Trademark Law - Material Difference

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Material Difference

According to the United States Court of Appeals for the Federal Circuit (see S.K.F. v International Trade Commission), the Material Difference Standard is defined as being applied to to "gray goods". This same court defined "gray goods":

Generally, gray market goods are defined as "genuine goods that . . . are of foreign manufacture, bearing a legally affixed foreign trademark that is the same mark as is registered in the United States; gray goods are legally acquired abroad and then imported without the consent of the United States trademark holder." Gamut, 200 F.3d at 778. "The principle of gray market law is that the importation of a product that was produced by the owner of the United States trademark or with its consent, but not authorized for sale in the United States, may, in appropriate cases, infringe the United States trademark." Id. at 777.

The Material Difference Standard deals with "the distinction between domestic goods and gray market goods", i.e.," whether there are differences between the foreign and domestic product and if so whether the differences are material."

We stated that "[t]he courts have applied a low threshold of materiality, requiring no more than showing that consumers would be likely to consider the differences between the foreign and domestic products to be significant when purchasing the product, for such differences would suffice to erode the goodwill of the domestic source."

The material difference can be something a simple as a color difference with which consumers identify, the lack of an English language manual, or a different chemical composition. "The consuming public, associating a trademark with goods having certain characteristics, would be likely to be confused or deceived by goods bearing the same mark but having materially different characteristics."
The general rule is that a trademark owner's authorized initial sale of its product exhausts the trademark owner's right to maintain control over who thereafter resells the product; subsequent sales of the product by others do not constitute infringement even though such sales are not authorized by the trademark owner.
Identical product being imported is covered by the first sale doctrine and the sale of genuine product that is identical is not trademark infringement. There need only be one material difference between a domestic and a foreign product in order to determine that the latter is a gray market good eligible for exclusion.

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Federal Statutes
Copyright Act 17 U.S.C. 5 | Digital Millenium Copyright Act 17 U.S.C. 12 | Lanham Act 15 U.S.C. 22
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