuine but physically altered trademarked product constitutes trademark infringement. While the 'first sale' or 'exhaustion' doctrine generally permits the resale of genuine goods, this court adopts the 'material difference' exception. A product is not considered genuine if it is materially different from the product sold by the trademark owner. A physical alteration, such as the etching on the fragrance bottles, that degrades the product's appearance and could lead a consumer to believe the product was harmed or tampered with, constitutes a material difference. This is because the appearance of the product and its packaging is part of the 'commercial magnetism' of the trademark and is material to a consumer's purchasing decision. Such a difference creates a likelihood of consumer confusion and erodes the trademark owner's goodwill, thus satisfying the requirements for infringement.



Analysis:

This decision formally adopts the 'material difference' exception to the first sale doctrine in the 11th Circuit, strengthening protections for trademark holders against gray market goods. The ruling clarifies that alterations to a product's packaging or container, not just the contents, can constitute infringement if they are likely to affect consumer perception of the product's quality or authenticity. By setting a low threshold for materiality, the court makes it easier for brand owners to police their supply chains and prevent the distribution of products altered to conceal their origin. This precedent will likely influence future cases involving altered packaging, quality control measures, and the overall presentation of trademarked goods.

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