Bose won summary judgment on its breach of contract and
trademark claims against Ejaz, who sold home theater systems made by Bose for
use in the US to other countries, to take advantage of higher retail prices
abroad. Ejaz sold American products in Australia
even though he signed an agreement settling a UK case promising not to do
so. (Query why this is infringing
conduct under US law.) The district
court found him liable under both claims and the court of appeals affirmed. Ejaz argued that there was a genuine issue of
material fact on likely confusion because differences between the products
intended for particular countries were trivial, and his eBay customers would
have been aware of them. And here’s
where I suspect the conflict of laws could come in, though I don’t know the
relevant Australian law: In a gray market goods case, “a material difference
between goods simultaneously sold in the same market under the same name
creates a presumption of consumer confusion as a matter of law.” Bose identified several material differences
between its Australian and American products: region coding for DVDs;
electrical power requirements; remote control capabilities; warranty durations;
and design and functionality of the products’ radio tuners.
Though Ejaz argued that his actual consumers weren’t
confused, the court didn’t consider that relevant, since the law requires only
“likely” confusion. Ejaz’s only evidence
was his own affidavit asserting that based on his experience, eBay customers
are “primarily bargain hunters, and understand that in exchange for significant
price savings they are not purchasing from authorized re-sellers or
distributors.” But that just means they
wouldn’t be confused about sellers’ identity. “[I]t gives no reason to believe
that they would expect the products to function differently from products sold
by authorized distributors.” Plus, Bose offered specific evidence of an email
thread showing confusion by an actual eBay customer. Given the presumption plus Bose’s evidence,
no reasonable factfinder could conclude that Ejaz met his burden to show
confusion unlikely.
Comment: the initial blurb I read about this made it sound
like a much broader decision. If Ejaz
had shown that at all times his eBay descriptions clearly disclosed that these
were American products and that they
wouldn’t work like Australian products, would that be enough? Would he have to have given every single
detail?
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