Sprint Nextel Corp. v. Welch

A reseller may be liable for trademark infringement if the reseller uses the trademark in a way that is likely to cause the general public to think the reseller is working in conjunction with the trademark owner.

Opinion (Boone): Sprint Nextel Corp. ("Sprint") sued Aaron Welch ("Welch") for trademark infringment. Sprint claimed that Welch conspired with 3rd parties, known as "runners" and "credit mules" in a scam to defraud Sprint and acquire phones in bulk to resell. To achieve this, Welch told the 3rd parties to purchase new iPhones with an insurance plan. The parties would then sell the iPhone to Welch and then the 3rd parties would file a claim that the phone had be lost or stolen. Sprint claimed that these actions constituted federal and common law trademark infringement. Normally, the resale of a genuine trademark in generally not considered trademark infringement, this is called the "first sale" doctrine. But when the resale of a trademarked good goes beyond just the regular resale of the product, infringement can be found if "the reseller used the trademark in a manner likely to cause the public to believe the reseller was part of the producer's authorized sales force or one of its franchisees." Further, Welch "unlocked" the phones, enabling them to operate on any network the court, which voids the warranty that customers expect to get with new phones sold by Sprint. Because of this found that the phones were materially different and thus consumer confusion would be likely. The court GRANTED default judgement in favor of Sprint.