In short: Most trademark lawsuits against small sellers are avoidable. Big brands protect their trademarks, so marketplaces "gate" many brand names and ask sellers to prove they're authorized. Selling genuine products is usually legal. Selling products that are counterfeit or "materially different," or listing a brand without authorization, is how sellers get suspended, and sometimes sued.
There's a moment almost every new online seller has. You find a famous brand, the numbers look great, and you think: why isn't everyone selling this? Usually, there's a reason. This article is about that reason, and how to stay on the right side of it.
What does "gated" mean on a marketplace?
Not everyone can sell every product. Many brands are gated, which is an industry term. Say you want to sell a well-known toothpaste brand. You select it in your seller account, and the marketplace won't let you list it. Instead, it asks you to upload proof that you're authorized to sell it.
▶ Watch: Watch: Robert Nikic on trademark law and seller account suspensions
I explained this on Dropping Bombs because I watched it happen over and over. The shortcut sellers look for a lucky gap: a brand-name product that slipped through without a gate. It works for a few months. Then the account gets taken down. What were they doing? Trademark infringement. These big companies protect their IP.
What is a trademark, in plain English?
A trademark is a word, logo, symbol or design that tells customers who makes a product. The US Patent and Trademark Office describes it as a way to identify the source of goods and distinguish them from others (USPTO).
When you see a famous brand name on a box, the trademark promises the buyer something: this came from that company, and it meets that company's standards. Trademark law exists to protect that promise, for the brand and for the customer.
Is it legal to resell brand-name products?
Often, yes. This surprises a lot of people.
US courts generally follow the first sale doctrine. Once a trademark owner sells a genuine product, the buyer can usually resell it without infringing, as long as they don't change it or suggest they're an official partner. The Eleventh Circuit, which covers Florida, put it this way in Davidoff & Cie v. PLD International: the brand's authorized first sale "exhausts" its right to control who resells that product (Justia).
So reselling genuine goods isn't automatically illegal. But there are big exceptions, and marketplace rules are often stricter than the law.
The exception that gets sellers sued: "material difference"
The same court said the first sale doctrine does not protect sellers of products that are "materially different" from what the brand sells. A materially different product isn't considered genuine, so selling it under the brand name can be infringement (Justia).
In Davidoff, the reseller had etched batch codes off fragrance bottles. The product inside was real. But the court found the altered bottles were materially different, and that was enough.
"Material" is a low bar. According to the American Bar Association's Business Law Today, courts have treated all of these as material differences (ABA):
- Removed or altered batch codes, SKUs or barcodes
- Different packaging, labels or missing warnings
- Different formulations or product versions meant for other countries
- Different warranty or service coverage from what authorized sellers offer
That last one is the trap for many online sellers. The product is genuine and unopened, but if the brand's warranty only covers purchases from authorized dealers, a court may see the unauthorized version as materially different.
Some courts also recognize a quality control exception: if a brand has real quality standards that unauthorized resellers bypass, it may have a claim even over genuine goods (ABA).
Why do marketplaces gate brands at all?
Because trademark complaints cost marketplaces money and trust. Brands can enroll in programs like Amazon Brand Registry, which give them tools to report listings that infringe their trademarks. Gating flips the burden: instead of brands chasing bad listings, sellers prove they're authorized before they can list.
From a buyer's point of view, that's a good thing. You want to know that the famous brand in your cart is real.
How sellers actually get sued (and suspended)
Most trademark trouble follows the same path:
- A seller lists a brand through a gap or without authorization.
- The brand notices, often through its own monitoring or a test purchase.
- The brand files a complaint with the marketplace. Listings come down, and repeated complaints can suspend the account.
- A cease-and-desist letter arrives, demanding the seller stop and sometimes pay.
- In serious cases, a lawsuit is filed under the federal trademark law, the Lanham Act, especially for counterfeits or repeated violations.
Counterfeits carry the most risk by far. But as Davidoff shows, even real products can lead to court.
The decision table: can I sell this brand?
| Situation | Usually OK? | Why |
|---|---|---|
| You bought from the brand or its authorized distributor, with invoices | Yes | You can prove the source and authorization |
| You have a letter of authorization from the brand | Yes | The brand has approved you |
| You bought genuine retail stock and resell it unchanged | Sometimes | First sale may apply, but marketplace rules and warranty differences can still block you |
| The product is meant for another country's market | Risky | Labeling, formula or warranty differences may be "material" |
| You removed codes, repackaged or bundled it | No | Alteration is a classic material difference |
| You can't verify where it came from | No | Counterfeit risk, and no defense if challenged |
What counts as proof of authorization?
Marketplaces vary, but typically:
- Invoices from the brand or an authorized distributor, dated recently, showing your business name and address and matching quantities
- A letter of authorization from the brand owner
- A distribution or reseller agreement that names you
A receipt from a retail store generally won't unlock a gated brand.
A plain-English checklist before you list any brand
- Check whether the brand is gated in your seller account.
- Find out whether the brand has an authorized reseller program, and apply.
- Buy only from sources you can document.
- Keep every invoice, organized by brand.
- Don't alter, repackage or bundle branded products without permission.
- Read the marketplace's IP policy and the brand's warranty terms.
- If a complaint arrives, respond with documents, not arguments. Then talk to a lawyer.
▸ How this connects to what I work on
Brand protection and small-seller access can look like opposites, but they aren't. One of the five positions I've published in my advisory work on SDG 8 & 9 is fair access to products, so that small businesses can sell what customers already want, not only what's left over. Gating protects brands and buyers. What I'd like to see is clearer, faster and cheaper paths for legitimate small sellers to get authorized, so that the honest route is also the easy one. When authorization is hard to get, people look for gaps. When it's straightforward, most of them won't bother.
FAQ: trademark lawsuits and selling brand names
Can you get sued for selling a brand-name product?
Yes, if the product is counterfeit, materially different from what the brand sells, or listed in a way that suggests you're an authorized partner when you're not.
What is the first sale doctrine in trademark law?
It's the general rule that once a brand sells a genuine product, the buyer can resell it unchanged without infringing the trademark.
Why did my account get suspended for a brand I bought legally?
Marketplace rules are often stricter than the law. A brand complaint, missing authorization or a warranty difference can trigger a suspension even when the product is genuine.
What should I do if I get a cease-and-desist letter?
Stop listing the product, collect your invoices and talk to an intellectual property lawyer before you respond.
If you can't prove you're allowed to sell it, you're borrowing someone else's trademark.
What is Robert Nikic's view on trademark law for sellers?
Robert Nikic's view is that gating protects brands and buyers. Sellers who build on authorized, documented sources avoid most suspensions and trademark lawsuits before they start, and policy should make authorization easier for legitimate small sellers to obtain.
This article is general information, not legal advice. For a specific situation, talk to an intellectual property attorney.
Related reading: Robert Nikic on Amazon's Legal Rules for Drop Shipping · 5 Common Lawsuits Small Businesses Face · Why Boring Products Pay
