Malls, flea markets, swap meets, farmer’s markets, and rummage sales should consider themselves “on notice.” Indeed, anyone who supplies a service for others to use should also be on notice. A party may be held liable for trademark infringement by its tenants, according to the Court in Luxottica Group, S.p.A. v. Airport Mini Mall, LLC.
In Luxottica, the Court was asked to weigh in on the liability of a mall owner in College Park, Georgia to a manufacturer of sunglasses where subtenants at the mall were selling knockoffs of the Ray-Ban and Oakley brands.
Since the mall itself was not selling the infringing products, Luxottica’s theory was a claim of contributory trademark infringement under the Lanham Act.
The contributory trademark infringement cause of action stems from applying basic tort liability concepts under the Lanham Act. The Supreme Court first acknowledged the existence of this cause of action in Inwood Laboratories. In that case, manufacturers supplied pharmacists with a generic version of a drug whose brand name was trademarked; some pharmacists mislabeled bottles containing generic capsules as containing brand name capsules.
Instead of suing only the pharmacists, the brand name manufacturer sued the generic manufacturers, prompting the Supreme Court to recognize that if a manufacturer or distributor intentionally induces infringement, or continues to supply its product to one it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor may be contributorially responsible.
Thus, a claim for contributory trademark infringement has two elements: direct trademark infringement by another person or entity, and either intentional inducement, actual knowledge, or constructive knowledge while supplying a product or service that facilitates the infringement.
In Luxottica, the Eleventh Circuit had to determine whether contributory liability extended to the landlord-tenant context and what level of proof of knowledge was required.
The evidence showed that defendants took no steps to evict infringing subtenants despite law-enforcement raids and demand letters informing defendants that subtenants were not authorized to sell Luxottica eyewear and that similar marks would indicate counterfeit goods.
The Court found that a landlord may be contributorily liable for its subtenants’ direct trademark infringement if the landlord intentionally induces the infringement or knows or has reason to know of the infringement while supplying a service such as space, utilities, or maintenance. The Court also found that the defendants were at least willfully blind to specific instances of infringement.
Given those findings, the Court upheld the lower court’s $1.9 million judgment against the mall owners.
In light of Luxottica, anyone who sublets space or otherwise provides a service should be careful if they receive claims of trademark infringement. They may be on the hook for damages if it can be shown that they knew, had reason to know, or showed willful blindness to infringement.