Economic Damages of an Employee Reselling Company Products

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Many employees are able to purchase products at their places of employment and then resell them at a higher price or without the discount they are often awarded while working for the company.

The possibility that this may be illegal has deterred most from performing these actions. However, not even with the threat of negative consequences has stopped certain individuals. The risk of reselling doesn’t even include the potential economic damages to the business from the person. He or she does not consider this when his or her actions are not stopped. It is important to seek a lawyer if any legal concerns arise through these actions.

A company is often not harmed greatly if one employee resells products he or she purchased legitimately. However, the business may fire the worker if he or she is found doing this. It is possible that a greater economic loss may be felt if there are several individuals reselling products that are sold out of the organization for revenue. This would mean that profits earned through valid transactions are being cut short by others gaining the income without any percentage going to the company. This may be considered theft by some local governing bodies. However, these issues may go to the court with so much in damages being awarded to the business affected.

What Does Reselling Mean?

When someone has purchased or been given items from a company with a logo or brand that specifies that business specifically, it is considered reselling when the person sells these objects to others. This may be through the permission of the organization involved, or it could be without gaining consent. It is when this transpires and the individual pretends he or she is a representative of the business selling the clothing, property or products, that this may become a legal matter. In most instances, this is not illegal. However, if the organization discovers these actions and it was not sanctioned, the employee may be terminated. When enough merchandise is bought in this manner, it is possible that there could be economic damages to the company affected.

The right to resell purchased products that may have a copyright is already affirmed and double verified through the Supreme Court. A case was handled where the copyright owner sued for damages because a copyright work was resold by the person that bought it. In the United States, the first time an object or product is purchased, the copyright protections are removed. This permits the citizen in the country to sell the books, manuscript, play or another document to another person. As long as copies weren’t made to sell as reproductions, the original may be resold. This may even be items such as branded iPads, Nike shoes and similar purchased products.

The Owner’s Right to Reselling

The Owners’ Rights Initiative has made headway of introducing the ability to resell any product that has been legitimately purchased by a person no matter where the item came from, what company it was purchased through and what brand, logo, copyright or other legal protection originally safeguarded violations. Several online companies back the Initiative to ensure owners retain the right to sell their own items after they’ve initially bought them. However, this does not mean that persons are permitted to represent themselves as the company. If any action such as this occurs, there are potential legal concerns. This includes any website that may promote certain brands. There must be information somewhere that the site is not connected to the company unless authorization to do so has been granted.

Economic Damages to the Company and Legal Recourse

While one person reselling items purchased through the company for some side money often is not felt unless the company is small, multiple individuals or groups of sellers could accrue enough income and profit from the venture so greatly that the business is harmed. Additionally, these merchandise owners could act as generic companies that sell or resell designer clothing or other products at a serious discounted price. When the word spreads, this could lead to a loss of sales, a dip in revenue and economic difficulties for shareholders.

Provided the employee is not covered under the Owners’ Rights Initiative in the situation, it is important to contact a business lawyer to determine what may be done about the complication. There may be a settlement that could be more beneficial to both parties rather than a long drawn out lawsuit which may be thrown out if the seller is taking advantage of the Initiative.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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