Malletier v. The Flea Market, Inc., 2009 WL 1625946 (N.D. Cal. 2009)

Judge Wilken addressed a rather fetching contributory trademark infringement issue last Wednesday. The Flea Market, located in Sacramento, was one of the largest open-air flea markets in the United States. The market stretched 120 acres, had over two thousand vendors, and received approximately four million visitors a year.

Storied fashion designer and manufacturer Louis Vuitton brought suit against The Flea Market, Inc., the operator of the market, and the real estate company that leased the land to the market. The real estate company moved to dismiss arguing that it didn’t have sufficient control over the vendors to be liable for contributory infringement.  The Court dismissed, distinguishing the case from the Ninth Circuit’s holding in Fonovisa, Inc. v. Cherry Auction, Inc, on the grounds that in Fonovisa, the defendant ran the flea market, not just leased the land.

Contributory Infringement

The Court cited Lockheed Martin Corp. v. Network Soultions, Inc., 194 F.3d 980, 983 (9th Cir. 1999) for the test for contributory liability for trademark infringement:

“Contributory infringement occurs when the defendant either intentionally induces a third party to infringe the plaintiff’s mark or supplies a product to a third party with actual or constructive knowledge that the product is being used to infringe the service mark.” Plaintiff does not allege that Defendant induced a third party to infringe. Thus, Plaintiff must show that Defendant supplies a product to a third party with knowledge that the product is being used to infringe the mark. To satisfy the “supplies a product” prong of the test, the court “consider[s] the extent of control exercised by the defendant over the third party’s means of infringement.” Lockheed, 194 F .3d at 984.

The Court then proceeded to distinguish Malletier from Fonovisa:

[I]n Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir.1996), the Ninth Circuit addressed this requirement in the context of flea markets. In that case, Cherry Auction, Inc. operated a swap meet in which vendors paid daily rental fees in exchange for booth space. Cherry Auction supplied parking, conducted advertising and retained the right to exclude any vendor for any reason at any time. Cherry Auction was also aware that vendors in their swap meet were selling counterfeit recordings in violation of the plaintiff’s trademarks and copyrights. The Ninth Circuit held that Cherry Auction was liable for contributory infringement because it “suppl[ied] the necessary marketplace” for the sale of infringing products. Id. at 265; Lockheed, 194 F.3d at 984.

Defendant distinguishes Fonovisa because in that case the defendant both owned and operated the market, whereas here, the property owner, Defendant, and the market operator, The Flea Market, are two separate and distinct entities. As a property owner, Defendant leases land to The Flea Market without exercising any specific, direct control over the Flea Market’s tenants’ business operations. Therefore, Defendant argues, it cannot be liable for having any control over the sale of the infringing products.

Plaintiff has not alleged any facts showing a relationship between Defendant and the vendors. The only facts alleged in the complaint that specifically refer to Defendant state that it and The Flea Market are “closely related to each other and collectively own the land, building, structures and fixtures at the market.” The complaint also states that Defendant receives “substantial sums of money” from The Flea Market’s lease agreements with the market’s tenants and vendors. No case supports the proposition that a property owner may be liable for contributory trademark infringement if it only leases property to a separate and distinct entity, which in turn operates a flea market and rents space to a vendor, which in turn infringes trademarks. Property ownership alone does not establish that Defendant exercised control over the sale of the infringing products.