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Iberia Foods v Rolando Romeo, 150 F.3d 298 (3rd Cir 1998)

Iberia Foods is a Brooklyn-based wholesale distributor of grocery store products that owns the United States trademark to Mistolin household cleaners. Mistolin products are manufactured exclusively in Puerto Rico by Mistolin Caribe, Inc. ("Caribe"). In addition to selling Mistolin to Iberia for resale in the United States, Caribe markets Mistolin directly to distributors in Puerto Rico for resale in the Puerto Rican market. In 1988 Iberia acquired the United States trademark to Mistolin from Caribe's parent company, Mistolin Dominicana, C.A. ("Dominicana").

Rol-Rom Foods, is a New Jersey-based distributor of household cleaning products that purchases Mistolin products on the open market in Puerto Rico and sells them in New York and New Jersey. RolRom has been able to offer Mistolin for sale in direct competition with Iberia at a substantial discount from Iberia's price. Iberia contended that by buying Mistolin in Puerto Rico and selling it in the continental United States, Rol-Rom had circumvented the quality control measures enforced by Iberia on all the Mistolin products it sold and sued for trademark infringement.

The district court entered an order denying Rol-Rom's motion for summary judgment and granting Iberia's summary judgment motion ruling that the first sale (exhaustion) and abandonment doctrines were inapplicable. The district court felt that the Mistolin sold by Rol-Rom was not "genuine" because it never passed through Iberia's post-manufacture quality controls.

The court of appeals reversed concluding that Iberia's quality inspections were insufficient to create a material difference between the inspected Mistolin sold by Iberia and the uninspected Mistolin sold by Rol-Rom. By limiting its inspection to "self-evident" defects, Iberia did no more than weed out those bottles of Mistolin that were entirely unsaleable on the open market. Because there was no material difference between the Mistolin sold by Iberia and that sold by Rol-Rom, the court held that the Mistolin sold by Rol-Rom was "genuine" and therfore not infringing.

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