Is Motorola Trying To Ban Reselling Phones?

We’ve seen video game execs freaking out about the second-hand sales market, and apparently that may be expanding to other arenas. The Register has an unnamed source (so make of that what you will) claiming that Motorola is asking people to sign contracts on a new phone that ban the buyer from reselling the phone to anyone, other than back to the manufacturer. Of course, this is an economically dumb argument. The resale market helps add value to the primary market, and allows the company to charge more for its product initially. As Mathew Ingram points out, some are suggesting that this move would violate the first sale doctrine, though that could depend on a variety of factors. I would imagine that the terms could establish the situation as a “lease” of the phone rather than a purchase, but that might be difficult to get the courts to accept. Also, my understanding of first sale doctrine was that it only applied to intellectual property — not physical goods, so I’m not sure it would really apply here. Either way, it would seem to be dumb, whether or not it’s legal. If you want to decrease interest in your product, adding such a clause seems like a reasonable way to do so.

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