Former Flea Market Owner Subject to Contributory Liability Claim

Posted on March 10, 2014

Coach v. Sapatis (D.N.H. Jan. 31, 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.

 

 

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Ninth Circuit Holds There is No Cause of Action for Contributory Cybersquatting

Posted on December 12, 2013

Petroliam Nasional Berhad v. GoDaddy.com  (9th Cir. Dec. 4, 2013)

As our book speeds its way to the printer, the Ninth Circuit has made sure we will have a lot to discuss on this blog and in the upcoming supplement to Secondary Trademark Infringement.  Last week it held there is no cause of action for contributory cybersquatting under the ACPA, exercising the nuclear option on a body of case law that says such claims are valid when they involve fact patterns this sweeping decision ignores.

It was an unexpected development in an unlikely case  that involved a tenuous claim of cybersquatting, much less secondary liability for it: Petroliam Nasional Berhad v. GoDaddy.com, where the plaintiff brought a contributory cybersquatting claim against the registrar GoDaddy for registering domain names containing its mark to others who used them to divert traffic to a pornographic Web site. The district court correctly dismissed the claim on a motion for summary judgment because the defendant had acted only in its capacity as a mere registrar whose domain name forwarding service would not subject it to contributory liability under the ACPA.  More to the point, the plaintiff failed to establish direct cybersquatting by the third-party registrants. As with traditional trademark infringement, there can be no contributory cybersquatting without direct cybersquatting, so the district court disposed of the claim without reaching the question of whether the Act allowed for it.

Courts in other cases had already recognized a cause of action for contributory cybersquatting.  But the defendants in those cases, as one court put it, did not “simply register a domain name and then go about [their] business.” They were complicit actors in complex cybersquatting schemes – not mere registrars like GoDaddy.  Acting as both registrars and registrants, the defendants in Verizon Cal. v. Above.com and Transamerica v. Moniker Online implicated themselves in the business of the direct cybersquatters, similar to corporate officer defendants who have been held contributorially liable by virtue of their familiarity with and participation in their companies’ infringing activities. Continue reading Ninth Circuit Holds There is No Cause of Action for Contributory Cybersquatting →

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