Thursday, September 14, 2006

how to generate fewer sales

i heard this on npr yesterday; now the indy star has a tiny blurb:

Klipsch sues unauthorized dealers
INDIANAPOLIS -- Klipsch Audio Technologies has sued three Internet sites, claiming they illegally use its trademarks and copyrighted materials. The sites are, and The loudspeaker company says the lawsuit is similar to earlier ones that resulted in stopping Web sites from selling Klipsch products. (Star report)

call me a pinko, but i generally don't believe that manufacturers should have any right to control who sells their products. sure, some items (firearms, insurance, liquor) require a government license to sell. but this is klipsch we're talking about. they make speakers and shit. no specialized skills or knowledge are required to sell audio equipment, as proven by the brisk business done by stores like big buy.

klipsch has every right to choose its business partners. so if klipsch refuses to work directly with these websites because the sites aren't properly deferential, more power to 'em. but a reseller isn't necessarily a business partner (goodwill is a reseller, too). so if these websites legally got their hands on stockpiles of legitimate klipsch speakers, those websites have every right to sell those speakers. it's called right of first sale and it's a backbone of traditional property law.

klipsch can't shut down these resellers simply because klipsch doesn't like them, so instead klipsch goes through copyright and trademark law. it does appear that these sites used klipsch marketing copy, and the google cache shows that some of them used the klipsch logo before taking it down (presumably in response to the lawsuit). this probably is a violation of the law, and klipsch has the right under the law to demand that these websites remove the copyrighted content. it would be a simple matter to comply with this demand: just remove or rewrite the copyrighted content.

but this isn't really about copyright. klipsch isn't really upset that its marketing copy appears on unauthorized sites. it's about control, and most of all it's about pricing. for example, klipsch wants you to cough up $1,600 list for a pair of RVX-54 floorstanding speakers, but soundcityexpo is only asking 1,095. you could save hundreds of dollars by buying from a discount shop, and klipsch doesn't want you to save that money: klipsch wants that money for itself, and it's willing to use copyright law to shut down competition.

the unauthorized dealer warning on the klipsch website warns about unscrupulous dealers who sell stolen goods and pirated merchandise. to be sure, there are dealers out there that do these things, and smart customers should try to avoid them. but that's not what this case is about, either. if klipsch had any evidence that these websites sold stolen or pirated goods, klipsch would be able to sue for that and would have a far stronger case. or better yet, klipsch could give its evidence to the authorities and try to get the site operators arrested for criminal activity. but there is no evidence. so instead, klipsch sues under copyright law, only saying that the websites "illegally use its trademarks and copyrighted materials".

the internet allows anyone to start a business and sell stuff online. this does mean that some people will set up illicit sites that sell illegal or pirated goods. but it also means that average, hard-working joes who always wanted to start a speaker shop but couldn't afford the overhead of a brick-and-mortar store can now set up honest businesses online. manufacturers like klipsch don't care which category you fit into: if you don't have a back-room handshake deal with klipsch, klipsch will sue your ass.

No comments: