If you have ever seen a Patagonia product on Amazon, there’s a chance it was there unlawfully.
The outdoor brand has named Kimberly McHugh, a California-based independent retailer that operates an Amazon Marketplace shop, Our Little Corner, in a new lawsuit that seeks to protect Patagonia’s right to remain separate from the world’s largest retailer.
In the suit, Patagonia claims that McHugh’s shop sells “gray market” products using its trademarks without its prior approval, putting its dealer agreements into doubt and confusing consumers into believing that the store’s policies are the brand’s own.
Our Little Corner interferes with Patagonia’s contracts with its authorized dealers by purchasing quantities of Patagonia brand products for the purpose of resale through unauthorized, gray market channels, including online marketplaces such as Amazon.com,” Patagonia wrote in the complaint filed with a California District Court on Sept. 4. “It has persisted in accumulating inventory in this manner despite Patagonia’s notices to Our Little Corner that such sales cause authorized dealers to breach their contracts and agreements with Patagonia. Our Little Corner then promotes and sells the improperly-obtained, unauthorized products with Patagonia’s branding and proprietary images.”
If that sounds similar to the way the resale market works, in general, there’s a reason. It is typically legal to resell a product after it has been lawfully purchased through an approved channel. However, according to Patagonia’s complaint, the difference is between the shopping experience offered by the brand and McHugh’s online shop.
“Our Little Corner is using several tactics to portray itself as an authorized Patagonia dealer to consumers looking for Patagonia brand products on Amazon.com,” the complaint alleged. “Our Little Corner, without authorization or a license, uses Patagonia’s copyrighted images, the same that appear in genuine listings for Patagonia products and on www.patagonia.com and on Patagonia’s dealers’ websites, to present itself as an authorized dealer. Our Little Corner also uses the PATAGONIA trademarks and the absence of a competitive market on Amazon.com—due to the absence of authorized dealers there—to gouge consumers with misleading prices.
In the complaint, Patagonia claimed it could provide examples of products like its Men’s Nano Puff jacket, which retails at $199.00 through Patagonia’s channels, being sold for up to $272.00 on the gray market. This scenario, combined with the fact that Patagonia’s warranty and return system is decidedly more robust, led the outdoor brand’s legal team to seek an injunction.
And according to The Fashion Law blog, Patagonia may have a case.
“It is well-established that the First Sale Doctrine enables the resale of trademark-bearing items by parties other than the trademark holder after the trademark holder initially releases those products into the market,” a blog post on the case read. “However, the protection from claims of trademark infringement (among other things) that is provided by this doctrine is limited in certain cases, making it so that the subsequent sale runs afoul of the law. Such a case arises when ‘material differences’ exist between the product(s) initially sold by a trademark-holding brand and the product(s) being ‘re-sold.'”
Patagonia will seek both an immediate injunction forcing Our Little Corner to discontinue the sale of its products and damages resulting from the monetary loss of the shop’s allegedly illegal acts.