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Question Line Reference
(See the complete passage discussion here: lsat/viewtopic.php?t=11038)

The correct answer choice is (A)

The justification for the correct answer choice can be found on:

(Lines 48-58)

In order to prephrase the answer to this question, we must consider points of disagreement between the exhaustion theorist and the territorialist. Their main point at issue concerns trademark protection for products registered within a given territory. In these situations, the exhaustion theorist would rule that there is no trademark protection post-sale, while the territorialist would rule that there is trademark protection for products in the country where they are registered. The correct answer choice is (A), in part because it is the only choice which discusses home-country registration, which we prephrased as the main point at issue. Answer choice (B) is wrong because none of the theories seek to restrict the rights of trademark owners to sell. Answer choice (C) provides a scenario which the two theories would agree provides no protection, and choices (D) and (E) are not mentioned in the passage.
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For number 10 I am having a hard time understanding why A is the answer and not C.
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 Stephanie Oswalt
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Hi kmaragh,

I have moved your post to the thread discussing #10. Please review the above explanation, and let us know if you have any additional questions. Thanks!
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I picked A but almost picked C. I am confused by the explanation as to why C is not correct. Is it because both would agree that channel flow distribution can occur in a country where the trademark is not registered?

Proponents of exhaustion theory agree that channel flow distribution can occur because the good has already been sold
Proponents of territoriality theory agree because the channel flow distribution is happening in a country other than the one where the trademark is registered.

 Robert Carroll
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In lines 54-59, the passage claims that the theory of territoriality can be used to stop channel flow diversion that occurs in a country where the trademark is registered. There is no indication that the theory could be used to stop channel flow diversion in other countries besides ones where the trademark is registered. In fact, because the only definition the author provides of territoriality seems to make registration essential for protection, it's much more likely that territoriality would provide no protection at all outside registered countries. If that inference isn't reasonable, then the best we can say is that we have no idea what territoriality would think about channel flow diversion outside registered countries.

The theory of exhaustion claims that all rights disappear when the product is sold, so anything sold via channel flow diversion will have no retained rights.

Putting that together, one of the following situations is true:

Exhaustion says there are no rights in the situation in answer choice (C), and territoriality agrees that there are no rights.

Exhaustion says there are no rights in the situation in answer choice (C), and territoriality is silent about the issue of rights in that situation.

In either case, we don't have disagreement. We have agreement, or an unknown opinion (and you can't disagree with an unknown).

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Answer choice A proposes "restricting distribution to authorized channels". But isn't the point to restrict unauthorized channels?
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 Paul Popa
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Hey Florida State,

Great question! I think those are two sides to the same coin: when (A) says " restrict distribution to authorized channels" they mean to restrict distribution to authorized channels only, and not unauthorized ones. Does that make sense?
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But how does it make sense to restrict only to authorized and not unauthorized distributors? Also as per exhaustion, before the goods are sold the trademark owners will still have the rights so they can enforce restriction on distribution patterns as A does not specify before or after distribution
 Rachael Wilkenfeld
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elite097, the issue in answer choice (A) is that the right would be the trademark owner's right to control how the product is sold after the initial sale. The trademark owner controls the first buyer, but in answer choice (A) the trademark owner wants to have restrictions on further distribution/subsequent buyers. The theory of exhaustion would say that trademark owners don't have that right; they only have the right to control the trademarked good through the first sale. The theory of territoriality would say they have that right but only in the place that the trademark is registered. By restricting the rights of the buyers of trademarked goods, they are restricting the sale of their goods to authorized channels only.

Hope that helps!

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