Patent Law

Cleveland Golf Cracks Down on Unauthorized Online Sales

By David Dawsey PE Esq

Since 2008 a pair of eBay sellers have sold over 10,000 Cleveland golf clubs totaling $1.7 million in sales to customers around the world. Not bad! So, why would Cleveland Golf sue them? Because the eBay sellers are ?not, and never have been, Authorized Dealers of Cleveland Golf? and are obtaining ?their clubs from Authorized Dealers who are transshipping the clubs? in breach of their distribution agreements with Cleveland Golf.

That?s right, this isn?t a matter of an eBay seller passing off counterfeit Cleveland clubs to unsuspecting purchasers; this duo of eBay sellers is selling the real deal. So what?s the issue? I will let the following excerpts from a Complaint filed yesterday by Cleveland Golf, in the District Court for the District of Massachusetts, do the explaining.

NATURE OF ACTION

1. This is an action for infringement and dilution under the trademark laws of the United States, 15 U.S.C. §§ 1051 et seq., (the "Lanham Act"); for tortious interference with advantageous economic relations, conspiracy, fraud, and trademark infringement under Massachusetts common law; and for unfair and deceptive trade practices under Massachusetts General Laws Chapter 93A.
2. These claims are brought as the result of the Cinicolos' knowing and intentional misrepresentations to purchasers of authentic golf clubs manufactured by Cleveland Golf. The Cinicolos have falsely asserted that (1) they received their golf clubs directly from Cleveland Golf, and (2) that they are authorized distributors of Cleveland Golf's products. These misrepresentations to purchasers are in violation of both Federal and state laws.

Cleveland Golf Authorized Dealer Network

20. To market its various products lines, Cleveland Golf has developed a nationwide network of authorized dealers ("Authorized Dealers"). Authorized Dealers are prohibited from transferring Cleveland Golf's products to anyone other than end-users.
21. A primary purpose of this restriction is curtailing "free-riding." Free-riding occurs when a customer goes to an Authorized Dealer to take advantage of its pre-sale presentation, expertise, and advice in order to determine what product to purchase, but then goes to a non-authorized dealer, similar to the Cinicolos, to purchase the item.
22. Cleveland Golf has in the past and continues to designate significant resources to develop and maintain its products' national and international image. Through its network of Authorized Dealers, Cleveland Golf has fostered a recognized image of quality and customer support.

The Complaint goes on to explain the alleged wrongful acts:

23. Upon information and belief, the Cinicolos operate a successful online eBay business using the eBay user IDs tallman4500 and miscountdiscountgolf. Using these eBay IDs, the Cinicolos sell, amongst other items, large quantities of golf clubs.
24. Since 2008, the Cinicolos have sold over ten-thousand (10,000) Cleveland golf clubs, totaling $1.7 million in sales, on eBay to customers around the world.
25. A private investigator retained by Cleveland Golf purchased Cleveland Golf's clubs from the Cinicolos on eBay. In consummating the sale, the Cinicolos stated that they received their clubs directly from Cleveland Golf and that they were a Cleveland Golf Authorized Dealer.
26. Cleveland Golf has received emails from customers who claim that the Cinicolos have given them similar assurances, and that the Cinicolos have held themselves out as Authorized Dealers of Cleveland Golf who purchase their clubs directly from Cleveland Golf.
27. The Cinicolos are not, and never have been, Authorized Dealers of Cleveland Golf.
28. The Cinicolos do not receive their clubs directly from Cleveland Golf. Upon information and belief, the Cinicolos obtain their clubs from Authorized Dealers who are transshipping the clubs to the Cinicolos in breach of their distribution agreements with Cleveland Golf.
29. In order to bring credibility to a faceless internet transaction, the Cinicolos intentionally associated themselves with the goodwill of the Cleveland Golf name and the credibility of the Cleveland Golf Authorized Dealer network.

Is Cleveland more concerned with the issues surrounding these two eBay sellers OR are they trying to smoke out the Authorized Dealer that is supplying the sellers with clubs and presumably taking sales away from other Authorized Dealers that are abiding by their distribution agreements? Interesting situation.

The actual Complaint may be viewed in its entirety HERE.

David Dawsey  ? Keeping an Eye on Golf Lawsuits

PS ? click HERE to read more posts about litigation in the golf industry

Full post as published by Golf Patents on June 02, 2009 (boomark / email).