Trade, IP, and Counterfeiting

Online marketplaces are proliferating on the web.  The growing consumer acceptance of online
only Sellers means that more goods can now be sold by more Sellers with very
low overhead.

As a Manufacturer, Authorized Distributor, or Independent
Seller on Springcontacts.com, you may be wondering how it may be possible to take
advantage of this new trend, while still maintaining control of goods being
sold, or re-sold on websites such as Amazon or eBay, or niche marketplaces such
as ours.

Online Sellers and Marketplaces bring a greater level of
competition to the market as to price, which arguably is ultimately beneficial
to the consumer.  Traditional
manufacturers and suppliers are struggling to find ways to manage the changing
market, which is increasingly leading some to seek to control the market to
protect their traditional sales channels from being undercut.

Most purchases of spring contact and test
probe products have been made for internal consumption, or sales through distribution
agreements.  Most of these agreements
allow the purchaser to set pricing and resell as they wish.  The general principle is that the buyer of
goods should be free to determine how and where they resell such goods.

If a Manufacturer stops selling to a Customer or Seller on
the basis that the Customer/Seller is re-selling the product at too low a
price, whether online or in a store, the Manufacturer is clearly restricting
the price at which the Customer or Seller can sell the product.  
Another, less direct method of price control, is forbidding a retailer
from selling only online because the online retailer is able to undercut the
supplier’s other customers or sales channels.  There are certain circumstances where restrictions on use of
a website are not linked to a desire to fix the price.  For example, where the goods being sold are
of a particularly technical nature and knowledge of the goods and the ability
to provide pre-sales and post-sales care is essential.  In the case of disputes, the law may favor online Sellers who have purchased goods under “standard” terms and conditions of sale.   

The current best-known method of sales channel control when prohibitions on sales practices have been breached, is not to seek to enforce any terms, but instead to stop supplying the offending Seller in the future. Taking legal action is difficult and expensive.  In general, Sellers do not wish to be seen as trouble makers and will likely accept the terms & conditions requested by the Manufacturer, or move on to another brand. However, there are a growing number of challenges to such practices.   Manufacturer’s refusing to sell their products, and not providing reasons for the refusal will expose themselves to a level of risk if the Manufacturer is in fact acting in an anti-competitive manner.

In the past, there has not been a proven method of effectively restricting internet sales, whether for brand protection reasons or otherwise.  Take care to consult your legal adviser, review and compare your policies with the Federal Trade Commission Policies, as well as the policies of your State or City.  Manufacturers are encouraged to establish provisions to clarify their legal terms of sale, such as “brand guidelines” or “fair retailing policies”, which may or may not include Minimum Advertised Pricing (MAP) or Manufacturer’s Suggested Retail Pricing (MSRP).  It may be also helpful to review this recent study on MAP.  

While Springcontacts.com is primarily a Business to Business (B2B) marketplace, we also offer Business to Consumer (B2C) transactions, essentially making us a B2X marketplace.  Using our niche marketplace, Manufacturers can maintain a greater level of control over product sales &
reselling, while still engaging customers. 
When correctly utilized, Springcontacts.com allows a Manufacturer to
participate in an online only sales channel which meet its minimum
standards.   A tremendous benefit of Springcontacts.com to manufacturer’s is the specific nature
of the goods we offer.   Our marketplace
is dedicated to, and suitable for, selling the specific type of goods offered, and our staff and our systems
support the effective marketing of spring contacts and test probes with a certain level
of technical expertise.  Your success, is
our success.

In general, the types of sales transactions on Springcontacts.com are:

• Manufacturer direct to Customer
• Authorized Distributor to Customer
• Independent Seller to Customer
• Manufacturer, Authorized Distributor, or Independent Seller to Retail End User
• Customer Resale of excess inventory
• Liquidation of inventory

In the industry, the selection criteria used by Customer to
determine whether to make a purchase is generally based on product dimensions
and performance attributes which may be available from one, or more,
Manufacturers.   Our mission is to
provide the tools to connect legitimate Manufacturers and Sellers with Customers
in the most efficient way.  

Another aim of our marketplace is to enhance competition
outside of the price sphere, for example requiring Manufacturers or Sellers to
compete on product quality, technical advantages, or customer service performance.

Independent Sellers typically resell spring contacts or test probes for legitimate reason, including:

• Profit – the product was purchased in volume or at liquidations, in order for resell for profit at a price the market will bear.
• Manufacturing Inventory – typically spring contacts purchased for manufacturing a product which can no longer be used due to technical changes or product obsolescence.
• Sustaining Inventory – typically test probes purchased for spares, and the inventory must be liquidated for obsolescence or financial reasons.

These types of Sellers are indeed selling genuine products that have been fairly acquired.   In the industry, these types of Sellers are not what immediately concerns Manufacturers. Manufacturers are most concerned about counterfeit products being sold to consumers to intended to buy their brand of products.  As such, Sellers are encouraged to create mutually beneficial
relationships in the industry and purchase branded inventory from authorized
distributors or Manufacturers.   Manufacturers
are encouraged to bring attention to a suspicious transaction, or Seller account, to ensure protection of their brand, and reduce the risk of counterfeit
products being marketed.   Suspicious
product listings or transactions may also be flagged by our system.  If flagged, a Seller may be required to
provide evidence of purchase, and must produce invoices and documents provided by
a Distributor or Manufacturer to be verified. 
This process may take time to complete.  Being able to provide evidence of purchase
will be critical if the need arises.  Manufacturers in the industry have invested heavily in
product development and work hard to create and maintain their brands.  If an unauthorized or otherwise Independent Seller
cannot provide satisfactory evidence to verify proper proof of purchase of the
product being offered, naturally we would recommend to the Seller that the
product is removed.

The counterfeiting problem has plagued Manufacturers of products in all industries, and it’s not a new problem.  Counterfeiters know how to falsifying labeling
and packaging.  To counter this activity, there are two main methods being used in the
industry to authenticate products:

1. Difficult to reproduce, or secret marking on products.
2. The use of “track and trace” products, which can be identified within the supply chain

We fully intend to help in the process to protect Manufacturers
and their intellectual property rights and brands.  Counterfeiters will be deterred and may be
prosecuted. A great advantage of our niche focused approach, is an enhanced ability
to more easily identify and pursue counterfeiters.   Please make inquiries on this subject, provide suggestions, or report any suspicious activity by contacting
the site Administrators.

Helping you get to the right point!

The Springcontacts.com Team