Coach wins trademark lawsuit against flea market

Coach wins trademark lawsuit against flea market:

Coach wins trademark lawsuit against flea market

6/3/2013

(Reuters) - A U.S. appeals court has upheld a $5 million verdict in favor of accessories company Coach Inc against a flea market owner who knew vendors were selling counterfeit Coach products.

Friday's ruling marked the first time the 6th U.S. Circuit Court of Appeals has weighed in on whether a flea market owner could be held liable for contributory trademark infringement.

In a unanimous ruling, a three-judge panel said that the flea market owner, Frederick Goodfellow, could be liable for contributory trademark infringement because he knew, or should have known, that vendors at The Southwest Flea Market in Memphis, Tennessee, were selling bogus Coach goods.

Solo practitioner Stephen Leffler, who represented Goodfellow, said his client would likely appeal.

Coach sued Goodfellow in June 2010 in U.S. District Court for the Western District of Tennessee. In the months leading up to the lawsuit, Coach had sent a letter to Goodfellow notifying him of counterfeit sales.

Coach, which has a reputation for aggressively protecting its intellectual property, has a section on its website dedicated to "counterfeit education."

The local district attorney also had sent Goodfellow a letter about infringing activity at his flea market. Law enforcement raided the flea market, seizing counterfeit Coach products in April 2010.

U.S. Magistrate Judge Diane Vescovo granted Coach's request for summary judgment against Goodfellow in February 2012, finding he was contributorily liable for trademark infringement.

The next month, a jury awarded Coach more than $5 million, finding that Goodfellow had willfully infringed Coach's trademark.

In reaching its decision, the appeals court relied on a 1982 Supreme Court opinion, Inwood Laboratories v. Ives Laboratories, which found that liability for trademark infringement could be imposed when a party continues to supply its product to a person whom it knows, or should know, is engaging in trademark infringement.

The 7th and 9th Circuits have also cited Inwood in decisions in which they held that flea market operators could be liable for contributory trademark infringement, Friday's decision said.

EBAY CASE

The 6th Circuit adopted these courts' reasoning, noting that Coach had repeatedly notified Goodfellow that counterfeit goods were being sold at his market.

The police had raided the markets twice to recover counterfeit goods, the ruling said.

Goodfellow had argued that he took remedial measures, distributing pamphlets to vendors and posting signs stating that selling counterfeit goods was prohibited. He also called a voluntary meeting with vendors to address selling counterfeit goods. By using similar measures, he said, eBay Inc had escaped liability for counterfeit Tiffany & Co rings sold on its site.

In a landmark 2010 lawsuit, the 2nd Circuit held eBay was not responsible for trademark infringement for counterfeit merchandise because the auction site promptly removed all listings that Tiffany challenged as counterfeit.

The 6th Circuit said the steps taken by eBay went "well beyond those taken by Goodfellow."

Goodfellow had actual knowledge that the infringing activity went on "over a lengthy period of time" and knew which vendors were selling the counterfeit Coach products, the court said.

The appeals court also upheld the lower court's decision to award Coach its attorneys' fees of more than $186,000.

Coach's attorney, Britt Phillips of Sutter & O'Connell, did not immediately respond to a request for comment.