Coach Inc. v. Frederick Goodfellow

The U.S. Court of Appeals for the Sixth Circuit affirmed liability of a flea market operator for contributory trademark infringement for failure to stop the sale of counterfeit goods at the market despite numerous warnings. In doing so, the Sixth Circuit has followed the example of the U.S. Court of Appeals for the Seventh, Ninth and Second Circuits. Coach Inc. v. Frederick Goodfellow, Case No. 12-5666 (6th Cir., May 31, 2013 (McKeague, J.).

Plaintiff Coach filed suit under the Lanham Act against Goodfellow who owned and operated a Memphis-area flea market after Goodfellow failed to take action in response to letters from Coach and the local district attorney informing him that counterfeit sales of Coach products were occurring at the flea market. Numerous counterfeit Coach products were seized during raids on the flea market both before and after the lawsuit was filed. Goodfellow admitted knowing that vendors were selling counterfeit Coach products, but did not take any effective remedial measures.

The district court granted partial summary judgment to Coach on the issue of contributory liability after viewing the record in the light most favorable to Goodfellow, despite his failure to respond to Coach’s motion. Goodfellow moved to set aside the order based on attorney error, alleging the motion had been misplaced by his attorney, but made no argument on the merits. A jury awarded Coach just over $5 million dollars in damages based on willful infringement of 21 of Coach’s marks. The district court awarded Coach attorneys’ fees and costs, finding the case exceptional based on Goodfellow’s failure to litigate liability, and the jury finding of willful infringement. Goodfellow appealed.

On appeal, the 6th Circuit noted that because Goodfellow failed to contest Coach’s motion for partial summary judgment, he had effectively forfeited his right to appeal liability. Nonetheless, the court exercised its discretion and addressed the merits of Goodfellow’s case. After de novo review, the 6th Circuit found no clear error in the district court’s ruling because Goodfellow “continued to rent spaces at his flea market to vendors that he know, or should have known, were engaging in infringing activity,” and the facts of the case were sufficient to support a finding of contributory liability. In particular, the court noted Goodfellow’s failure to undertake reasonable remedial measures after receiving actual notice of ongoing infringing activity. The court also affirmed the district court’s award of attorneys’ fees and costs.

In its decision, the 6th Circuit relied on the Inwood Labs. v. Ives Labs, a 1982 Supreme Court decision, as well as circuit court decisions from the Seventh, Ninth and Second Circuits applying Inwood and finding flea market operators subject to liability for trademark infringement by vendors.