Louis Vuitton Achieves Genuine Victory Over Flea Market's Phony Sales

by Sheppard Mullin Richter & Hampton LLP
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[author: Tyler Baker]

Luxury brand titan Louis Vuitton recently achieved a significant victory over counterfeiting of its designer products. In an action brought in the U.S. District Court for the Western District of Texas, Louis Vuitton sued the Eisenhauer Road Flea Market, its owner, Bruce L. Gore, and its manager, Patricia D. Walker, for contributory trademark infringement, alleging that the defendants had failed to prevent vendors from selling fake Louis Vuitton goods at the flea market. See Louis Vuitton Malletier v. Eisenhauer Road Flea Market, Inc., No. SA-11-CA-124 (W.D. Tex.). Louis Vuitton stated that counterfeit “LV” products were abundant at the flea market and that Louis Vuitton had given Gore and Walker sufficient opportunities to discipline their vendors that engaged in phony sales. Louis Vuitton alleged, notwithstanding this notice, that Gore and Walker chose to be “willfully blind” to such infringing activity. Gore testified that he warned market tenants not to sell counterfeit goods, only to have those vendors nonetheless engage in distribution of bogus items after they said they would not.

On January 12, 2012, a unanimous jury found in favor of Louis Vuitton, deciding that nine trademarks were infringed, and awarded $400,000 for each mark. On January 31, U.S. District Court Judge Harry Lee Hudspeth entered a judgment in accordance with the jury verdict which was, if nothing else, comprehensive in its scope of remedying the situation for the present and future. In addition to finding the defendants jointly and severally liable for $3.6 million in compensatory damages, the judgment also permanently enjoined the defendants from further acts of contributory trademark infringement with respect to the Louis Vuitton trademarks. Specifically, the defendants were ordered not to lease space to tenants whom the defendants know, have reason to know, or have been presented with credible evidence that are selling or distributing products bearing counterfeit Louis Vuitton trademarks. The defendants themselves also were banned from selling Louis Vuitton counterfeits and engaging in any conduct which would contribute, directly or indirectly, to counterfeiting of Louis Vuitton trademarks by flea market tenants. The Court’s order went further, requiring the defendants or their agents to conduct periodic inspections of the booths maintained by flea market tenants to guard against Louis Vuitton counterfeits, and to post signs at each market entrance warning lessees and the public that the tenants were not authorized to sell Louis Vuitton merchandise, and that doing so was a criminal offense. The judge also required that all future lease agreements for the flea market expressly prohibit the sale of Louis Vuitton counterfeits, and permitted Louis Vuitton representatives or agents to conduct unannounced random inspections during normal flea market business hours to search for Louis Vuitton fakes.

In response to the Court's order, the flea market accused Louis Vuitton of forcing the flea market to do the luxury brand’s job, i.e., enforcement of Louis Vuitton trademarks, and that the company had other means by which to police counterfeiting, e.g., by alerting law enforcement agencies or by pursuing the vendors directly in civil or criminal court. Louis Vuitton responded that the flea market was infested with counterfeit merchandise and that the defendants simply turned a "blind eye" to the counterfeits.

This case should send a powerful message to commercial landlords of flea markets who suspect or have been warned that phony designer merchandise is being sold on their premises. While Louis Vuitton noted that suing the flea market was an extreme measure taken only once such measures are deemed necessary, this case should serve as a warning that established luxury brands, such as Louis Vuitton, police their marks vigilantly against contributory infringement, whether it be in the physical world or cyberspace.

Louis Vuitton already secured an important victory against online contributory trademark infringement where the defendant provided web-hosting for numerous websites that sold counterfeit Louis Vuitton products. See Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011). In Akanoc, Louis Vuitton sued the defendant for contributory trademark and copyright infringement and counterfeiting after the defendant failed to end service for the infringing sites, despite eighteen notices of infringement from Louis Vuitton. The trial and appellate courts found the defendant liable for contributory copyright and trademark infringement because of the way it had guided web users to the infringing sites and exercised direct control over and monitored the websites. The Akanoc case is analogous to the Eisenhauer Road Flea Market case in that both cases demonstrate that neither the real world nor the world wide web are safe havens for trademark infringement.

 

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