United States: contributory trademark infringement. The Luxottica case

Luxottica Group, S.p.A. and its subsidiary Oakley, Inc. (hereinafter, “Luxottica”) manufacture and sell luxury eyewear (Ray-Ban and Oakley among other brands). Luxottica sued Mini Mall Airport LLC (in College Park, Georgia) and its owners and managers for infringement of its Ray-Ban and Oakley trademarks. Previously, police operations had found that many tenants offered counterfeit eyewear products for sale. Luxottica twice sent letters to the defendants informing them that their tenants were not allowed to sell the said products. Nonetheless, the defendants had not taken any action to expel the breaching tenants.

Luxottica sued the defendants on the basis of contributory infringement under section 32 of the Lanham Act. (15 U.S.C. § 1114). In the first instance, the shopping center and the owners of the latter were found to be responsible for trademark infringement. The defendants appealed. The court of appeal for the 11th circuit confirmed the decision of first instance in the following terms.

The court recalled the conditions of contributory infringement:

(1) a person or entity commits an act of counterfeiting (so-called “direct counterfeiting”) under the Lanham Act; and

(2) the defendant:

(a) “intentionally incites” the counterfeiter to commit an offense;
(b) provides the counterfeiter with a “product” that he “knows” to be a counterfeit product; or
(c) provides the counterfeiter with a “product” that it “has reason to know” that it is a counterfeit product.

The dialectic of Luxottica was based on arguments 2b and 2c. To that end, Luxottica argued that the defendants had intentionally ignored the reality of the counterfeiting (willful blindness theory). The Court of Appeal went in its favor by recalling the case-law based in particular on Coach, Inc. c. Goodfellow and Tiffany (NJ) Inc. c. EBay Inc.

More specifically, the court held that, unlike Tiffany (NJ) Inc. v. EBay Inc., the defendants did not need Luxottica’s intervention to identify the offenses. According to the court, the letters sent by Luxottica should have prompted a reasonable owner to make at least one superficial assessment, a visual inspection of the shopping center’s 130 shops in order to determine which vendors were selling the products in question, taking into account prices (in this case, only $ 15 or $ 20 the pair of glasses, against $ 140 and $ 220 for a genuine product). And the court adds that such a summary visual inspection was not insurmountable. In a second time, after the first search, which had lasted several hours, the defendants could no longer ignore the situation. In summary, there was evidence that the defendants were aware of unlawful acts committed by tenants or sub-tenants (Luxottica Group SpA and Oakley Inc. v. Aiport Mini Mall LLC, Yes Assets LLC, Chienjung Yeh, Donald C. Yeh, and Alice Jamison, 18-10157, 11th Circ., DC Docket No. 1: 15-cv-01422-AT). In these conditions, the owner of the shopping center contributes to the infringement and must be held liable.

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