Posted on March 10, 2014
Much of modern contributory liability doctrine is founded on the flea market cases, where the courts first extended Inwood’s test for contributory trademark infringement outside the “supplies a product” context to flea market owners and operators whose vendors sold counterfeits of the plaintiff’s products. These cases historically distinguish two types of flea market landlords: those who own the flea market itself, leasing booth space to individual vendors, and those who merely own the property on which the flea market is located. Courts have declined to extend liability to the latter category of defendants because they do not exercise direct control over the infringing sales. Flea market owners who are also “operators,” by contrast, are subject to contributory claims because they can terminate their relationship with their vendors upon notice of infringing activity.
In Coach v. Sapatis, (D.N.H. Jan. 31, 2014), however, the defendant property owner was also the former owner of the flea market he had sold to his daughter and, under the allegations, remained actively involved in its ongoing operation after the sale. There the court denied his motion for summary judgment on the contributory trademark infringement claim because his activities went beyond mere ownership of the land on which the flea market was located. As the court made clear, “the defendant’s degree of control over the infringer—rather than his or her nominative status as owner, lessor, or lessee—is the determinative factor.”
The court in Coach v. Sapatis thus clarifies that the rule mentioned above—that mere ownership of the land on which the flea market is located will not trigger contributory liability—is not absolute. This is an important reminder not only in the flea market context, but in other areas, such as corporate ownership liability, where similar principles apply.
For in-depth treatment of the topics in this post, see Chapters 3 and 7 of Secondary Trademark Infringement, by Coleman and Price, published by Bloomberg/BNA.