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Comment by blondin | Hacker News Reader

it is unclear how first sale doctrine applies here.

I just provided that as an example most people are aware of. It could very well come into play if Tesla attempts to use IP laws to prevent resale. Any such provision from Tesla would generally fail under UCC, which generally only allows conditions on resale when there is an explicit agreement to act as a distributor or wholesaler.

Can you point to what part of the UCC you think generally prohibits/voids this type of contractual restriction (or case law saying it does if it does in a way that isn't obvious from a plain reading)?

I can't say I'm very familiar with the ins and outs, but I don't see anything that obviously does so glancing through it. There is some stuff about "sale or return" that I think is the distributors/wholesalers vs normal sale distinction that you're making, but nothing there seems relevant to this sort of clause.

The idea that you can't tell someone else what they can do with a thing once it has been sold traces back to common law. Here is a Supreme Court example from 1911:

"The right of alienation is one of the essential incidents of a right of general property in movables, and restraints upon alienation have been generally regarded as obnoxious to public policy [and have] been generally held void." -Miles Medical. v. Park

I can't point you to a specific code that prohibits this because it depends entirely on what grounds Tesla would claim the right to impose such restrictions. For example if they claim that parts of the Cybertruck are patented, the exhaustion doctrine would apply. From Wikipedia: "once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article are said to be 'exhausted,' and the purchaser is free to use or resell that article without further restraint from patent law. However, under the repair and reconstruction doctrine, the patent owner retains the right to exclude purchasers of the articles from making the patented invention anew"

They're pretty plainly putting it in as a clause of the contract for sale aren't they... not claiming that IP law allows them to unilaterally enforce this (which is the point at which the first sale doctrine would come into play).

Thanks for the citation. It seems to be

1. A case prohibiting this sort of clause when selling to distributors while previously you claimed this sort of clause was only valid when selling to distributors. So I'm left wondering what the basis was for your previous post.

2. Overturned by Leegin Creative Leather Products, Inc. v. PSKS, Inc. Which instead introduces a "rule of reason" based approach for determining whether or not a contraint on resale is anticompetitive and prohibited.

3. Miles, and Leegin, both seem to be about manufacturers attempting to impose a minimum price on their goods. Tesla, strangely, instead seems to be attempting to impose a maximum price (hence the right of first refusal at a pre-defined price). As such the dicta in Leegin seems to suggest to me that attempting to impose a maximum price wouldn't violate the "rule of reason", but potentially only because it wasn't something the court considered at all, so it might violate another ruling.

I didn't intend to cite the case specifically as an analog, but the part I quoted as flavor as to how the law in general looks at nonpossessory interest in the sale of goods.

When this is litigated it will no doubt be complex and touch many areas of IP law, antitrust laws, UCC, and contract law. The contract law angle is interesting because of good faith and fair dealing, which you could make the argument that resale of the vehicle is not material to the purpose of the transaction.

I'd also love to see this blow up in Tesla's face when a lienholder takes possession of a Cybertruck and sells it at auction.

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