selling licensed products

[kimmyshop]

I have a business that is located in Canada. This business has an on-line store which attracts customers from all over the world. The store sells licensed toys which it purchases from Canadian distributors. These distributors have licensing contracts with their licensor that stipulate that they can not sell to retailers outside of Canada or knowingly to third parties that sell outside of Canada.

Given that I sell outside of Canada, am I in violation of trade-mark law? I have no signed agreement with the licensor. I simply buy and resell product.

 

[Michael Wechsler]

This is a very good question. One company cannot grant another company rights that it does not have. If there is a licensing scheme that is involved, it is possible that you might be pulled into a lawsuit. In such a case, I would make sure that the contract that I had with the Canadian distributor included warranty and an indemnification clauses. Make them warrant that they have the rights to sell you what they are selling and that they will indemnify or reimburse you if the do not and you are sued.

However, I'm not sure what the license limits are -- whether the distributor cannot sell to companies selling outside CA or whether the license travels with the product. If the limit is that the first retail sale of the product cannot be sold outside of CA, then there might be a problem. But if the limitation is on the distributor, then it is possible that you may escape liability because there truly is no restriction on you. Regardless, you would probably want the clauses stated above in your purchase agreement.