What is Contributory Trademark Infringement?
When a person or a business registers a trademark or a service mark, the owner of the mark can sue in court to defend the mark against infringement. Trademarks are governed by the federal Lanham Act. Under §32 of the Lanham Act — 15 U.S.C. § 1114 — it is possible to hold someone contributorily liable for trademark infringement if that person induces or knowingly facilitates the infringement. The first US Supreme Court case to examine contributory trademark infringement was the case of Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982) involving generic prescription drugs that were fraudulently sold in brand name bottles. The owners of the brand name trademarks sued the drug manufacturers for essentially aiding and abetting the infringement of the individual pharmacists. The US Supreme Court held that the drug manufacturers could be held liable.
Since the Inwood case, the federal courts have concluded that contributory trademark infringement has two legal elements that must be proven with the second prong having several options. The first element is that some person or entity must commit direct trademark infringement. The second prong that must be proven — the contributory part of the case — can be proven one of three ways:
- The target of the lawsuit, the defendant, directly and intentionally induces the other to infringe
- The defendant supplies a product to the direct infringer whom it knows is directly infringing or
- supplies a product to the direct infringer whom it has reason to know is directly infringing
A good recent example comes from a case decided by the US Court of Appeals for the Eleventh Circuit. See Luxottica Group, SPA v. Airport Mini Mall, No. 18-10157 (US 11th Cir. August 7, 2019). Luxottica makes high end luxury eyewear and owns trademarks for various brands such as Ray-Ban and Oakley. In their case, Luxottica alleged that a certain mini-mall near a Georgia airport was selling counterfeit sunglasses and other items that infringed on Luxottica’s trademarks. Luxottica sued the sellers and also sued the owner/Lessor of the mini mall for contributory trademark infringement. Luxottica was successful and the jury awarded $1.9 million in damages against the landlord of the mini mall.
The Eleventh Circuit recently affirmed the decision of the jury. In particular, the court held that the landlord facilitated the direct infringement of its tenant by providing, among other things, parking, utilities, and other services via the lease. Further, the court held that the landlord had either actual or constructive knowledge of the trademark infringement by its tenant because of these facts:
- Three raids conducted by law enforcement during which officers executed search warrants, arrested subtenants, and seized alleged counterfeits of Luxottica eyewear and other brands’ products — the second raid lasted more than 14 hours, involved 30 federal and local law enforcement agents and resulted in the complete shutdown of the entire Mall
- Various mall employees and agents actually met local law enforcement and discussed the counterfeit sales at the mall
- Luxottica sent letters to the mall’s owners notifying them of the suspected infringement and counterfeit sales
Based on these facts, the court held that the owners of the mall had more than sufficient information to have at least constructive knowledge. Further, the lease in question allowed the landlord to terminate the lease in the event that the tenant failed to comply with all applicable laws. The court affirmed the jury’s award.
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For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard can assist with the formation of your California professional corporation and any other business entity — corporations, LLCs, and other forms. Mr. Leonard can also assist with sales, mergers and acquisitions, contract drafting and review including commercial leases, and establishment and licensing of trademarks, copyrights, and trade secrets. Like us on Facebook.