[gambiting]

While I agree with you mostly, this is really a basic issue - devices stolen from the manufacturer are still owned by the manufacturer. They are, and should be, free to do with them however they please. It's a basic question of ownership and control over one's property in here.

[sandworm101]

I'd have to know more about the "theft". I suspect that this wasn't a robbery in the dead of night.

UCC § 2-403 states: When goods have been delivered under a transaction of purchase the purchaser has such power even though ... the delivery was procured through fraud punishable as larcenous under the criminal law.

https://www.law.cornell.edu/ucc/2/2-403

Basically, if an employee to other person who was "entrusted" with these goods by the manufacturer sells them, then innocent purchasers take full legal title. The good-faith purchaser is now the legal owner even if they purchased the goods from someone who wasn't a legal owner. The goods don not belong to the manufacturer. This is specifically to protect innocent people from debates between manufacturers and distributors, even where those distributors have stolen goods.

The knock-on effect of this is that people who buy things in good faith from distributors don't have to worry about manufacturers (or police) raiding their homes ... which appears to be exactly what this manufacturer is doing by bricking these devices.

[gamblor956]

That's not what the law states.

It actually says:

(1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased.

The part you're quoting refers to the recipient being the fraud, not the seller. The recipient never acquires more rights than the seller had. This is why stolen goods can be seized by police, even from innocent purchasers.

[Edit:] Actually more complicated than that. The provision contemplates the middle-man acquired the rights to the goods sold through fraudulent means. In this case, it still requires the middle-man to have acquired the rights from the original seller in a transaction in which the seller gave up the rights to the goods. I.e., theft by fraud would suffice but mere theft would not. It's hard to explain theft by fraud. In a nutshell, the original seller is deceived as to one or more details of the transaction itself, such as price, identify of the seller, or even as to what they are exchanging. The UCC expects all parties to a contract governed by the UCC to exercise due diligence with respect to a contract, so if the transaction includes the "stolen" goods, the UCC doesn't provide any relief. Generally in a situation like this, it would happen where the language of the transaction clearly would include the goods at issue, but the middleman misrepresents to the original seller that those goods aren't included in the contract.

[icebraining]

The seller doesn't have to give up their rights:

"Suppose Ed takes his bicycle to Merv, a bicycle dealer, for repairs, but instead of making repairs Merv sells the bicycle to Betty. Who now owns the bicycle? Section 2-403(2) states that "[a]ny entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business." Ed has entrusted possession of goods to Merv, a merchant dealing in goods of that kind. Assuming Betty is a buyer in the ordinary course of business (BIOC), Merv now has the power to transfer all of Ed's rights in the bicycle to Betty. Betty now owns the bicycle, and Ed cannot validly assert any ownership claim against her. Ed's only remedies would be against Merv."

https://scholarship.law.campbell.edu/cgi/viewcontent.cgi?art...

[gamblor956]

Guys, the UCC isn't the only law that applies to the situation...

Ed might not have rights under the UCC, assuming it applied to the transaction, which is questionable since Ed does not appear to be a merchant. He would have rights under state laws that override the provisions of the UCC.

[Edit] Most states actually override this provision of the UCC to define entrusting narrowly. See, e.g, California's provision:

3) “Entrusting” includes any delivery and any acquiescence in retention of possession for the purpose of sale, obtaining offers to purchase, locating a buyer, or the like;  regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.

[sandworm101]

But see (2)

(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyer in ordinary course of business

We need to know more about how the seller acquired the goods. Often such ebay sales are by people who had legitimate possession, just not any right to sell them. This is why experimental and demo electronics aren't normally investigated as stolen goods. Nobody should be selling them, nobody had the right to sell them, but a great many merchants do legitimately possess them.

[gamblor956]

We need know nothing about the person selling the stuff on ebay. It's irrelevant how the ebay merchant got the goods, what matters is how the manufacturer gave up the goods.

If it was theft--easy case. Stolen property is not covered by UCC. (It's the Uniform Code of Contracts, so there must be a chain of contracts connecting the property from the manufacturer to the innocent buyer for the UCC to apply.)

If it was theft by fraud--now we're talking. This could mean, for example, that the eBay merchant ordered the goods from the manufacturer but then never paid, or lied about who they were, or some other such misrepresentation or fraud or crime. In this case, there's a chain of contracts, so an innocent buyer from the eBay merchant would be protected by the UCC. (Note that if the eBay merchant knowingly does not pay, it could be both theft or theft by fraud depending on the jurisdiction and specific circumstances.)

[eric-hu]

So does this mean the people who were fraudulently sold the Brooklyn bridge actually own it?

[sandworm101]

No. It has to be things that someone can clearly possess, something movable. The seller also has to be someone authorized to possess the thing and deals with such things regularly.

The standard scenario: You take your guitar to a music store to be fixed. Some evil sale guy at the store instead deliberately sells your guitar. Your issue is now with the store. You cannot go after the guy who bought and is how holding "your" guitar. It isn't yours anymore. You have to sue the store for money and the store is free to try and buy the guitar back.

[gamblor956]

What you're ignoring is that the guitar guy never had the ownership rights to your guitar, and thus could not give the ownership rights to the buyer. The UCC only allows the middleman bad actor to pass on the rights they actually had. The provision you quoted early merely contemplates that the middleman acquired ownership rights through deceptive means (i.e., fraud), which isn't the case here. The guitar guy acquired custodial rights, but not ownership.

Thus, in pretty much every state in the US, you go to the police, and they take the guitar back, and the buyer has to go back to the store and get refunded.

EDIT: The following provision is why the guitar guy never gets ownership. (From California's Commercial Code, but most states have made the same change to the UCC text in redefining what "entrusting" means):

3) “Entrusting” includes any delivery and any acquiescence in retention of possession for the purpose of sale, obtaining offers to purchase, locating a buyer, or the like;  regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goods have been such as to be larcenous under the criminal law.

[gambiting]

That is absolutely not true. If you found the guy with your guitar you can take it back(without harming that person in the process, obviously!), the ownership has never transferred from the store to the buyer because the store never had it in the first place.

[icebraining]

No, because the fraudsters weren't entrusted with the bridge.