Our 501(c)(3) organization recently received a Chinese “knockoff” of a patented U.S. product for sale at our silent auction. A representative of the company holding the patent agreed that it was a fake. We told the donor and withheld it from sale. The donor wants the item back. Should we give it back or give it to the company? Do we have the right to give the donor’s name to the company?
Since the donor gave the item to your auction and you decided – quite correctly in my view – not to sell it, I think you have legitimate grounds to return it to the donor. I don’t see any reason for you to give it to the company based on its claim that the product is a fake.
I don’t think you have any legal obligation to report the donor’s name to the company. You don’t know the circumstances under which your donor obtained the item and you have only the company’s claim that it is a knockoff. Your donor may have received warranties on its acquisition. I would leave it up to your donor to decide what to do about the company’s claim.