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2 Steps Trademark Owners Can Take to Eradicate Flea Market Counterfeiting

Many brand owners dream of being able to eradicate lots of infringement activity in one fell swoop. Rather than expending the time, resources and effort to track down every one-off counterfeiter, a recent Sixth Circuit decision demonstrates that it is possible for brand owners to focus their energy on a single source of infringement to effectively eradicate a number of violators all at once. The case that led to this decision lays out two key steps trademark owners can take to eradicate flea market counterfeiting.

Step 1: Notify the market or sales source of counterfeiting

Coach, Inc., the maker of the well-known COACH bags and accessory products, became aware of The Southwest Flea Market in Memphis, Tenn., where counterfeit COACH products were regularly sold by the flea market’s vendors. Rather than chasing down each vendor who sold fake COACH merchandise, Coach notified the flea market’s operator and landlord, Frederick Goodfellow, of the apparent infringing activity being conducted at his facility and asked that the unlawful sales stop. Goodfellow did not act. He then received a letter from the county’s district attorney general informing him of the unlawful conduct on his premises, and still did not act. Ultimately, law enforcement officers raided the flea market on three different occasions over the course of more than a year and seized a total of 4,600 counterfeit COACH products.

The takeaway for trademark owners is to put landlords and other property owners on notice as soon as you become aware of infringement occurring on or through their premises. Such notice is necessary to give the property owner actual knowledge or a reason to know of the infringement, which is needed to establish contributory liability.

Step 2: If needed, take the case to court

Coach sued Goodfellow for trademark infringement and counterfeiting under the federal Lanham Act. Without putting up a defense, Goodfellow was held liable for contributory trademark infringement, meaning that, although he did not commit infringement directly, he would nonetheless be held responsible for the damage because he contributed to it. The case resulted in an award in favor of Coach for roughly $5 million in damages as well as $186,000 for Coach’s attorney’s fees and court costs.

Goodfellow appealed to the Sixth Circuit Court of Appeals, which agreed with the lower court’s decision. The appellate court addressed whether a flea market operator could be held liable for the trademark infringement of its vendors. Under the theory of contributory liability, those who facilitate trademark infringement of others may also be held responsible for it.

Following the logic of other appellate judges, the Sixth Circuit court determined that if Goodfellow knew or had reason to know that vendors were engaging in infringing activity and he nonetheless provided space to them, then he would be contributorily liable for their trademark infringement. Given the letters he received and the several raids on his facility, Goodfellow clearly knew or had reason to know of the vendors’ infringement, yet he continued to facilitate it by renting booths and storage space to them. For that reason, his liability was upheld.

This case is promising for trademark owners, especially for those residing within the Sixth Circuit (i.e., Kentucky, Ohio, Michigan and Tennessee). Not only did the court issue a helpful precedent, it also paved the pathway for other trademark owners to attack counterfeiting at the root instead of the bud.

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