Coach v. Flea Market
Last weekend, my wife and I joined some friends for our first trip to the Rose Bowl Flea Market – with 2,500 vendors, it’s billed as “the world’s most unusual flea market” and “the shopping place of the stars.” While everything I saw looked authentic, I was on the lookout for knockoff goods because flea markets have made some legal news lately. On May 31, the 6th Circuit Court of Appeals ruled on whether a flea market owner can be liable for contributory trademark infringement in the case of Coach Inc. v. Goodfellow.
Frederick Goodfellow (no relation to Robin “Puck” Goodfellow from A Midsummer Night’s Dream, playing at the Old Globe this summer, folks…), owner of The Southwest Flea Market in Memphis, Tennessee, was accused of allowing his vendors to sell knockoff Coach products. Goodfellow had been notified in writing by Coach and by the local District Attorney of these violations. The market was raided several times by law enforcement. Nonetheless based on the facts in the 6th Circuit opinion, it seems like Goodfellow did very little to stop the counterfeit vendors.
Coach sued, and Goodfellow and his attorneys continued their pattern of not doing much to help themselves:
Goodfellow asked for relief from judgment because notice of the motion for partial summary judgment had been misplaced by his attorney and because Coach’s counsel had filed notice of intent to strike the motion for partial summary judgment…While setting forth these grounds for his failure to timely respond, Goodfellow’s motion offered no argument on the merits. The district court denied Goodfellow’s motion, finding that his showing of attorney error did not amount to excusable neglect…The court also noted that even if the neglect were deemed excusable, Goodfellow did not assert a meritorious defense in his motion to justify setting aside the order.
I’m starting to sense a bit of irony related to Goodfellow’s surname. In any event, Goodfellow was held liable for contributory trademark infringement, and the 6th Circuit upheld that finding.
Note that Goodfellow was liable even though he never manufactured counterfeit goods or directly used Coach’s trademarks. From the 6th Circuit opinion:
This form of secondary liability was first recognized by the Supreme Court in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982). The Court determined that liability under the Lanham Act [the Federal law that governs trademarks] may be imposed on those who facilitate trademark infringement, stating that where a “distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, [it] is contributorially responsible for any harm done as a result of the deceit.”
They went on to state that
[E]ven if we consider all the evidence of remedial measures, it fails to undermine the district court’s conclusion that Goodfellow engaged in “ostrich-like practices.” Goodfellow continued to supply flea market resources to vendors with knowledge of and willful blindness toward ongoing infringing activities, thereby facilitating continued infringing activity.
OK, so Goodfellow was found to have allowed some counterfeit handbags to be sold. How much was he liable for?
Damages of $5,040,000, plus attorney’s fees and costs of $186,666.61.
Well, I think it’s fair to say that operators of flea markets and anywhere that independent vendors may be selling counterfeit goods should now be on notice. Courts are taking this business seriously, so you should, too.
Editorial Note – the photo above isn’t from the offending flea market – it’s my ticket from the Rose Bowl Flea Market. I just thought it looked cool.
