eBay Bargains Soon To Be A Thing Of The Past?

ScaredOfTheMan writes to mention that, as expected, companies are utilizing the decision in Leegin Creative Leater Products v. PSKS to force the take-down of auctions on eBay because auctions are priced too low or even stating the auction itself is an infringement of their intellectual property rights.

Comments

Auctions (if fair & open) yield the RIGHT pric

[Anonymous Coward]

... in other words, the price which the buyer is willing to pay and which the seller is willing to accept.

Any other kind of pricing is rigged.

Blatant slashdotted post... karma me up scotty

[Creepy Crawler]

I predicted here that companies would soon rely on the Supreme Court's decision in Leegin Creative Leather Products v. PSKS to justify interfering with competition from less expensive products sold online. It did not take long for that prediction to come true. Although interference with eBay sales is nothing new (see here and here), companies in two recently filed federal cases explicitly invoke Leegin as a justification for terminating the eBay auctions of competitors that charge lower prices online. These cases not only show Leegin's likely effect on Internet sales, but are also, unfortunately, fairly typical examples of the sort of anticompetitive actions companies take to fight lower-priced competition online.

In the first case, Merle Norman Cosmetics v. LaBarbera, No. 07-60811 (S.D. Fla.), Merle Norman Cosmetics filed suit against eBay seller Joyce LaBarbera for selling its makeup on eBay at a discount. The company had previously terminated a variety of eBay auctions by claiming that the sale of its makeup violated an unspecified FDA regulation. In this case, however, the company concedes that the eBay seller could rightfully resell the makeup on eBay if, as she claims, she purchased the makeup at a flea market. Merle Norman, however, suspects that the eBay seller is in fact buying the makeup from a salon that, pursuant to its contract with Merle Norman, has agreed not to sell anything on the Internet. Merle Norman says it demands these contracts so that purchasers can only buy the makeup at Merle Norman stores, with the guidance of "beauty consultants" who are "specially trained in proper hygienic practices." Of course, the contracts also help ensure that the products won't be available outside the stores at reduced prices.

Although Merle Norman does not claim that the eBay seller ever contracted with the company, it contends that the seller's act of purchasing the makeup from a salon that had entered such an agreement and then selling "at discount prices" on the Internet constituted unfair competition, interference with its contracts, and civil conspiracy (see complaint). In other words, the eBay seller, according to the company, is guilty of breaching somebody else's contracts and unfairly competing by selling to consumers on the Internet at prices that are too low. In its brief in the district court, Merle Norman relies on Leegin, which had been decided just a few days earlier, in support of its right to "require dealers to charge certain resale prices to promote interbrand competition." The company claims that "the law is well settled that manufacturers like [Merle Norman] have the right to control the manner of distribution of their products." Although the district court denied the pro se defendant's motion for a preliminary injunction, the case is now on track for trial.

The second case is Colon v. Innovate! Technology, Inc., No. 07-21349 (S.D. Fla.). Innovate! Technology ("ITI") is a company that makes high-performance car parts. According to its brief in the district court (warning, large file), the company "sells its products only via authorized distributors and retailers" that "comply with ITI's policy of Minimum Advertised Pricing." The company views sales by unauthorized sellers (i.e., those who sell too cheaply) to be not only a violation of its minimum-price policy, but, surprisingly, as an infringement of its intellectual property rights. ITI's eBay "About Me" page explains that the sale of its products by anyone but an authorized dealer constitutes patent and trademark infringement. Moreover, the company claims the right to prohibit all use of its copyrighted "technical data, photos, graphics, software, product literature, catalogues, product specifications, installation guides, user guides, promotional material and other types of information" without its permission. In other words, the company claims it is copyright infringement to read its user guides and manuals, browse its catalogs, or look at its pictures without its "express written permission." Presumably, the company f

Re:Blatant slashdotted post... karma me up scotty

[PrescriptionWarning]

i think this whole ordeal is really about resellers in general, they just need a scapegoat because it affects their online sales presence.

but whats rediculous is the fact that these products were ALREADY PURCHASED. Therefore the company has already made its bucks off of its products. Besides there's plenty of people out there who'd still rather go through an official source rather than ebay even if they spend a bit more. It really comes down to quality of product and quality of services, if someone thinks they're better off through ebay the problem is not with ebay.

Re:Blatant slashdotted post... karma me up scotty

[Anonymous Coward]

Maybe I am missing something, but where is the business model in buying something for a high price and selling it for a low price? The only way this works is if the auctioners are able to purchase product for less than the minimum prices from an authorized dealer. If authorized dealers are sellling product at below their contracted minimum prices these dealers are who the manufacturers should be going after, not the auctioners.

It shouldn't be that hard to find the source of the discount goods - most manufacturers have (or should have) some type of serial or batch numbering system and should be able to trace the discount goods back to the authorized dealer.

Re:Blatant slashdotted post... karma me up scotty

[Bombula]

these products were ALREADY PURCHASED

Mark my words, pretty soon we will not be 'buying' anything, but will be 'licensing' lipstick and shampoo and hotdogs and underpants for 'personal use only', just like software.

Just FIY for those of you who've been on the Moon for the last 25 years, for all the chest-thumping economic rhetoric about the free market, it is completely ignored by companies who are actually interested in profit. Why? Because you can't make a profit in a competitive market. It's as simple as that. True competition drives profit margins down to subsistence levels. If you want to haul in billions you need to have a minimally competitive market: monopoly, oligopoly or cartel.

Re:Blatant slashdotted post... karma me up scotty

[MagikSlinger]

The only way this works is if the auctioners are able to purchase product for less than the minimum prices from an authorized dealer. If authorized dealers are sellling product at below their contracted minimum prices these dealers are who the manufacturers should be going after, not the auctioners.

That's precisely the problem. The make-up case was the woman buying them at a flea market (probably from a salon owner selling overstock) and then selling them on eBay. The autoparts case was the man buying from a wholesaler (legitimately), but the man never signed the official licensed retailer contract with the company, so he could sell at less than the MSRP.

This just confirms something to me that certain classes of laissez-faire types keep missing: the private sector can just be as bad as the government for the market. The only thing keeping them in check is ironically government regulation of the market.

Re:Blatant slashdotted post... karma me up scotty

[StarvingSE]

Perhaps the whole problem is that companies expect^H^H^H^H^H believe it is their right to make billions. Maybe profits are way too skewed towards the big corporate players that a totally free market is needed to put balance in the system. If someone wants to sell a comparable product at a fraction of the cost, so be it. Leave the courts out of it.

Re:Blatant slashdotted post... karma me up scotty

[MagikSlinger]

What you missed here, actually, is that they can only do it if the State gives them such power.

Very close! When ever I've heard of some law that screws the consumer over, in the guise of "good market intervention", it seems like there's private business behind it. E.g., DMCA, local anti-gas price war statutes.

But even with contract law, we can get screwed, and as history has shown us, the private sector has no problem ganging together to ensure we can't negotiate our way out of restrictive contract laws. E.g., software EULA. The only reason they don't seriously harm us is the State did protect us from some of the aspects of the EULA (but not all!)

In an ideal world, we wouldn't need the State to protect us from the marketplace, but since it is not ideal, maybe government regulation should limit itself to preventing bad contract conditions and nothing else?

But good point about pointing out the State aiding and abetting them.

Re:Blatant slashdotted post... karma me up scotty

[Attila Dimedici]

If I read the Supreme Court ruling correctly, these guys will lose their cases. The Supreme Court ruled that it is perfectly legal for you enter into a contract with a retailer that as a condition of them purchasing your product the retailer will not sell said product for less than a specified amount. This doesn't mean that you the manufacturer of said product can force people who get the product without signing such a contract to charge your the rpice you selected. I don't think any of these cases will hold up.

Re:Blatant slashdotted post... karma me up scotty

[JarrettHere]

See also Exorbitant Shipping Costs. The business/profit is in the marked up shipping fees.

1. Buy at cost.
2. Charge 30% more for shipping.
3. Profit!

Re:Blatant slashdotted post... karma me up scotty

[nuzak]

> True competition drives profit margins down to subsistence levels.

Nonsense. The market price tends to settle at a price point, where the demand is not affected sufficiently by further price moves to result in an increase in profit. This is greater than the marginal cost -- otherwise there wasn't a point in being in the business in the first place. There's a disincentive to lower prices beyond that except as a zero-sum game with the competition, and there are a lot more incentives than just price that motivate customers. No one would be buying $600 phones if that wasn't the case.

Even a competitive market kept competitive by antitrust regulation is going to boil down to a few major players though. I don't think that can necessarily be called an oligopoly or a cartel though.

Re:Blatant slashdotted post... karma me up scotty

[harrkev]

It is not about selling a COMPARABLE product cheaper, it is about selling the SAME product cheaper.

Example: HP cannot set Dell's prices, but HP might want to make sure that nobody sells their HP computer too cheap.

I think that one reason this is a problem is the typical example of going to Best Buy or Comp-USA to look at a product, but then going to Newegg to purchase. Newegg has much lower overhead, better selection, etc. But I don't think that anybody wants all brick-n-mortar stores to go under. Can you imagine a world with no stores?

I am not saying that this decision is right, or even a good idea. I am just pointing out what the manufacturers can & can't do.

Re:Blatant slashdotted post... karma me up scotty

[Eric in SF]

Are you kidding me? I can't WAIT for a world with no stores. No more surly sales clerks, no more snake-oil sales clerks, no more presumption of criminality (papers! Ve need your papers upon exit!), I could go on and on.

I buy as much as I can online now and as imaging and bandwith increase, it will be easier and easier to buy more and more things online.

Gives me more time to spend time with friends and family and to do the things I enjoy, whatever they may be.

Re:Blatant slashdotted post... karma me up scotty

[mindstrm]

That's all fine and dandy, except in the modern west, there is the first-sale doctrine. Once you sell it to me, it's mine to do what I want with, including re-selling it.

Now.. that said.. a salon trying to get out of their contractual obligations by selling on e-bay, fine, go after them, it's breach of contract... but you made your money when you sold the item the first time.. what happens after that isn't your problem.

Re:Blatant slashdotted post... karma me up scotty

[Bombula]

Your transparent spoon-fed rhetoric confuses demand inelasticity with competition for market share. In the tiny minority of markets which are both highly localized and which have highly inelastic demand, there is invariably a monopoly - local utilities are a prime example.

In other markets, companies cease to compete for market share irrespective of demand elasticity when the field is narrowed to just a handful of sellers via mergers, acquisitions, and initial predatory pricing. The equilibrium point you allude to when you say "there's a disincentive to lower prices beyond that except as a zero-sum game with competition" is one that is either tacitly or overtly agreed to by the remaining sellers. When sellers set 'minimum retail prices' that are all at this equilibrium point, the market is unequivocally rendered minimally competitive, just as I said in my original post.

In the minority of markets where price is not the only consideration, there is also an inherent lack of competition. You will agree that there is only one Apple computer company and only one iPhone at present (though I hear there is already a Chinese clone). If your utility is drawn from the brand and not from the functions of the product, then there are no real alternatives available, and again there is no real competition. This is common for two types of products: luxury items (clothing, jewelry, shoes, etc where brand is the primary consideration and price is secondary - something that only applies to people with discretionary income, which excludes about 90% of the world's population), and innovative technology items which, when first introduced, have no available alternatives. These markets, you will notice, are profitable because each seller is unique and there are therefore no alternatives.

The whole point of the article here is that companies are getting upset when folks on eBay sell identical products for a lower price. When one seller offers you a real alternative for a lower price, that is genuinely competitive, and that is why there is such a fuss here.

Fair Use?

[TheBearBear]

ITI's eBay "About Me" page explains that the sale of its products by anyone but an authorized dealer constitutes patent and trademark infringement

The seller wasn't even under contract. Are they saying that I can't resell a wrench (or shoe) that I just bought? It's MINE! Can the seller selling the makeup get around this by saying that the products are "used"? Like she licked the box or something.

Re:Fair Use?

[GizmoToy]

Yes, that appears to be what they're trying to say. I hope they're prepared for a lawsuit, because somebody's going to see an opportunity to win a lawsuit against them. Interpreting any law to mean your customers can't resell their property is bound to get either the law overturned, you sued, or both.

Re:Fair Use?

[belmolis]

No, this is wrong. The agreements that the Supreme Court ruling allows are agreements between manufacturers and retailers that prevent the retailer from selling the goods at less than a certain minimum price. If you are a wholesaler who has been selling at a discount on eBay, this decision affects you because you enter, directly or indirectly, into a contract with the manufacturer to observe the minimum price.

However, if you are Joe consumer and you buy a hammer at a hardware store, or any other retail outlet, the contractual chain ends with the retailer who sells it to you. The retailer fulfills his obligation by selling the hammer to you at no less than the minimum price set by the manufacturer. You do not enter into any contract concerning resale of the hammer when you buy it at retail. The doctrine of First Sale applies and you may now do whatever you like with the hammer, including reselling it for less than the manufacturer's minimum. What this decision does is it allows manufacturers to prevent discounting of the initial retail sale. That is probably a bad thing, though some economists argue otherwise. This decision has no effect on the sale of used goods.

Re:Fair Use?

[timeOday]

if you are Joe consumer and you buy a hammer at a hardware store, or any other retail outlet, the contractual chain ends with the retailer who sells it to you.

Everything you said is wrong if the lawsuits in question are successful. That's the whole point. If the makeup manufacturer can successfully sue somebody who has not entered into any agreement with them, it's a whole new ballgame. I think it would end the gray market.

Re:Fair Use?

[stinerman]

A more careful reading of the article gives a different picture.

What Merle alleges is essentially this:

X sells widgets to Y. Y signed a contract with X to not sell the widgets below a certain price. Y sells some widgets to Z. Z sells the widgets on eBay either at a loss or is more likely getting a deal in violation of Y's contract with X. X notices auctions of their products below the value stipulated in the contract and concludes one of their partners is selling below cost. Therefore, X sues Z for interference in contracts and civil conspiracy, probably using it as leverage in order to compel Z to divulge Y.

In Colon:

The same basic premise is true but ITI says that any sale below a certain price set by them is an infringement of copyright, patent, and trademark law. In this case, X issued DMCA takedown notices to eBay. Z is suing to get a judgment that he isn't actually infringing any IP.

The fact that either of these cases are going to trial is something to be seriously worried about.

Re:Fair Use?

[belmolis]

It is true that there is big trouble for sale of used goods IF these suits are successful, but that is a very big if. The point is, what the Supreme Court actually held in Leegin is not what these suits are claiming. They are trying to use a slogan that characterizes Leegin, namely the idea that companies may control the retail sale and distribution of their products, to justify further changes in existing law. This slogan, however, is NOT what the Supreme Court actually held and is not an established legal principle.

In the makeup case, for example, the manufacturer's claim is that the person selling on eBay bought the makeup from a salon that was contractually obligated to sell only at retail, not for resale. The eBay seller denies this, and will win on the facts if the manufacturer fails to prove that the makeup came from the salon. Even if he did buy from the salon, in order to win the manufacturer is going to have to get the courts to override the long-settled doctrine of First Sale on the basis not of a holding but of a dictum in Leegin, one that, furthermore, was more in the line of a vague comment than a statement of legal principle. So, yes, it would be very unfortunate if the manufacturer won this case, but the case is quite a stretch, and the result desired by the manufacturer does not follow in any direct way from Leegin.

Re:Doh

[imbaczek]

Coral cache

Too late...

[Walenzack]

My first thought after reading this was something like:
"Great, first you can't copy your own CDs, now you can't sell your owm belongings... Before you know you won't be able to even kill yourself".

But then I remembered that suicide is considered a crime in some, if not most of, western countries (like mine, Spain). Too late.

Re:Too late...

[vux984]

Just how are they going to punish a suicide for breaking the law? Extra nails in the coffin?

Of course, if the person committing suicide succeeds the laws against it are irrelevant.

However, like many crimes you can also be punished for 'attempting it'.

By making suicide illegal, police are allowed to intervene when someone attempts it. Courts are allowed to prescribe mental health evaluation, rehab, etc.

Personally I support a persons right to die... but I also agree that 'the right to die' shouldn't be extended to every distraught teen with a drug problem who just caught her boyfriend cheating on her. The decision to die is permanent, and you shouldn't be allowed to make that decision without proper consideration, or simply because you are suffering from treatable depression.

Time to buy stock in HP

[BlueParrot]

Seeing that ink prices are likely to surge (again) ...

First Sale Rights

[grahammm]

What happened to the first sale rights? Once you have bought something, are you not supposed to be allowed to sell it at whatever price you like with no interference from the manufacturer or distributor?

Re:First Sale Rights

[Rufty]

How quaint. Right of fist sale's going the way of right to privacy.

Re:First Sale Rights

[MoneyT]

I'm sure the companies are arguing (and perhaps not without merit) that first sale applies only to the end user or the consumer. If you purchase with intent to resell, that makes you a retailer or distributor and thus subject to different rules. There is some merit to this point of view. Consider that resellers, retailers and distributors are required by law to follow certain processes, laws and regulations. Among these are verious health regulations for the food industry.

Let's say that Evil Corp Foods sells their food product to Massive Grocery. Laws dictate that in order for Massive Grocery to leagaly sell ECF's product, it must be sold within 30 days of being recieved at an MG location. Day 29 arrives, MG marks down some of it's ECF stock to sell off and at least make some profit on. Joe Freedom buys it. It sits on his shelf for a few days, at which point he realizes he didn't really need it, but a friend does, so he sells it to his friend, at a hair more than he paid, but less than MG sells it for. So far so good, everyone wins.

But let's say that Joe Freedom's friend gets sick from the food product. Currently, it was a rotten thing for Joe Freedom to do to his friend, but not illegal and certainly (most likely) not intentional.

But let's now say that Joe Freedom is doing this every week. Buying the dicounted food product from MG and turning arround and selling it at a profit to people in his neighborhood and on craigslist. Now more people are getting sick. Not all of them, only some, but say it's still something like 10% or 20%. Shouldn't Joe Freedom be subject to the same health regulations that MG and ECF are? Don't you think that ECF might have an interest (and a valid one) in shutting Joe Freedom down since it's their product, money and their reputation on the line (even though they didn't sell it to the people that got sick)?

In a world where a company is responsible for the stupidity of people that buy their products, does it not suprise you that companies have a vested interest in tighly controling their supply line?

This is not as black and white as it seems at first glance, and certainly there is no easy answer, but just like any other freedom, first sale is not and can not be absolute.

Re:First Sale Rights

[MoneyT]

[quote]can you state a clear logical reason why not?
Once I buy it, I should be able to do whatever I want to with that product.[/quote]

I thought I just did, or do you believe that Joe Freedom should be allowed to continue unimpeded? It was no pity play, it was a very specific senario to display the purposes of the laws in place. Intent to resell does have an effect on your ability to resell, and it's that way for a specific reason. Just because in this instance it doesn't agree with your politics doesn't mean it's not valid or that it shouldn't be considered. It's a complex issue and saying that "I bought it, it's mine and I can do whatever the fuck I want with it and resell it to whomever and however I want" is a simple blanket statement that has the potential to have very determental effects on the market as you know it.

Re:First Sale Rights

[AK Marc]

I thought I just did, or do you believe that Joe Freedom should be allowed to continue unimpeded?

Joe is selling something past its expiration date knowing full well that it is making people sick. He should be shut down, but not for reselling. He should be shut down for assault with a biological weapon. The company that initially sold it may be unhappy, but they shouldn't be involved in shutting him down at all. So yes, he should be allowed by the manufacturer to continue unimpeded. But the retailer and government should shut him down.

It's a complex issue and saying that "I bought it, it's mine and I can do whatever the fuck I want with it and resell it to whomever and however I want" is a simple blanket statement that has the potential to have very detrimental effects on the market as you know it.

I disagree. You should be able to do whatever you want with what you bought. That won't affect the market at all. A few companies may have isolated cases of resales they don't like, but the market as a whole wouldn't notice. It really is a simple issue. Do you own what you buy, or are you indebted to the makers of all you paid for but don't own? I prefer owning what I pay for and would take that with no restrictions over any system that steals my rights to protect corporations.

#1 - yes, #2 - no.

[khasim]

Yes, they are attempting to block reselling products ... online.

No, stating that it is "used" would not circumvent this ... online ... if they get their way.

The online part is important. It is the online part that is hitting their sales. People can quickly search for lower prices. Certain vendors do NOT like that.

So they hit back with every legal weirdness they can find. You can't use their trademarked names. You can't use photographs of their products. Etc.

It's stupid and it should be shot down. But we'll see how it eventually works out. Right now it's easy for them to win under the DMCA.

Re:#1 - yes, #2 - no.

[waferthinmint]

So they hit back with every legal weirdness they can find. You can't use their trademarked names. You can't use photographs of their products. Etc.

It's stupid and it should be shot down. No, I do not think it is stupid. Manufacturers have invested in their brands and reputations. For example, a large part of Brand awareness comes from quality assurance. In the case of third party sales (be they flea markets or ebay), the manufacturer has no control over the merchandise.

If I produce a digital scale, for example, and it is intended for precision work, I will probably be expected to service it. if it gets sold by a third party who has not signed any handling agreements and introduced the scale to shock or extreme environments the customers will still expect my scale to be supported by me.

As the producer I am hurt by this reseller; not because he has sold my product below MFSR, but because he sold it as new. He is benefiting from my brand's reputation for quality assurance without paying for the cost of maintaining the standard. I would have no legitimate complaint if it were sold as used.

So much for the "free market"

[TheWoozle]

But part of me wishes that the majority of consumers in the U.S. would shop based on the quality of products and services, not just the price.

Anecdote:
I've recently been looking in my area (D/FW, Texas) for a reputable consumer electronics dealer - specifically hi-fi equipment. Not too long ago, there were several good places to buy. One of my favorites was Hillcrest Hi-Fi, a local business well-known around here; they were purchased by Tweeter a couple years ago. Fast forward to today - all of the better shops that had knowledgeable people are gone; only Best Buy and Circuit City remain (ugh!).

Long story short:
Due to a combination of grey market "deals" on the Internet, mega-chains buying out local businesses, and the HDTV pricing war, I no longer have any place that will meet my requirements for buying expensive electronic equipment. I don't buy cars over the Internet or from Uncle Al's Cars and Appliances, and I don't buy expensive electronics from places like Best Buy.

I a way, I sympathize with the few places left with a quality product and good service who just want a way to stay competitive and stay in business.

Re:So much for the "free market"

[Lumpy]

Problem is Quality is relative.

I can get you a power conditioner for your home entertainment center.

One costs $199.00 the other is $3500.00

One is from tripplite, is very nice but economy priced.

The other one is from richard gray power company. and is fantastic on paper.

Unless you understand electronics and electricity. then you realize that one of them is a complete and utter scam. The salesmen even tell you to inform the buyer that it will take from 30-60 days for your capacitors in your equipment to re-learn and get conditioned to the new cleaner power. Coincidentally that time happens AFTER the return period is up.

guess which one is the snake oil garbage? Hint: not the one that is affordable.

People do not understand quality because they refuse to become educated enough to make a decision based on quality. so they look at price. High price = quality right! that Sony Viao is a far better laptop than that lenovo, it's more expensive! That Ferrari is far better than that ford,GM,toyota... it's way more expensive.

Fact: Ferrari's are garbage, having owned a 308 they are utter crap with a fancy name tag. Nice technology, but reliability is horrid they are designed for performance not reliability.

Fact: Sony laptops are crap compared to lenovo and other brands, hands down. I have trashed more Sony laptops than anything else, even the low grade Dell beats sony in longevity. Online there are far more people complaining about Sony laptops than any other brand. (well maybe gateway has more complaints)

Problem is it takes education, LOTS of education to buy smart and for quality. Education is not what the consumer wants to hear, they want to buy their new "ooh shiney!" right now.

Me getting a grey market refurb Video ipod that looks new and has a 30 day warranty for $120.00 less than retail, on ebay gives me an extra $120 for more ooh shiney.

and that is what matters.

Re:So much for the "free market"

[GreyPoopon]

I agree with you on everything except the following:

People do not understand quality because they refuse to become educated enough to make a decision based on quality.

While some people do actually refuse to become educated enough, many more have neither the means nor the time to do so. If every time a person needs to replace an expensive item, they need to get halfway to being an expert, they'll have time for absolutely nothing else in their lives. That's why friends and family come to me for help when buying computers, and it's why I call my Dad when I'm getting ready to buy a car. The problem is, not everybody has a friend or a Dad to help make decisions on the big ticket items they need. What is needed is some consolidated and reliable (IE, not supported by companies trying to separate you from your money) source of information for non-experts to turn to.

Re:So much for the "free market"

[Grishnakh]

Fact: Ferrari's are garbage, having owned a 308 they are utter crap with a fancy name tag. Nice technology, but reliability is horrid they are designed for performance not reliability.

Two points:

1) The 308 is an old car. Would you bash Ford now for the Pinto? That was 35 years ago. New Ferraris are much more reliable, and use much more modern manufacturing methods. Older Ferraris were basically hand-built, tube-frame cars.

2) Ferraris (esp. in the 308's time) weren't known to be reliable, just fast. Want reliable? Get a Toyota. Want fast? Get a Ferrari. Want to walk away from a crash at 160 mph? Get a Ferrari Enzo.

Re:So much for the "free market"

[StikyPad]

Nonetheless, the law respects caveat emptor, buyer beware, meaning it is the buyer's responsibility to learn about what he is buying. Short of fraud (see: pig in a poke), it is unreasonable to rely on the seller to provide an objective opinion.

Most people have experienced this when selling their cars. You will probably feel morally obligated to point out any big problems, (or maybe not), but you almost definitely won't go into details over every nick, scratch, problem with the seat moving, etc., because you don't want to talk the potential buyer out of the sale. It's a conflict of interest. Moreover, any semi-reasonable buyer should be aware of this conflict, and should expect that he will have to give the merchandise a thorough evaluation by himself (or with a trusted agent) before purchasing. Anyone who believes otherwise is naive.

Re:So much for the "free market"

[Somnus]

http://www.consumerreports.org/

Re:So much for the "free market"

[Grishnakh]

Then I guess you're not in the target market for the Enzo...

What a useless comment.

Greed is rampant

[Stanistani]

Politicians lay down with corporations. Judges cackle over injustices. The clouds gather.
Anime DVDs go up in price.

Sorry, just feeling apocalyptic today.

Granny's Knitting

[Bob the Hamster]

BAM! The door splintered off its hinges, and toppled into the room. The cats yowled and scrambled under the furniture. Six police officers with plexiglass masks and riot guns stormed into the room and surrounded Granny's overstuffed floral-patterned armchair.

"Oh, my!" said Granny.

"Drop the knitting!" shouted one of the officers. "And keep your hands were we can see them!" he added.

Granny released the needles, and the scarf fell into her lap with the yarn. The officer who had spoken reached out with the barrel of his gun and nudged the knitting from her lap onto the floor.

"Clear!" shouted another officer.

A young plainclothes officer carrying a digital clipboard entered the room, gingerly stepping over the wreck of the door. He gave the heap of knitting a scowl, and stopped in front of Granny. The riot police shifted aside to give him a clear view of her.

"Abigail Theresa Winslow?" the officer read from his clipboard.

Granny removed her reading glasses and looked up at the man. "Yes, that's my name." she said.

"You are hereby charged with Economic Terrorism in the 2nd Degree. You have the right to remain silent. Anything you say is being recorded, and can be used against you in a court of law."

"I don't understand!" wailed Granny, wringing her hands.

The officer ducked down and picked up Granny's knitting. He held it up to the light, lifting it with only his thumb and forefinger, as if he did not like to touch it.

"This is a beautiful scarf, Mrs. Winslow." he said.

"Oh, thank you, but--" Granny began confusedly.

"I can tell you spent a lot of time on it." said the officer.

"Well, yes, I--"

"We have witnesses willing to attest that you sell these scarves for no more than the cost of the yarn..."

"Yes, I just enjoy making--"

"...Severely undercutting the prices of your commercial competitors by an order of magnitude, in spite of the fact that your scarves are obviously superior handcrafted products."

"I... I... well, ... Thank you?" said Granny, still confused, but recognizing the compliment to her handiwork.

"Don't get funny with me, Lady!" the officer snapped, leaning in close to Granny's face. "You should be ashamed of yourself! This sort of underpricing makes me sick! I've come to expect this kind of altruistic bull from hackers and teachers, but I never expected it from a respectable citizen with no criminal record. What is this world coming to?"

"Well, I never!" exclaimed Granny.

"Take her away, boys." said the officer.

Two of the riot police gently handcuffed Granny, and lead her out of the room.

"Send in forensics to bag the evidence." said the officer, dropping the knitting, and wiping his thumb and forefinger on his shirt. He looked around the room, and shook his head sadly. "When will people learn? She acted like she didn't even know it was wrong."

Almost any company can do this. We do.

[Stu101]

Not me personally you understand, but the company I work for. We were having a problem with a lot of our stock (especially seconds) turning up on ebay at sometimes less than 1/3 the SRP. We would also get lumbered with damaged returns that had found their way into the channel. Because our company knows most of the customers personally, we did some digging, whois.sc is your friend, then when the companies selling the cheap/returned goods came to order more stock, there was mysteriously no stock left for them. No stock, nothing to sell, at least non of our stock. However a lot of other people who were not selling too cheaply were just "cautioned" and "its ok as long as the prices are good"

I guess it depends on your organisation, some like ours are big enough to be the one of thebiggest manufacturers of this product but small enough to know every retail customer we deal with, and can therefore control the distribution channels quite effectively.

And before anyone moans that the market should dictate prices etc, bear this in mind. If one of your customers is worth over $60,000,000 a year, and they are working on small margins, retail sites and are getting undercut by some guy flogging stuff in the back of his van/ebay, how long till they turn round and stop selling your product, and therefore you potentially just lost $60 million.

Re:Almost any company can do this. We do.

[Volante3192]

Now, here's where I get confused about this. If this company that's selling goods for cheaper is, in fact, buying them from you, isn't that still a sale?

Honestly, this isn't clicking for me. Sounds to me like they'd just be selling it at a loss...

Re:Almost any company can do this. We do.

[Stu101]

Well this can happen a number of ways, for example, on a consumer buy 2 get 3rd free for example, the customer probabily doesnt get the free 3rd item (that we gave away, so our margins are lower) or they buy up grey market destined for example, eastern europe, at lower prices. Also if people buy in big quantities, you get large (HUGE) discounts. so if you were to buy 2000 widgets, you would get 1000 widgets for free, so you can sell at a lower price and still make a profit. Then there are people authorised to buy our surplus, for export or similar, but they dump it in the local market, and if they pay 10% of retail, and sell it for 30% of retail, thats a good margin, for just listing them! Obviously as I said, when we find em, we dump em, but gotta find em first.

Re:Almost any company can do this. We do.

[timmarhy]

so what? as long as you are selling it at a profit yourself to retail, you aren't losing out.

If retail stores are losing ground to ebay, it's time to rethink how they do business.

"However a lot of other people who were not selling too cheaply were just "cautioned""

Sounds like intimidation and price fixing to me, i'd suggest they stop. the market along with government regulation is the only thing allowed to set prices, anything else is called price rigging.

besides, are you honestly suggesting that some guy selling a few items on ebay, lets say 20 at best, is going to bring down a $60,000,000 retail chain? ebay is a place you can sometimes snag a bargin, not somewhere that replaces a retail store.

Re:Almost any company can do this. We do.

[Stu101]

The difference is Van guy prolly doesnt declare his income, or have any taxes to pay (we all know this happens on ebay) or more importantly doesnt have a prime retail location to rent, heat and staff.

I can see your point though. Our margin is large. Its the illusion of quality that does it.

Re:Almost any company can do this. We do.

[MoneyT]

He just said they stop doing it. They just stop selling to one distributor. Seems much more efficient than stopping the whole program

Re:Almost any company can do this. We do.

[Wylfing]

My head asplode.

This is not insightful. This is evil, and demonstrably so. You are driving inefficiencies into the market, which ends up raising prices for everything for no reason. Everybody ends up with less. I shall endeavor to explain:

The function of the economy (pick a model, any model) is to distribute goods as efficiently as possible. Now suppose the natural equilibrium price for a good is 100 zorkmids, and you artificially constrict the market so that you can charge 300 zorkmids for it. What this does is cause 200 zorkmids worth of inefficiency in the marketplace. That 200 zorkmids more or less disappears. Instead of spending that 200 zorkmids on other things, the customer, well, can't. He no longer improves his house. He no longer buys new clothes.

So of course your answer is "Aha! But those zorkmids don't disappear! I have them in my pocket!" Quite. But because your customer buys fewer goods due to your unscrupulous overcharging, all those vendors have fewer zorkmids, and they buy fewer goods. And so it propagates across the entire economy, all the way back to you. Everyone ends up with less. This gets substantially worse when a lot of vendors start artificially constricting supply chains in order to (as they think) make more money. We all end up with much less then.

Conclusion: knock it off, you creep. You're hurting everyone.

Re:Almost any company can do this. We do.

[adminstring]

While I agree with your conclusion that the creep should knock it off, I don't agree with your economic analysis.

Those 200 extra zorkmids don't stay in your pocket once you get them. You spend them, the same way the customer would have spent them, on new clothes and home improvements, and they travel through the economy in exactly the same way. The only difference is that you get the new clothes and home improvements, and he doesn't.

Maybe if you are rich and the customer is poor, you might invest the zorkmids instead of spending them, or if he is rich and you are poor, he would have invested them instead of spending them like you would, and depending on whether the economy "needs" spending or investment more at that particular moment in time, one or the other actions would be better for it. But if you are just as likely to spend or invest as he is, the net impact on the economy of you ripping him off is zero.

That doesn't, of course, make it right. No one should ever rip anyone off. But if they do, it won't necessarily slow down the economy.

Re:Almost any company can do this. We do.

[mutterc]

This doesn't jibe with economic theory as I understand it.

The 200 zorkmids that go to the retailer don't just get stuck in a vault or buried under a mattress. They get invested in the business, or paid back to shareholders. The vendors the company buys stuff from, or the shareholders, then spend that money, etc. Eventually this trickes down to everybody. (Perhaps the CEO hires the consumer to clean his private jet, for a direct example).

Don't believe me? Make a post sometime complaining about concentration of wealth. Someone will come out of the woodwork and say the exact same thing I said above, only with "rich people" substituted for "the retailer".

IANAL Warning

[fishthegeek]

Is there a lawyer that might add some insight here on the concept of "first sale"? I was under the impression that after purchasing a product that you as the rightful owner of the product reserved the right to sell it any time and at any price.

Don't care about the law.. fuck off!

[brxndxn]

With all these bullshit patent, copyright, and now 'intellectual property' lawsuits pooping all over the place.. and the greedy lawyers earning their greedy reputations, I predict a new kind of legal letter...

It's called the 'Fuck Off Response.'

See.. it goes like this... Company A sends Person B a cease and decist letter. Person B sends a letter back saying, 'Fuck Off!'

This letter back symbolically represents the hours and hours of time consulting a licensed attorney, paying a licensed attorney tons of undeserved money at exhorbitant prices, that Person B is not afraid of large Company A, and that person B is willing to go through all the trouble to fight the original letter - without all the actual trouble.. just symbolically.

So, in other words.. a huge company with an army of lawyers may only choose to use what I have available to defend myself. If that is only myself and a public attorney, then said company may only use equal or lesser - or otherwise lose by default since company is not stooping low enough to reach me in order to even take a swing.

Little guy (or girl) says 'Fuck off.' (but en masse)

Re:Don't care about the law.. fuck off!

[Threni]

> With all these bullshit patent, copyright, and now 'intellectual property' lawsuits pooping all over the place.. and the greedy
> lawyers earning their greedy reputations, I predict a new kind of legal letter...
> It's called the 'Fuck Off Response.'

There's similar precedent, in the UK at least:

http://en.wikipedia.org/wiki/Private_Eye

An unlikely piece of British legal history occurred in the case Arkell v. Pressdram. The plaintiff was the subject of an article relating to illicit payments, and for a change the magazine had ample evidence to back up the article. Arkell's lawyers wrote a letter in which, unusually, they said: "Our client's attitude to damages will depend on the nature of your reply". The response consisted, in part, of the following: "We would be interested to know what your client's attitude to damages would be if the nature of our reply were as follows : Fuck off". This caused a stir in certain quarters. In the years following, the magazine would use this case as a euphemism for an obscene reply: In subsequent cases, instead of using the obscenity, Private Eye (and others) would say something like "We refer you to the reply given in the case of Arkell v Pressdram", or perhaps "His reply was similar to that given to the plaintiff in Arkell v. Pressdram ". Like "tired and emotional" this usage has spread far beyond the magazine.

DRM

[zymano]

This could blow a hole in DRM too

You can't interfere in commerce like this.

Companies don't own their product after it's sold to someone.

The /. readers are missing the boat with this one

[Bomarc]

After reading the comments thus far (about 30), many /. readers don't seem to get this story.
First, this is not about the buyer and the seller, this is about the company that makes the product and the person(s) selling the product new on eBay.
The case has already been to the Supreme Court, and "we" (aka the people) lost, the business have won. The test case was for a first (retail) sale, not an owner of the product trying to resell it. But that issue is being abused as well (again, what the article is trying to say).
Also incase you were wondering -- the decisions were split along party lines: Democratic and Republican representatives. The Republican representatives had the majority. (Yes, I know that the justices are not Democrats or Republicans, but the justices were appointed by them).

ITI vs Colon doesn't make sense

[dave562]

I don't understand how ITI is trying to sue Colon. Obviously Colon did not buy the products directly from ITI but bought them instead through a distributor. How did the distributor sell the products to Colon and make a profit, while at the same time still allowing him to resell them at less than what ITI says he is allowed to sell them for? It seems to me like ITI should be going after their distributor for breach of contract, not Colon. Or did I misread the article?

There is a great song by Rage Against the Machine

[PortHaven]

Fuck you I won't do what you tell me...

Fuck you I won't do what you tell me...

Fuck you I won't do what you tell me...

Honestly, I am getting so sick and fucking tired of these sort of controls. The perpetual infinite contracts where you have to cancel on the one day a year of renewal or you are hit with either an early termination fee or another term of contract.

It's getting ridiculous....

I've reached a point where I have no respect for copyright. 10 yrs ago things were different. But I'm sick of the price gouging and pseudo-controls. Why are all the stores charging $30 for a USB cable that used to cost $6.95. And that I can still go to Costco and get two + an extension cable for under $8. And they're gold-plated too boot.

The worst part of it, is people are so bloody apathetic these days that when there should be a revolt - there isn't. And so much money is dumped into welfare systems that enable people who don't work to buy HDTV's, cable, DSL, a Lexus, and what not without a care for where the money comes from. That hard working people can't even influence the system by not spending money. Cause we'll simply be taxed and have our money given to someone who will spend it.

*bah*

"Free Mars!!!"

Ebay bargains already a thing of the past

[syousef]

When I first started using Ebay you could really get a bargain, and that's why I went there. However that was a long time ago. These days you're likely to see used goods sold at 80% or more of the original "brand new" product...sometimes they go for more than brand new which makes me wonder how legit these sales are. The other thing that makes me wonder is how I started getting second chance offers. What put the nail in the coffin for me buying stuff off Ebay though was my dissatisfaction at the handling of a dispute over a very low value item. (About US20). I got broken used goods where the claim was that the goods were "still in shrink wrap". Yeah re-shrinkwrapped. The proof I had to get to get my money back was certainly not worth the $20 and the seller started threatening me with legal action over factual comments I left on his feedback instead of dealing with the issues. So I issued a chargeback on my credit card, I closed my paypal account, and haven't used my Ebay account since. That was sometime last year.

Another time I was very lucky to get a much more expensive pair of items because the seller got the address wrong. Fortunately the goods got to me, but when I questioned the seller over whether the address was obtained from my Ebay account they just got defensive. I'd have been out US350 if those goods hadn't arrived. I've heard much worse horror stories from acquaintances at work but I'm not privy to the details and don't know how true they are.

Also fee increase over the years have made it not worth it to list low value items. So these items don't show up if you're a buyer and if you want to sell them you know you're better off trying to pawn them off to friends.

In short, Ebay isn't what it once was, at least for me. It was once an excellent place to get a bargain or get rid of unwanted goods.

I can understand their point

[The Null Repeater]

Back before Al Gore invented the internet, I used to work in at a windsurfing store. The biggest competition started to be mail order warehouses that could sell boards cheaper due to less overhead. In the short term, its better for the consumer but in the long term, it kills the sport. People would go to the local store and find out which board they wanted then order it from the warehouse. Local stores couldn't compete and started to close up but these local stores were the ones were creating new customers through lessons, demos, etc. Some manufactures realized this and stop selling to warehouses.

I can understand why Merle Norman Cosmetics doesn't want their products sold on Ebay. If consumers don't buy the product in the stores, then why should the stores carry it. If stores don't carry it, how is the company to find new customers? Online, you can't sample a smell or see its true color. Cheap stuff is great but sometimes its affect on the bigger picture isn't.

Re:Auctions (if fair & open) yield the RIGHT p

[StarvingSE]

Not exactly. Auctions that follow the Vickrey auction scenario are much closer to the "right" market price. Basically, everyone posts a secret bid, and the person who bids the highest wins, paying the price of the second highest bid. I've read numerous studies (too lazy to link to them) that conclude the Vickrey auction to set a much fairer and true price than traditional auctions.

It's more complex than that

[Moraelin]

It's more complex than that.

E.g., what if it's a counterfeit product? It's damn easy to undercut someone's prices when you don't have to invest a cent in research (even if it's "what are people willing to wear this season") or even in marketing (since you're piggy-backing on someone else's brand image and using their own marketing investment against them.) Often you can cut more corners too, because, hey, if the product malfunctions spectacularly or even hurts someone, it's not _your_ brand image that goes down the drain.

Or what about stolen goods? Or defective goods which someone was supposed to dispose of, but made a bit of money on the side auctioning them? It's damn easy to undercut prices when you're selling stuff you got, essentially, for free by illegal means.

Or the case comes to mind which saddled us all with frequency- or multiplier-locked CPUs. A bunch of dishonest fucks figured out that they can take, say, a cheap 100 MHz CPU and overclock it to 133 MHz, make a computer with it, and sell it for quite a bit of profit. Remember that at the time most of the ID of a CPU was what was printed on it, and it was up to you to set the motherboard jumpers right. So, being that the CPU in a complete computer was under a heatsink, there wasn't even much way to see if you got defrauded without taking the computer apart, which Joe Average didn't usually do. But some went as far as to erase what was printed on the CPU and actually print the higher CPU frequency on it.

It was something which actively damaged Intel's reputation, and later AMD's when they were the last to sell unlocked CPUs. People were buying computers which kept crashing, or only worked as long as the temperature in your room was under 20C. Summer comes and your computer is a dysfunctional piece of shit. You'd maybe take it back to the shop and they'd tell you some "yeah, we've had a lot of problems with bad Intel CPUs lately." (When the only problem was that they had defrauded you of a lot of money.) There was a _lot_ of "Intel CPUs are shit and crash all the time" bad reputation built at the time. And later it was "AMD CPUs are shit and crash all the time."

Just, you know, in case you were wondering why CPUs are locked nowadays.

So basically it's trivial to have some auction where the whole point is that it's _not_ fair and open, you're not even buying what you think you're buying. And it might not be a price that a normal, honest seller would ever accept.

Plus, just because Slashdot has _yet_ _again_ a lopsided and inflammatory story, it doesn't mean you can jump to a conclusion based on it. There used to be a time when the stories actually had anything to do with technology, and it was exciting new stuff, not "version 2.5.1.2 of Product X released, people advised to patch their 2.5.1.1 version." Nowadays it seems that lopsided "company X is violating your rights if they don't buy me a pony" astroturfing is more common than anything even remotely related to computing.

So basically, if a story seems like a clear-cut "side X is 100% right, side Y is 100% wrong and are evil fucks to boot", that's usually your clue that you're spoon fed an astroturfing story. Reality is rarely that neat, and the devil often is in the details you're not getting, or are getting a cherry-picked slightly-warped version. If you can cherry-pick only the details you like, you'd be surprised how far reality can be warped. (E.g., think, "Hitler was buying roads and factories and the allies attacked him for it." If you conveniently omit such details as, you know, that three continents were plunged into all out war at the time and the ethnic cleansing part, the whole story takes a very different angle.)

Re:It's more complex than that

[packeteer]

You bring up some good related points but this case is still 100% clear to me. Take the example of the women selling cosmetics from TFA. If she is telling the truth and gets the items from a flea market they could be stolen or fake but that is not what the company is worried about. They are pursuing the ebay seller because they suspect that she bought the cosmetics from a salon which has an agreement to only sell in the salon they run. Therefor the salon is breaking the agreement with the cosmetics company. That would be a clearcut case of them breaking the agreement if that is what is going on, nobody would defend the salon in breaking that agreement.

The problem here that is 100% clear cut to me is that the cosmetics company is not going after the salon. The company is going after a 3rd party who MAYBE bought the cosmetics from the salon. They say that the ebay selling is breaking an agreement between 2 parties, neither of which are her. How could she possibly be responsible for an agreement that she didn't agree to? If she did get the cosmetics from the salon (which she denies) she has bought something from them and owns it. She is not responsible to uphold an agreement she did not have anything to do with.

What i see going on here is this; a cosmetic company is seeing the BATSHIT FUCKING CRAZY logic that companies are using to defend their intellectual property. They want in on some of the action and are calling their TANGIBLE GOODS an intellectual property. I know that they REALLY REALLY want to be in the market of selling intellectual property because it allows them to make all sorts of ridiculous claims in court but it just isn't the reality for them. They are selling tangible goods in the strictest definition and should not get away with this crap.

Re:It's more complex than that

[ApharmdB]

The cosmetic company is definitely going after the wrong party. And it is doing it the expensive, complicated way. The company should just hire a P.I. to tail the lady running the ebay auctions. When they find out which salon the lady is buying her product from the cosmetic company can just cancel their contract with them or sue them directly. The P.I. has got to be cheaper than a bunch of lawyers.

Re:It's more complex than that

[karmatic]

How is this for a thought?

Salon has agreement to sell in-store only, not online.
eBay seller walks into store, buys products, sells online.

Who is breaking any contracts? The salon in this case has upheld their end of the bargain.

Re:It's more complex than that

[Alexei]

Salon has an agreement not to sell at all, only to use on their customers, and thus gets the products at a discount.

Re:It's more complex than that

[MMC Monster]

Most salons I've been to sell bottles, under an agreement with the manufacturer. Some manufacturers even advertise to the public to buy their wares at the salon.

Re:There is a great song by Rage Against the Machi

[Threni]

> The worst part of it, is people are so bloody apathetic these days that when there should be a revolt - there isn't. And so much
> money is dumped into welfare systems that enable people who don't work to buy HDTV's, cable, DSL, a Lexus, and what not without a
> care for where the money comes from. That hard working people can't even influence the system by not spending money. Cause we'll
> simply be taxed and have our money given to someone who will spend it.

I think you'll find that most people who get welfare aren't spending it on Lexus (Lexii?), HDTVs etc. If you're talking about the US, for example, official records suggest that more than 10% of the population can't afford enough food to support a healthy lifestyle.

A friend of mine owns a spa

[begbiezen]

a day spa. She sells expensive creams. These creams can not be bought anywhere else in the county. (well, one or two other places) It's a day spa. They're not just selling creams, it's a whole package. You get a facial or a waxing or a massage or facial. You hang out for sometimes hours. You learn stuff. Then my friend sells you fancy creams that cost way more than average creams. Are they that much better? I don't know. But one of the reasons they sell is because you can't buy them anywhere else. (in town) My friend makes a significant mark-up on the creams. as she should, considering how much time and effort she has invested in marketing them. The salon and the cream company work together.

Now someone comes along and starts selling them on ebay. How did they get them? Used a salon account i imagine. This person can sell them for a tiny mark-up and still make a profit. That means people can go the salon, learn all about how awesome the cream is, and then go buy it on ebay for half the price. Where does that leave my friend? The cream company told her there was nothing could do to stop the ebay sales, they were working on it. (trying to eliminate the bad distributer) Now they can shut it down officially. And thats good for my friend, and the cream company. We are not talking about people being told they can't sell they're stuff. We are talking about nasty cut-throat business practices. (that should be illegal)

Re:A friend of mine owns a spa

[HiredMan]

Now someone comes along and starts selling them on ebay. [] This person can sell them for a tiny mark-up and still make a profit. [] Now they can shut it down officially. [] We are talking about nasty cut-throat business practices. (that should be illegal)

I'm unclear... which are you saying should be illegal? Because I could make a case for either one from the above statements.

Company makes product and inflates it 2000% but protects that margin by promising exclusive dealerships for which dealers pay big bucks, pass on huge mark-ups and and mark products even further. They protect this channel by driving out of business anyone who tries to sell it at less than 3000% mark-up. Sounds cut-throat to me...

Just sayin'

Re:A friend of mine owns a spa

[DamnStupidElf]

Where does that leave my friend?

Charging for the service instead of overpriced garbage? God, are people so unimaginative that they can't imagine charging an accurate price for a real service or on the customer side actually paying someone for a service instead of a "product"? What about people who are smart enough to go spend a couple hours in the day spa and *not* buy the stupid creams? Don't they leave your friend in the exact same position?

Attorney and Economist: Big Deal (yawn)

[hawk]

I'm an attorney, and a sometime economics professor. No, this isn't legal advice.

In short: big deal.

The new doctrine (which had been expected for years the next time this came up) applies to a very limited number of producers. It does *not* apply to those with market power.

Previously, the court had held that minimum pricing was always anticompetitive. The new ruling finds that *in itself* it is not *necessarily* anticompetitive. It could still be found to be so, however, based on the facts of the case.

A typical manufacturer will have no reason to try to hold up the prices of its product--it would rather sell more. For a very small set of them, however, the "exclusivity" or perceived quality is actually part of the appeal, and sales could go up.

If, for example, microsoft tried this, it *would* be anticompetitive, as they already had market power. On the other hand, if "Joe's Linux" were to insist that its CDs only be sold for a price of $199 or more, it would not harm the markets. If Chevrolet tried it, sales would plummet. BMW, on the other hand, might be able to make their vehicle more desirable this way--it would fit in with their current high-end service sales campaign. Furthermore, it can be used to insure that distributors *of an upscale product* have sufficient margins for the service level the company wishes to project--Nordstrom's instead of WalMart.

TFA gets it wrong, by the way, in indicating that this is about competitors stifling auctions. It's about manufacturers requiring their vendors to comply with their sales contracts. Assuming that the company is correct that she bought from a licensed dealer, she did this with knowledge of the contract terms. I doubt that it would be much of a stretch of privity to hold her to them in this case. The manufacturer could certainly take here deposition and find out the vendor, and then cut the supply that way. If she really bought them at a flea market, *that* vendor can be forced to reveal the dealer.

The manufacturer thinks that its product is more desirable if sold only through beauticians at high prices. Fine. There are any number of other manufacturers that are happy to sell.

hawk, phd, esq.

Re:Attorney and Economist: Big Deal (yawn)

[geekoid]

So? you totally overlook the real world implications.
Manufactures can send notices to any retailer and tell them that everyone has violated the contract. Effectively shutting out the used market.

You don't think publishers would love to shut down used book stores?
Since no 1 publisher controls the market it is not anticompetitive, but all of the publishers could enforce it. Meaning used book store owners would need to be able to afford a very lengthy legal process to fight this.

"It's about manufacturers requiring their vendors to comply with their sales contracts."

Sales contracts that had unenforceable clauses, apparently.
This is about manufactures to have more control over sales contracts.

It's a unnecessary stifling of the free market.

Re:Attorney and Economist: Big Deal (yawn)

[hawk]

>So? you totally overlook the real world implications.

No, though you created implications that don't exist :)

>Manufactures can send notices to any retailer and tell them that everyone has
>violated the contract. Effectively shutting out the used market.

Absolutely not. Nothing the Supreme Court or I said suggests such a thing. This is about the new market; the manufacture can't reach the used market under the SC decision.

>You don't think publishers would love to shut down used book stores?

Sure, they'd love it.

>Since no 1 publisher controls the market it is not anticompetitive, but all of the publishers could enforce it.

No, they couldn't. Absolutely nothing has happened to the first sale doctrine for a good faith buyer. This is *only* about the path to the first sale.

Also, if the publishers did try together, *that* would be an illegal use of market power, a cartel, and a couple of other things.

>Meaning used book store owners would need to be able to afford a very lengthy legal process to fight this.

No. The *only* way in which it could even come up is if the seller was buying a price-restricted book from a dealer and then selling it as new.

>"It's about manufacturers requiring their vendors to comply with their sales contracts."

>Sales contracts that had unenforceable clauses, apparently.

Unenforceable as in "the contract was breached."

>This is about manufactures to have more control over sales contracts.

Their own sales to the distribution chain, yes.

Still, though, for the overwhelming majority of products, such an act would be *undesirable* from the manufacturer's perspective.

>It's a unnecessary stifling of the free market.

No, it actually allows more possibilities in the free market. Note that *most* of those that will try to increase prices this way will take serious losses; there are very few products (mostly high end luxury goods) for which profits increase for doing this.

hawk, esq.

Re:Attorney and Economist: Big Deal (yawn)

[Christian Anarchist]

Sorry, hawk, but I must respectfully disagree.

(And I've both practiced law and the teaching of economics, too.)

I'll take your word on the letter of the law -- I don't practice anymore and even when I did "competition" law wasn't my main shtick. But, whatever the letter might be, _interpretation_ of the law is not an equal opportunity endeavor.

The problem is that litigants don't come to the bar with the same bankroll. When the law requires a court to interpret it (by figuring out which piece of the law is fit by the facts, etc.), the advantage goes to the rich Mary Kay and her pink cadillacs. They can afford to push things through court, deal with the delays, vendors (E-bay) not dealing with you, etc etc in the meantime. The evil little salon can't.

Depend on the courts to define what constitutes competitive behavior and what constitutes naughtiness not to be allowed is like requiring the pit bull to be the one to prove Michael Vick is guilty of conspiracy to electrocute.

After all, a pit bull owner is not necessarily an abuser of his dog.

Oh yes, and mine isn't legal advice either.

JD, 1983, PhD, 1999

suicide as crime

[hawk]

actually, it used to make a lot of sense.

There simply wasn't an exception to murder for killing yourself.

The *reason* it made sense is that felony meant that your life and lands were forfeit to the crown. Your life was already gone, but now your son didn't inherit. Typically, the son paid a year's income or some such to get the property back.

hawk

Re:Auctions (if fair & open) yield the RIGHT p

[trolltalk.com]

"Uh. Rigging is the whole point of intellectual monopoly law. It's antithetical to free market capitalism. I don't know why you're surprised, america - you're about as capitalist as the soviets were communist."

People keep forgetting that the Internet routes around damage. There is no such thing as a monopoly when the whole operation can be moved to servers in another country. You're a seller in the US, and you want to sell to someone else in the US - just auction it off on ebay in the UK or Canada or france.

Short Reply

[Nom du Keyboard]

Although Merle Norman does not claim that the eBay seller ever contracted with the company, it contends that the seller's act of purchasing the makeup from a salon that had entered such an agreement and then selling "at discount prices" on the Internet constituted unfair competition, interference with its contracts, and civil conspiracy (see complaint). In other words, the eBay seller, according to the company, is guilty of breaching somebody else's contracts and unfairly competing by selling to consumers on the Internet at prices that are too low.

The short reply to this is: Doctrine of First Sale. I would argue that once a product is legally acquired, that the manufacturer cannot control what you do with it afterwards.

How long before the RIAA tries to take down used CD sales under this SCOTUS ruling? It's as bad as the eminent domain debacle of last year - and you can't blame just one political party for this pair of rulings.

A market for demo items?

[h0mee]

So if the economists argue a "free rider problem", what that suggests to me is that the solution is not anti-competitive agreements on fixed pricing, but rather we need "look and feel" shops that serve as a front to internet only ordering.

Picture it: you walk downtown or to the (disgusting) strip mall, and you enter a "shop" (in which you either pay a nominal fee [say $5 in 2007 dollars], or the store is subsidized by corporate sponsorship). The shop contains a dynamic and broad array of products waiting you to try out. Provided are free internet terminals, as well as pads of pen and paper. When you have "window shopped" you are encouraged to go home and order on the internet for the cheapest price.

Personally, I think a *lot* of consumers would go hog wild over an outlet like this: I'm somewhat surprised it hasn't already happened....

eBay sucks

[Anonymous Coward]

eBay used to be neat. Now it is just a gaggle of businesses selling crap! The real value and "neat factor" of eBay was buying people's used stuff, person to person. eBay made a grave mistake by creating these stores and allowing businesses to use them. Personally I do not ebay anymore. They charge the seller to much and it doesn't protect the users ONLY itself. They don't care about manufacturers either. I used to ebay a lot; I'm also going to pressure my wife away from it as well. Too many rights violations; it is not wise to make a living from eBay. You could be shut down tomorrow for any reason with no other alternative. People need to quit being lazy and cheap and just build their own online presence.

Re:Used CDs as an example...

[toddestan]

FUD. Nothing (nothing) stops you from selling the physical CD that you physically bought.

It's not FUD. The RIAA has gone after used CD sales. They lost, which is why used CD stores still exist, but I wouldn't put it beyond the RIAA to try again (and again) until to they get a ruling in their favor.

Re:Auctions (if fair & open) yield the RIGHT p

[StarvingSE]

It's fair in that the price is closer to the fair market price, not what a person is willing to pay for it. I'm not saying the system is perfect, because it is most certainly not.

Chinese manufacturing

[falconwolf]

Try to find a manufacturer making a profit anywhere outside of China ... they only make a profit there by expoiting their workers

The Chinese workers aren't making as much as First World workers make, but they aren't being exploited. Sure the pay isn't as good but then again the cost of living is a lot lower too. Chinese who are employed in one of these factories make more than those who can't get a job at one, and if they can't get one it's because they aren't looking or trying hard enough to get work. Or they live in the wrong place. There is a real estate boom in China because workers there can afford to buy homes. And more and more are buying and driving cars. Heck, an American can move to China and live like a king by teaching ESL, English as a Second Language. This is because many, many Chinese want to learn English.

or despoiling the environment.

Pollution and despoiling the environment has been a problem however there is an active Chinese environmental movement in China and the Chinese authorities are becoming aware of just how important it is to cut down and stop pollution:

New rules to curb "rampant" violations of pollution laws
HEFEI, July 12 (Xinhua) -- China's environment chief on Thursday unveiled a set of tough new rules to tackle worsening lake pollution while lambasting the country's "bumpkin policies" that encouraged local officials to turn a blind eye to environmental hazards.

The regulations follow findings showing "rampant" violation of environment rules by almost nine in ten of the country's industrial parks and two fifths of companies.

Zhou Shengxian, director of the State Environmental Protection Administration (SEPA), said the new rules covering China's three major lake areas -- the eastern Taihu Lake, Chaohu Lake and the southwestern Dianchi Lake -- included:

-- A ban on all projects involving discharges containing ammonia and phosphorus, and the turning down of existing applications to establish such projects.

-- A ban on the production, use and sales of detergents containing phosphorous around the lake drainage areas.

-- The removal of all fish farms from the three lake areas by the end of 2008.

-- A ban on fishponds, vegetable and flower farms that may involve the use of fertilizers within one kilometer of the lakeside.

Zhou outlined the measures at a special meeting on lake pollution in Hefei, capital of east China's Anhui Province.

In the last two months, blue-green algae outbreaks have been reported in the three lake areas, endangering domestic water supplies. On July 4, water supplies to 200,000 people in Shuyang County, Jiangsu Province, were halted for more than 40 hours after ammonia and nitrogen were found in a local river.

"Environmental problems, if improperly handled, can trigger major social crises, and improving water quality has become our most urgent task," Zhou told environment officials.

He said illegal activities that harmed the environment were "rampant".

SEPA investigations showed 87.3 percent of the 126 industrial parks in 11 provinces had violated environment rules, allowing environmentally harmful companies into their parks.

They also showed half of the 75 wastewater-processing factories failed to properly process water or were not operating at all. Of 529 companies that SEPA inspected, 44.2 percent were violating environment rules.

"Hazards are everywhere, and environmental accidents are very likely to happen," he said.

Some local officials often relied on companies for GDP contribution and their own promotions, and failed in their responsibil

Re:Chinese manufacturing

[grimwell]

The Chinese workers aren't making as much as First World workers make, but they aren't being exploited.

Whoa, there big guy. Not sure what rock you have been living under but reports & documentaries of exploited Chinese factory workers have been around for a while. Think sweatshops of turn-of-the-20th-century America but nastier and on a larger scale.

A quick google turns up 1.1 million links for the phrase "chinese exploited workers"

Go take a gander at Frontline's Is Wal-Mart good for America video. If I'm remembering right there is a bit in there about the Chinese factories and their workers.

Chinese who are employed in one of these factories make more than those who can't get a job at one

That doesn't mean they aren't being exploited. Work & safety conditions play a large part. Ask a coal miner.

Re:Auctions (if fair & open) yield the RIGHT p

[Smauler]

But then what if everyone bids high so they win, thinking they'll pay a much lower second price?

In that case, the buyers are morons. Seriously, if you can't understand that someone might try to do the same thing as you do, you really are stupid.

Not allowing a bidding war will also mean a reduced price for the seller.

So your first point claims people will pay too much, the second claims people will pay too little. Bidding wars do not necessarily raise prices across the board. Some people start a bidding war, then drop out assuming the opposition is too determined. With blind bids, people will bid the amount they are willing to pay.

People who are wanting to buy but don't know the market price or value of the product will not be able to bid.

Come on - if you don't know the rough market value of an item, you shouldn't be bidding on it at all. Anyway, this system protects people who wildly overbid to some degree - you only pay the second highest bid.

A secret ballot means you don't know you're out of the bidding until it's too late to find another auction, so all the losers in the auction are severely inconvenienced.

I think this is the only really valid point here. However, it's not all that important depending on the auction. Many different timeframes can be used with this style of auction.

No, I'm afraid this Vickrey method is full of flaws.

I'm so glad we've got you to point them all out. You've convinced me....

Re:Auctions (if fair & open) yield the RIGHT p

[advocate_one]

using a different ebay doesn't work... stuff gets taken down on those for the same reasons. A friend on mine has had to give up selling his replica Fender Bass guitar as every time he lists it, it gets taken down. He's not mis-selling it, he actually describes exactly what it is, a Replica Fender Bass made from Warmoth parts... he believes the problem is Fender has people policing ebay looking for what they consider trademark abuse... and he's falling foul of them as he's got a genuine Fender logo on the headstock...

the annoying thing is that they aren't going after the real fakes... the ones that people are actually misrepresenting as actual vintage Fenders.

Golden

[hpavc]

This is awesome, truly we are living in a age of golden prosperity.

The Free Market ROCKS!

[Fantastic Lad]

I really expected an uproar from the Libertarians about this but they are strangely silent. Maybe they don't really believe what they say about things they are against and actually support the monoply/oligopoly form of capitalism we have now with government controls of free trade. I am really dissapointed with the non-response from the Libertarians. They must be "only if it benifits me" hypocrites!

You called it.

The Free Market totally works. People with the best ideas and the best implementation WIN WIN WIN in a Free Market! The Free Market Decides it so!

Heck, it allowed the ruling elite to compete their way to the top and hold onto everything forever. They got there by the sweat of their brows and the shrewdness of their schemes! (Then by the sweat of their slaves and the governments they own). The Free Market gave them the freedom to win! Rah Rah! --Too bad the Free Market isn't like a board game which gets reset every time you put it back in the box.

In effect, we've been playing the same game of Monopoly for over 3000 years. --Longer if some conspiracy theorists are correct.

And you know how it goes. When your little brother has hotels on all the good properties, all the money ends up in his hands and you have to mortgage yourself to kingdom come just to stay viable until pay day while the little devil squeaks at you with infuriating glee.

The Rothschildes and their brethren must be a gleeful people.

-FL

Inflated real estate prices

[metacell]

Let me guess: the interest rates are very low in the UK right now?

Here in Sweden, real estate prices are also ridiculously inflated. This is very clearly linked to the low interest rates. People bid more on houses than they should be worth, just because they can borrow large amounts of money very cheaply from the banks.

If the economy changes and interest rates go up, a lot of people will find they can no longer afford the payments. And as the interest rates go up, house prices will go down, so they will be forced to sell their houses at a huge loss.

It's not the first time this happens, and it will not be the last.

Re:Auctions (if fair & open) yield the RIGHT p

[MrNiceguy_KS]

Individual morons will run out of spare cash, but the universe will never run out of spare morons.