Bluetooth’s Trademark Infringement Action Distorted by First Sale Doctrine

June 9, 2022

By: Stephanie M. Smith

From smartphones and in-car stereo systems to health monitors, and all the accessories in-between, Bluetooth technology permeates everyday life around the world. The word is so universal that it may well surprise some that the term “Bluetooth” and the recognizable “B” symbol appearing at the top of many phone screens are registered certification marks owned by Bluetooth SIG, Inc., a nonprofit organization that administers standards for short-range wireless technology.

To use the federally registered Bluetooth marks, a product manufacturer needs to join the SIG network, execute a licensing agreement for permission to display the marks, submit declarations of compliance, and importantly from Bluetooth’s perspective pay fees. Failure to follow these steps when using the marks invites a claim of trademark infringement.

Such an invitation was provoked by FCA USA, Inc., the manufacturer of Fiat, Chrysler, Dodge, Jeep, and Ram brand vehicles. This recent case shows how not only Bluetooth SIG and FCA are affected by the scope of trademark protection, but any other entity seeking to transition finished trademarked goods into new end products, as well as the trademark owners looking to profit from the licensing and authorizations required to use their marks.

FCA equips its vehicles with a head unit, i.e., an in-car entertainment unit, using Bluetooth technology which unit it purchases from third-party suppliers. FCA uses the registered marks on the units and to market its vehicles’ Bluetooth capabilities.

Head unit suppliers are licensed by SIG to use the trademarks, but FCA is not. Based on this seemingly unauthorized use of the Bluetooth trademarks, SIG filed trademark infringement claims against FCA. SIG’s lawsuit, however, did not turn out to be an open-and-shut trademark infringement case.

In a recent decision from the Ninth Circuit Court of Appeals, Bluetooth SIG Inc. v. FCA US LLC, 30 F.4th 870 (2022), the court breathed life into FCA’s defense that FCA’s use of the trademarks is protected by the first sale doctrine, a legal concept that curbs the scope of protection afforded to a trademark.

The first sale doctrine originates from the nearly 100-year-old Supreme Court case Prestonettes, Inc. v. Coty (1924). There, Coty, a French national, owned the trademark COTY for face powder. Prestonettes, a New York company, purchased Coty face powder, subjected it to pressure, added a binder and filled the resulting cake into metal cases that it sold to the public under its own name, but using the COTY mark to indicate the source of the powder.

The Supreme Court held that Prestonettes’ use of the COTY mark was not trademark infringement provided that there was clear disclosure to the consumer that the powder originated with the French manufacturer, and had been repackaged by Prestonettes.  The Supreme Court explained that a trademark does not confer a right to prohibit the use of the word or words; a trademark only gives the right to prohibit its use to protect the owner’s goodwill against the sale of another's product as the owner’s.

Relying on these principles, the Ninth Circuit held that the first sale doctrine potentially protected FCA’s use of the Bluetooth marks without Bluetooth’s approval because FCA bought the Bluetooth head units from companies that had qualified the product with SIG.  However, the case was sent back to the district court to determine whether FCA had adequately disclosed its relationship with, and qualification to use, the Bluetooth technology and whether FCA’s use of the mark could confuse consumers.

While a final determination awaits, it is apparent that end product manufacturers using Bluetooth, or any other trademarked technology, may not need further authorization, and thus significantly need not pay additional licensee fees, to use the marks if its product incorporates a previously licensed product and the manufacturer adequately discloses that incorporation.  Although expansive, the extent of trademark protection is not infinite and this case and its future rulings should serve as a reminder of these limitations.