Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC

FILED
United States Court of Appeals
Tenth Circuit

April 9, 2009
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

BELTRONICS USA, INC.,

Plaintiff - Appellee,

v. No. 07-3340

MIDWEST INVENTORY
DISTRIBUTION, LLC; I-NET
DISTRIBUTORS, LLC; AUDIO
VIDEO MAN; KEVIN BURKE;
STEVE WEBB,

Defendants - Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D. Ct. No. 2:07-CV-02440-JWL-GLR)

Derek T. Teeter (Maxwell Carr-Howard, with him on the briefs), Husch Blackwell
Sanders LLP, Kansas City, Missouri, appearing for Appellants.

Brett A. Schatz (Thomas W. Flynn, with him on the brief), Wood, Herron &
Evans, L.L.P. Cincinnati, Ohio, appearing for Appellee.

Before TACHA, BRISCOE, and O’BRIEN, Circuit Judges.

TACHA, Circuit Judge.

Defendants-Appellants are a consumer electronics company, its owners,
and its trade names (collectively, “Midwest”). Plaintiff-Appellee (“Beltronics”)

is a provider of aftermarket vehicle electronics, including radar detectors.

Midwest appeals the district court’s order preliminarily enjoining it from selling

Beltronics equipment not bearing an original Beltronics serial number label. See

Lanham Act, § 34(a), 15 U.S.C. § 1116(a). We have jurisdiction under 28 U.S.C.

§ 1292(a)(1) and AFFIRM.

I. BACKGROUND

As early as 2003, Beltronics began selling electronics equipment under its

Beltronics trademark. At all times relevant to this case, Beltronics sold its

equipment to at least two authorized distributors who agreed to sell the products

for a specified minimum price. Apparently in violation of their distribution

agreements, those distributors sold Beltronics radar detectors to Midwest, which

in turn resold them as “new” on the internet auction site eBay. To prevent

Beltronics from discovering that Midwest’s inventory had been supplied by the

two distributors, the distributors either replaced each radar detector’s original

serial number label with a phony label or removed the original label altogether

before shipping equipment to Midwest. On rare occasions, when the distributors

supplied Midwest with a radar detector bearing an original serial number label,

Midwest removed the label prior to resale.

It is Beltronics’s policy that only those who purchase Beltronics radar

detectors bearing an original serial number label are eligible to receive certain

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products and services, including software upgrades, rebates, product use

information, service assistance, warranties, and recalls. Beltronics learned that its

radar detectors were being sold without original serial labels when Midwest’s

purchasers contacted Beltronics with warranty requests for detectors that had

phony serial numbers. A Beltronics customer service manager submitted an

affidavit stating that those purchasers were confused, thinking that they were

entitled to a warranty from Beltronics. The customer service manager further

stated that the customers expressed their belief that they did not receive what they

thought they had purchased and that Beltronics had deceived them. He explained

that they became irate when they learned their radar detector was not covered by

Beltronics’s warranty and did not come with other services such as recalls and

product upgrades, and that this is extremely harmful to Beltronics’s reputation

and goodwill.

In September 2007, Beltronics filed this action against Midwest. The

complaint asserted (1) counterfeiting and federal trademark infringement under 15

U.S.C. § 1114; (2) false designation or origin under 15 U.S.C. § 1125; and (3)

trademark infringement, unfair competition, and passing off in violation of state

law. Beltronics also sought a preliminary injunction. 1 Following an evidentiary

1
Beltronics also filed an ex parte application for a seizure order pursuant to
15 U.S.C. § 1116(d). After initially authorizing the seizure of certain goods and
records in Midwest’s possession, the district court held a hearing and determined,
inter alia, that Beltronics had failed to demonstrate that Midwest “would destroy,
(continued...)

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hearing on October 31, 2007, the district court determined that Beltronics had

satisfied all of the necessary requirements for a preliminary injunction and

enjoined Midwest from selling or offering for sale any Beltronics products that do

not bear an original serial number label. Midwest filed a timely notice of

interlocutory appeal. 2 See 28 U.S.C. § 1292(a)(1); Fed. R. App. P. 4(a)(1)(A).

II. DISCUSSION

A. Preliminary Injunction Standard of Review

To prevail on a motion for a preliminary injunction, the movant must

establish that four equitable factors weigh in its favor: (1) it is substantially likely

to succeed on the merits; (2) it will suffer irreparable injury if the injunction is

denied; (3) its threatened injury outweighs the injury the opposing party will

suffer under the injunction; and (4) the injunction would not be adverse to the

public interest. See Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1224 (10th Cir.

2009). On appeal, Midwest challenges only the district court’s determination that

1
(...continued)
move, hide, or otherwise make the seized goods inaccessible.” Beltronics USA,
Inc. v. Midwest Inventory Distrib’n LLC, 522 F. Supp. 2d 1318, 1323 (D. Kan.
2007). See 15 U.S.C. § 1116(d)(4)(B)(vii). It therefore dissolved the seizure
order. See Beltronics, 522 F. Supp. 2d at 1324. That issue is not raised in this
appeal.
2
Midwest moved the district court to stay all other proceedings pending the
resolution of this interlocutory appeal. The district court has granted that motion.
See Beltronics USA, Inc v. Midwest Inventory Distrib’n LLC, 545 F. Supp. 2d
1188, 1190 (D. Kan. 2008).

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Beltronics has a substantial likelihood of prevailing on the merits of its claim for

trademark infringement. See Lanham Act, § 32, 15 U.S.C.A. § 1114.

We review the grant of a preliminary injunction for an abuse of discretion.

See Pac. Frontier v. Pleasant Grove City, 414 F.3d 1221, 1231 (10th Cir. 2005).

“A district court abuses its discretion when it commits an error of law or makes

clearly erroneous factual findings.” Wyandotte Nation v. Sebelius, 443 F.3d 1247,

1252 (10th Cir. 2006). Moreover, “because a preliminary injunction is an

extraordinary remedy, the right to relief must be clear and unequivocal.” Greater

Yellowstone Coal. v. Flowers, 321 F.3d 1250, 1256 (10th Cir. 2003); see also

United States ex rel. Citizen Band Potawatomi Indian Tribe of Okla. v. Enter.

Mgmt. Consultants, Inc., 883 F.2d 886, 888–89 (10th Cir. 1989) (stating that a

preliminary injunction “constitutes drastic relief to be provided with caution . . .

[and] should be granted only in cases where the necessity for it is clearly

established.”); Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226

(10th Cir. 2007) (“In general, a preliminary injunction . . . is the exception rather

than the rule.”) (quotations omitted).

We have also explained that injunctions that disrupt the status quo are

disfavored and “must be more closely scrutinized to assure that the exigencies of

the case support the granting of a remedy that is extraordinary even in the normal

course.” Schrier v. Univ. of Colo., 427 F.3d 1253, 1259 (10th Cir. 2005)

(quotations omitted). An injunction disrupts the status quo when it changes the

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“last peaceable uncontested status existing between the parties before the dispute

developed.” Id. at 1260. In such instances, the district court may not grant a

preliminary injunction unless the plaintiff “make[s] a strong showing both with

regard to the likelihood of success on the merits and with regard to the balance of

harms.” O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d

973, 976 (10th Cir. 2004) (en banc). This heightened standard accords with the

historic purpose of the preliminary injunction, which is to “preserve the relative

positions of the parties until a trial on the merits can be held.” Univ. of Tex. v.

Camenisch, 451 U.S. 390, 395 (1981). See also O Centro, 389 F.3d at 977 (stating

that the purpose of a preliminary injunction “is to assure that the non-movant does

not take unilateral action which would prevent the court from providing effective

relief to the movant should the movant prevail on the merits”).

Midwest argues that the district court’s injunction disrupted the status quo

between the parties because it compelled Midwest to cease selling Beltronics

products on eBay. It thus contends that the district court was required to examine

with extra scrutiny whether Beltronics is substantially likely to prevail on the

merits of its trademark infringement claim. We need not decide this question,

however, because even assuming the heightened standard applies in this case,

Beltronics has met its burden.

B. Trademark Infringement Claim

Under § 32 of the Lanham Act, “[t]he unauthorized use of any reproduction,

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counterfeit, copy, or colorable imitation of a registered mark in a way that is likely

to cause confusion in the marketplace concerning the source of the different

products constitutes trademark infringement.” First Sav. Bank, F.S.B. v. First

Bank System, Inc., 101 F.3d 645, 651 (10th Cir. 1996) (citing 15 U.S.C.

§ 1114(1)(a)). Thus, the central inquiry in a trademark infringement case is the

likelihood of consumer confusion. See Team Tires Plus, Ltd v. Tires Plus, Inc.,

394 F.3d 831, 832 (10th Cir. 2005); see also Australian Gold, Inc. v. Hatfield, 436

F.3d at 1238 (“The party alleging infringement has the burden of proving

likelihood of confusion.”). Midwest argues that the district court erred both

legally and factually in determining that Midwest’s sale of Beltronics radar

detectors is likely to cause confusion in the marketplace. First, Midwest claims

that its sale of radar detectors under the Beltronics trademark is protected by the

first sale doctrine and the district court committed an error of law in concluding

otherwise. Alternatively, Midwest argues that even if the first sale doctrine does

not apply, the district court’s determination that its disclosure to consumers was

insufficient to alleviate confusion involved errors of both law and fact. We

evaluate each of these claims in turn.

1. First Sale Doctrine

Those who resell genuine trademarked products are generally not liable for

trademark infringement. See Davidoff & CIE, S.A. v. PLD Int’l Corp., 263 F.3d

1297, 1301 (11th Cir. 2001); NEC Elecs. v. CAL Circuit Abco, 810 F.2d 1506,

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1509 (9th Cir. 1987). “The reason is that trademark law is designed to prevent

sellers from confusing or deceiving consumers about the origin or make of a

product, which confusion ordinarily does not exist when a genuine article bearing

a true mark is sold.” NEC Elecs., 810 F.2d at 1509 (citing Prestonettes, Inc. v.

Coty, 264 U.S. 359, 368–69 (1924)). See also United States v. Giles, 213 F.3d

1247, 1252 (10th Cir. 2000) (“‘[T]he purpose of trademark law is . . . to guarantee

that every item sold under a trademark is the genuine trademarked product, and not

a substitute.’”) (quoting Gen. Elec. Co. v. Speicher, 877 F.2d 531, 534 (7th Cir.

1989)). Accordingly, under the “first sale” doctrine, “the right of a producer to

control distribution of its trademarked product does not extend beyond the first

sale of the product.” Australian Gold, 436 F.3d at 1240–41 (10th Cir. 2006)

(quotations omitted). In our circuit’s only case evaluating this doctrine in

connection with a Lanham Act claim, we observed that “the essence of the ‘first

sale’ doctrine [is] that a purchaser who does no more than stock, display, and

resell a producer’s product under the producer’s trademark violates no right

conferred upon the producer by the Lanham Act.” Id. at 1241 (quotations

omitted).

It logically follows that the first sale doctrine is not applicable “when an

alleged infringer sells trademarked goods that are materially different than those

sold by the trademark owner.” Davidoff, 263 F.3d at 1302. A materially different

product is not genuine and may generate consumer confusion about the source and

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the quality of the trademarked product. See id.; Gamut Trading Co. v. U.S. Int’l

Trade Comm’n, 200 F.3d 775, 779 (Fed. Cir. 1999); Iberia Foods Corp. v. Romeo,

150 F.3d 298, 303 (3d Cir. 1998). 3 We hold, as other federal circuit courts have

held, that the unauthorized resale of a materially different trademarked product can

constitute trademark infringement. See Brilliance Audio, Inc. v. Haights Cross

Commc’ns, Inc., 474 F.3d 365, 370 (6th Cir. 2007); Davidoff, 263 F.3d at 1302;

Iberia Foods, 150 F.3d at 302–03; Martin’s Herend Imports, Inc. v. Diamond &

Gem Trading USA, Co., 112 F.3d 1296, 1302 (5th Cir. 1997); Societe Des Produits

Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 638–39 (1st Cir. 1992); Original

Appalachian Artworks, Inc. v. Granada Elecs., Inc., 816 F.2d 68, 73 (2d Cir.

1987). 4

3
The Lanham Act was designed to protect both consumers and trademark
owners from the effects of such confusion. See S. Rep. No. 1333, 79th Cong., 2d
Sess., 3 (1946) (“The purpose underlying [the Lanham Act] is twofold. One is to
protect the public so it may be confident that, in purchasing a product bearing a
particular trade-mark which it favorably knows, it will get the product which it
asks for and wants to get. Secondly, where the owner of a trade-mark has spent
energy, time, and money in presenting to the public the product, he is protected in
his investment from its misappropriation by pirates and cheats. This is the
well-established rule of law protecting both the public and the trade-mark
owner.”).
4
We recognize that these cases and others cited in this opinion involve the
sale of “gray market” goods—goods that bear a United States trademark, are
authorized for exclusive production and sale in a foreign country, and are
subsequently imported and sold in the United States without the trademark
owner’s consent. See Gamut, 200 F.3d at 778. The rationale in gray goods cases
applies with equal force in this context. Thus, we agree with the Third and
Eleventh Circuits that the rule “is not limited to gray goods cases.” Iberia Foods,
(continued...)

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 We emphasize that not all differences are material. See Davidoff, 263 F.3d

at 1302. Some differences between products “prove so minimal that consumers

who purchase the alleged infringer’s goods get precisely what they believed they

were purchasing [and] consumers’ perceptions of the trademarked goods are not

likely to be affected by the alleged infringer’s sales.” Iberia Foods, 150 F.3d at

303 (quotations and citations omitted). A guiding principle in evaluating whether

a difference between two products bearing the same trademark is material is

whether the difference “confuses consumers and impinges on the . . . trademark

holder’s goodwill.” Nestle, 982 F.2d at 638. For this reason, the materiality

analysis must be undertaken “on a case-by-case basis,” see id. at 641, and must

include “an examination of the products and markets at issue.” Brilliance Audio,

474 F.3d at 371. Although no mechanical process exists for determining the

threshold for materiality, see Nestle, 982 F.2d at 641, a difference is material if

“consumers [would] consider [it] relevant to a decision about whether to purchase

a product.” Davidoff, 263 F.3d at 1302. Because many factors influence such

considerations, the threshold “must be kept low to include even subtle differences

between products.” Id. We review de novo the question of whether differences

4
(...continued)
150 F.3d at 302; Davidoff, 263 F.3d at 1302 n.5. See also Gamut, 200 F.3d at 778
(“The conditions under which gray-market goods have been excluded [from
import into the United States]. . . reflect a legal recognition of the role of
domestic business in establishing and maintaining the reputation and goodwill of
a domestic trademark.”).

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between trademarked goods and goods sold by an alleged infringer are material.

Iberia Foods, 150 F.3d at 303.

In support of its argument that the first sale doctrine applies in this case,

Midwest contends that material differences are limited to differences in physical

quality or in control procedures designed to ensure a trademarked product’s

physical quality at the time of resale. It asserts that the absence of Beltronics’s

warranties and other services are “collateral” to the radar detectors’ physical

quality, and therefore no material differences distinguish Beltronics’s radar

detectors from those sold by Midwest. Accordingly, Midwest claims the first sale

doctrine shields it from liability under the Lanham Act.

In evaluating this line of reasoning, we turn again to what we have called

“the essence of the ‘first sale’ doctrine,” which is that “a purchaser who does no

more than stock, display, and resell a producer’s product under the producer’s

trademark violates no right conferred upon the producer by the Lanham Act.”

Australian Gold, 436 F.3d at 1241 (quotations omitted). In this case, it is

undisputed that something more than stocking, displaying, and reselling radar

detectors is at issue. Additionally, although we have never had occasion to review

whether differences in warranties or service commitments may constitute material

differences, at least two federal circuit courts have held or observed that they may.

See SKF USA Inc. v. Int’l Trade Comm’n, 423 F.3d 1307, 1312 (Fed. Cir. 2005);

Nestle, 982 F.2d at 639 n.7. The Federal Circuit has held that “physical material

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differences are not required to establish trademark infringement . . . because

trademarked goods originating from the trademark owner may have nonphysical

characteristics associated with them, including services, such that [the sale of]

similar goods lacking those associated characteristics . . . may mislead the

consumer and damage the owner’s goodwill.” SKF, 423 F.3d at 1312. Similarly,

the First Circuit has observed that “the appropriate test [for materiality] should not

be strictly limited to physical differences,” but should include other differences

such as “warranty protection or service commitments [that] may well render

products non-identical in the relevant Lanham Trade-Mark Act sense.” Nestle,

982 F.2d at 639 n.7. We are aware of no federal circuit court that has held or

observed otherwise when considering the specific question of whether material

differences may include warranties and service commitments. Accordingly, we

conclude that the district court did not commit an error of law in concluding that

material differences may include the warranties and services associated with

Beltronics’s radar detectors.

Midwest expresses concern about the policy implications for such a

decision. It claims that this interpretation of the material difference exception to

the first sale doctrine would permit any trademark owner to eliminate the resale of

its goods, shut down its competitors, and ultimately fix the price of its product

simply by limiting its warranty coverage and service commitments to those who

buy from it directly. Because under this scenario those who purchase a

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trademarked product from a reseller would not receive the same warranty and

services as those who purchase from the trademark owner, Midwest asserts the

product would be materially different and all resellers would be unavoidably and

invariably liable under the Lanham Act.

Were the first sale doctrine the only legal principle shielding resellers from

liability in this scenario, Midwest’s argument might avail. See Davidoff, 263 F.3d

at 1301 (observing that the first sale doctrine “does not hold true . . . when an

alleged infringer sells trademarked goods that are materially different than those

sold by the trademark owner.”). However, the fact that “the resale of a

trademarked product that is materially different can constitute a trademark

infringement,” see id. at 1302 (emphasis added), does not mean that it always

does. The Lanham Act does not proscribe material differences per se; it proscribes

sales and offers for sale that are “likely to cause confusion, or to cause mistake, or

to deceive.” 15 U.S.C. § 1114(a)–(b). The purpose of the material difference test

is to assist courts in determining whether allegedly infringing products are likely

to cause confusion in the marketplace and undermine the goodwill the trademark

owner has developed in its trademarked goods. See Iberia Foods, 150 F.3d at 303;

Nestle, 982 F.2d at 638 (noting that the sale of materially different merchandise

violates [the] Lanham Trade-Mark Act . . . because a difference in products

bearing the same name confuses consumers and impinges on the . . . trademark

holder’s goodwill.”). So long as resellers of materially different products take the

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necessary steps to adequately alleviate this confusion and prevent injury to the

trademark’s goodwill—by, for example, sufficiently disclosing that the product

differs from the originally sold product—those differences will be unlikely to

trigger the liability Midwest envisions. See King of the Mountain Sports, Inc. v.

Chrysler Corp., 185 F.3d 1084, 1089 (10th Cir. 1999) (“Likelihood of confusion

forms the gravamen for a trademark infringement action.”); Matrix Essentials, Inc.

v. Emporium Drug Mart, Inc., 988 F.2d 587, 591 (5th Cir. 1993) (explaining that

in several cases where trademark infringement was associated with the resale of

materially different goods, an essential element was that “a consumer would not

necessarily be aware of the [differences] and would thereby be confused or

deceived.”). We therefore conclude that Midwest’s policy argument is unavailing.

2. Sufficiency of Disclosure

Midwest argues that even if the Beltronics radar detectors its sells are

materially different than those sold by Beltronics, Midwest included a disclosure

in its advertisements sufficient to shield it from liability. Specifically, Midwest

offered into evidence a printout from an auction on eBay that contained the

following statement:

WARRANTY – WE PROVIDE A 1 YEAR DEFECTIVE
REPLACEMENT WARRANTY. THE MFG WILL NOT HONOR
THE WARRANTY IF PURCHASED OFF EBAY. SINCE WE
HONOR THE WARRANTY, THE SERIAL NUMBER HAS BEEN
REMOVED AND RETAINED BY US.

The district court rejected this argument, stating:

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 According to defendants, when they advertise their product on the
Internet they disclose that the manufacturer will not honor the
manufacturer warranty and that, in lieu thereof, defendants provide a
one-year replacement warranty. But, based on the evidence
presented, the court is unpersuaded that defendants’ warranty policies
are necessarily disclosed to consumers in a manner that is sufficient
to ameliorate any confusion. Beltronics became aware of defendants’
practices with respect to Beltronics radar detectors by way of
customer warranty inquiries seeking to return units for repair, and
those units appear to have come from defendants. This undercuts
defendants’ argument that they consistently disclose their warranty
policy in a prominent manner. Moreover, the radar detectors which
were seized do not contain any written disclosures concerning
defendants’ warranty policy. Additionally, the lack of a
manufacturer’s warranty is not the only implication associated with
Beltronics products not bearing legitimate serial number labels.
Customers also do not receive product and service assistance, product
use information, software upgrades, rebates, and recalls. Thus, the
court is unpersuaded that defendants’ alleged disclosures to
consumers concerning the product warranty are sufficient to
ameliorate this confusion.

Beltronics, 522 F. Supp. 2d at 1328.

On appeal, Midwest raises several challenges to the district court’s

conclusion. First, it contends that the court impermissibly shifted the burden of

proof to Midwest to demonstrate the effectiveness of its disclosure, as evidenced

by the court’s statement that it was “unpersuaded” that the disclosures sufficiently

ameliorated consumer confusion. The record, however, clearly shows that the

court understood that Beltronics, as the party seeking the preliminary injunction,

bore the burden of proof. At the conclusion of the evidentiary hearing on the

preliminary injunction, the court invited Beltronics to present evidence, explaining

that “you get the last word because you bear the burden of proof.” The court’s use

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of the word “unpersuaded” in its written order does not cause us to question the

district court’s earlier and unequivocal acknowledgment that Beltronics bore the

burden of proof.

Next, Midwest argues that the court clearly erred in finding that it did not

disclose adequately its warranty policies to consumers. Again, we disagree. The

district court considered evidence that Midwest’s consumers contacted Beltronics

for warranty coverage, which calls into question whether Midwest included a

warranty disclaimer in all of its sales advertisements. Midwest contends that the

limited number of consumer complaints simply demonstrates that those consumers

may not have read the disclosures. Midwest also states that it is equally likely that

those consumers may have read the disclosures but tried to obtain warranty

coverage from Beltronics anyway. Although those may be permissible findings in

light of the evidence presented, so too is the district court’s finding that Midwest

did not consistently and prominently include the disclosures in its sales material.

As such, the district court did not clearly err. See Olcott v. Delaware Flood Co.,

76 F.3d 1538, 1558 (10th Cir. 1996) (“Where there are two permissible views of

the evidence, the fact finder’s choice between them cannot be clearly

erroneous.”). 5

5
Midwest further argues that “the district court was simply wrong when it
stated that ‘the radar detectors which were seized do not contain any written
disclosures concerning [Midwest’s] warranty policy.’” Midwest points out that
every radar detector it sold included a Beltronics warranty card, which states that
(continued...)

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 Moreover, to the extent that Midwest contends that the evidence of actual

consumer confusion was de minimis and therefore insufficient for Beltronics to

meet its burden, our case law clarifies that a plaintiff must demonstrate more than

isolated instances of actual confusion when (1) the trademarked product and the

defendant’s product are not physically similar or are not used for similar purposes,

or (2) the defendant has put on its own substantial evidence demonstrating no

significant actual confusion—for example, testimony from consumers stating that

they were not confused. See Universal Money Ctrs., Inc. v. Am. Tel. & Tel. Co.,

22 F.3d 1527, 1534–36 (10th Cir. 1994) (de minimis evidence of actual consumer

confusion insufficient when the defendant introduced substantial and reliable

evidence demonstrating no significant actual confusion and when the two marks

are not similar); King of the Mountain Sports, 185 F.3d at 1092–93 (de minimis

evidence of actual consumer confusion insufficient “in light of the complete lack

of similarity between the defendants’ uses and plaintiff’s mark.”). In this case,

however, the two products at issue are nearly identical in all physical respects,

they are used in the same manner, and Midwest did not offer any evidence

showing that consumers were not confused. Therefore, we do not find this

argument persuasive.

5
(...continued)
the Beltronics warranty does not apply to radar detectors lacking a serial number
or purchased on eBay. The presence of the Beltronics warranty card, however,
does not in any way undermine the district court’s finding that the radar detectors
did not come with a written explanation about Midwest’s warranty policy.

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 Finally, Midwest maintains that the district court erred as a matter of law in

concluding that the disclosure was insufficient because it only relates to warranty

coverage and does not disclaim that Beltronics also refuses to provide “product

and service assistance, product use information, software upgrades, rebates, and

recalls.” Midwest contends that if any disclaimer is necessary, it need only

identify changes to the physical product itself. We reject this argument for the

same reasons identified earlier in this opinion. The first sale doctrine is

inapplicable when the resold product is materially different from the originally

sold product. A difference is material if it influences the decision whether to

purchase the product. See Davidoff, 263 F.3d at 1302. Beltronics provided

evidence that consumers rely on its product and service assistance and that

Midwest’s simple replacement warranty does not provide the level of service

expected by consumers. Thus, the district court did not err in concluding that the

disclaimer did not sufficiently ameliorate the risk of consumer confusion on these

points.

III. CONCLUSION

The district court correctly determined that Beltronics demonstrated a

substantial likelihood of success on the merits by showing a likelihood of

consumer confusion. Accordingly, we AFFIRM the district court’s order granting

Beltronics’s motion for preliminary injunction.

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