On April 10, 2020, 3M Co. sued an unauthorized vendor for attempting to sell an NYC agency $45 million worth of 3M-brand respirator masks at 500% of 3M’s list price, or more.
Amid the COVID-19 pandemic, as government agencies scramble to procure personal protective equipment (PPE), unscrupulous parties are capitalizing on the crisis through price gouging, counterfeiting, and other deceptive practices. According to 3M’s federal complaint, Performance Supply, LLC successfully deceived New York City’s Office of Citywide Procurement into believing that it was an authorized 3M vendor.
3M alleges that Performance Supply offered to sell 7 million masks, which Performance Supply represented as 3M products, at a massive mark-up to the city agency by submitting a formal quote. The quote unlawfully reproduced the 3M mark throughout the document and within the attached specification sheets. The quote also provided that acceptance of the purchase order “is at the full discretion of 3M,” thus falsely implying that the formal quote (and unit prices) came directly from 3M. According to 3M, these misrepresentations were made to confuse and deceive NYC officials into believing that Performance Supply was an authorized distributor of 3M products. Performance Supply’s plan worked—the NYC agency prepared bid evaluation requests in which they mistakenly identified Performance Supply as a “vendor” of 3M.
3M is suing Performance Supply for federal and state trademark infringement, unfair competition, false association, false endorsement, and deceptive acts and practices. 3M seeks injunctive relief and states that “any damages, costs, or fees recovered by [3M] will be donated to charitable COVID-19 relief efforts.”
Actors such as Performance Supply clearly pose reputational issues for 3M. As more individuals, hospitals, and government agencies require respirator masks and other PPEs, 3M seeks to meet these demands by escalating its global production and importing its 3M-brand masks into the United States. Although the demand for respirator masks has increased exponentially, 3M states in its Complaint that it has not raised the prices it charges for the respirators in response to the COVID-19 outbreak. Moreover, it says, “3M does not – and will not – tolerate individuals or entities deceptively trading off the fame and goodwill of the 3M brand and marks for personal gain.”
This lawsuit provides a good template for companies, like 3M, whose products are being used on the frontlines of the fight against COVID-19, and are ripe for both price gouging and counterfeiting. By taking such swift and strong action quickly, 3M has protected its reputation and may deter similar actions by others.