The United States Court of Appeals for the Eleventh Circuit affirmed liability under the “know or has reason to know” standard for contributory trademark infringement in Luxottica Group, S.p.A. v. Airport Mini Mall, a case concerning a mall owner’s liability for alleged sale of counterfeit goods by retailers who subleased space in the mall.
The plaintiffs, luxury eyewear manufacturers and sellers, sued the owners, the manager and the lessee of a shopping center for contributory trademark infringement of their Ray-Ban and Oakley-branded eyewear. A jury found the defendants liable and awarded $1.9 million in damages. The Eleventh Circuit affirmed, finding the defendants had constructive knowledge of the trademark infringement, based on their willful blindness to it.
The court applied the elements for contributory trademark infringement from the Supreme Court’s Inwood Laboratories v. Ives Laboratories decision (involving product manufacturers) because the defendants provided services and support that facilitated the direct infringement. The mall owner provided the lessee — and the 100-plus retailers who subleased retail space from the lessee — with services such as lighting, water, sewage, maintenance, cleaning and customer parking.
Under Inwood, the court considered whether the defendants had actual or constructive knowledge of the infringement. The defendants urged the court to follow the Second Circuit’s decision in Tiffany (NJ) v. eBay. In eBay, Tiffany sued the online marketplace based on allegedly infringing goods listed for sale by users of eBay’s platform. The Second Circuit held that a service provider, such as eBay, could only be liable for contributory trademark infringement with knowledge of specific acts of infringement, rather than general knowledge or a reason to believe that its service is being used for infringing purposes.
The Eleventh Circuit, however, declined to decide whether knowledge of specific infringing acts is required. Instead, it determined, regardless of the standard applied, that there was sufficient evidence to support liability. The court rejected the defendants’ argument that the plaintiffs failed to prove knowledge because they did not provide notice that specific retailers in the mall were infringing. It held instead that knowledge can come from “many sources,” not limited to the plaintiffs’ notices. It distinguished Tiffany, in which the Second Circuit rejected Tiffany’s demand letters that did not identify particular eBay sellers, finding that the defendants here did not need assistance in identifying the infringing goods.
The court pointed to three categories of evidence as showing constructive knowledge: (1) “serious and widespread” infringement based on three law enforcement raids to execute search warrants, arrest subtenants and seize alleged counterfeit products; (2) the mall’s manager and attorney meeting with the local police department to discuss counterfeit sales at the mall after the plaintiffs sued; and (3) the defendants’ ability to inspect each retail space in the mall to see if retailers displayed goods with Luxottica’s marks at suspicious prices after receiving demand letters from the plaintiffs identifying certain retailers. It made this determination despite acknowledging evidence of “a legitimate secondary market for Ray-Ban and Oakley eyewear.”
The opinion did not decide, and thus leaves open, the requisite knowledge standard for contributory infringement in the Eleventh Circuit. The court’s analysis, however, departs from the framework adopted by other courts by finding sufficient evidence based on more generalized knowledge of the alleged infringement, rather than limiting its consideration to knowledge of the specific infringing acts. In affirming the landlord’s liability for the acts of its tenants, the Eleventh Circuit thus left open the possibility of holding service providers liable for contributory trademark infringement based on a reason to believe that their services are being used for infringing purposes.