UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Coach, Inc., et al.

v. Civil No. 12-cv-506-PB Opinion No.

P Peter J. Sapatis, et al.

MEMORANDUM AND ORDER

This case arises from the sale of counterfeit goods by

third party vendors at a flea market in Londonderry, New

Hampshire. Coach, Inc. and Coach Services, Inc.,1 purveyors of

designer handbags and other personal goods, have sued Peter J.

Sapatis, Londonderry Marketplace, LLC, Alaina E. Paul, and TABA

Enterprises, LLC, seeking injunctive relief and damages for

alleged violations of federal trademark and copyright law.

Coach has moved for a prejudgment writ of attachment to secure

real property owned by Sapatis pending trial. I deny the

motion.

I. BACKGROUND

A detailed background of this case is provided in two

previous orders, Coach, Inc. v. Sapatis (Sapatis I),

Coach, Inc. and Coach Services, Inc. have referred to themselves collectively as “Coach” throughout the pleadings. I follow their lead here. 021 and Coach, Inc. v. Sapatis (Sapatis II),

. I

thus limit my discussion to facts relevant to the instant

motion.

On June 26, 2011, two private investigators working for

Coach, Andrea Powers and Michael Surette, arrived at the

Londonderry Flea Market and informed Sapatis that the Flea

Market’s vendors were selling counterfeit Coach products. Doc.

No. 36-4. Sapatis sent for one of the off-duty, uniformed

Londonderry police officers retained by TABA to patrol the

grounds as well as a TABA employee, Linda Morrow, who each

accompanied Powers and Surette while they inspected the Flea

Market.

Powers noted that “30 vendor locations were

observed offering counterfeit Coach merchandise for sale. . . .

in plain view.”2 Doc. No. 53-3. The investigators purchased six

such items from various vendors.

They later reported to

Coach that Sapatis had “agreed to all of our requests . . . .

and appreciated us dealing with [the vendors] directly to

resolve this issue. . . . [Sapatis was] very accommodating to

this service.” Doc. No. 53-3; see Doc. No. 50-3 (“[Sapatis] 2 During subsequent visits to the Flea Market, Coach’s investigators - who were also hired by other brand owners to investigate possible counterfeit sales of their products - noted that vendors were also selling counterfeit merchandise bearing the trademarks and copyrighted material of several other brands. Doc. No. 53-3. 2 asked if we could help in any way . . . . I offered several

types of services to [him]. . . . I offered to walk him through

his market and point out the vendors who were selling

counterfeit items. I offered to provide him with specific

language that he could put in his vendor agreements. . . . I

offered him free training to law enforcement so they could

identify product[s] and help [him].”).

Following the inspection, Powers gave Morrow copies of a

letter prohibiting the sale of counterfeit goods that had been

translated into Mandarin.3 Doc. No. 36-4. Morrow distributed

this letter to all vendors, and Sapatis later called Powers to

ask for additional copies of the letter so that he could

distribute it to the vendors a second time.

Morrow

informed the investigators “that she would . . . instruct [the

thirty identified vendors] to pack-up and leave the market.”

Doc. No. 53-3. Paul later testified that Morrow had in fact

“kick[ed] them out” of the Flea Market. Doc. No. 42-11.

On August 2, 2011, Coach sent a letter to the Flea Market

alleging that counterfeit Coach products were being sold by its

vendors and that those responsible for the Flea Market could be

held liable if they failed to stop this unlawful activity. Doc. 3 The parties agree that most of the allegedly infringing vendors were of Asian ancestry. See Doc. Nos. 42-11, 42-12, 53-3. 3 No. 36-1. Sapatis received this letter and attempted to contact

Coach’s counsel to seek assistance in complying with its

instructions, although he is unsure whether he spoke with a

representative of Coach. Doc. No. 36-4.

On August 13, 2011, the investigators returned and noted

that a sign had been posted at the sole entrance to the Flea

Market stating “vendors, you are not allowed to sell counterfeit

or any illegal items on these premises.”4 Doc. No. 53-3. The

investigators informed Coach that “[t]he rows of vendors whom

[sic] were served with [cease and desist] letters during our

previous visit seemed smaller. . . . Approximately 10 vendors

were observed displaying [Coach] products. . . . where [the]

letters were previously served on your behalf.”5

The most

prominent of these vendors was “displaying approximately 3 dozen

[counterfeit Coach] items.”

The investigators explained

that “[o]ther booths in this row did not display counterfeit

4 The sign was also noted during the investigators’ subsequent inspections of the Flea Market. Doc. Nos. 53-3, 70-1. 5 The investigators noted that the vendors allegedly selling counterfeit Coach goods were located in the same area of the Flea Market during each inspection. Doc. No. 53-3. Sapatis later testified that these vendors had requested to be placed together “mainly because of the language barrier.” Doc. No. 53- 8. 4 Coach items in plain view . . . . [and w]hen asked about Coach

products, each vendor replied ‘no.’”

In September 2011, Sapatis called Surette and offered to

pay him to conduct another inspection. Doc. No. 36-4. Later

that month, Powers sent an email message to Coach and certain

other unidentified brand owners in which she reported that

Sapatis had informed her that he “wants to work with us to keep

these vendors in line[,] . . . requested copies of the NH anti-

counterfeiting law[6] in both English and Mandarin to hand out to

. . . vendors[, and] . . . asked if we could walk around the

flea market and identify any vendors currently selling

counterfeit items.” Doc. Nos. 68-2, 70-1. Powers stated that

Sapatis had also asked her if she could “‘provide [him] with

copies of the trademarks,’ and I told him I would do that.”7

6 Sapatis was presumably referring to section 350-A:11 of the New Hampshire Revised Statutes, the state law analog to

. 7 Sapatis testified that he “didn’t know Coach’s trademarks. It’s a matter of being educated, and . . . I never saw the word ‘Coach’ on anything . . . .” Doc. No. 42-12; see also Doc. No. 47-9 (“[Sapatis] has never purchased a Coach product, nor been given one as a gift. He is not familiar with their trademarks.”). He noted that some of TABA’s employees were “familiar with Coach. . . . [but] never brought to our attention . . . [that] they ha[d] seen anything with Coach or resembling Coach.” Doc. No. 42-12. When others later pointed Coach products out to him, Sapatis stated that he “couldn’t tell the difference between authentic or counterfeit, especially when 5 Doc. No. 68-2. Per Sapatis’s request, Powers presented the

following proposal to the brand owners that had hired her firm

to investigate the Flea Market:

Trip #1: . . . survey the Londonderry Flea Market, identify the vendors selling counterfeits to Mr. Sepatis [sic], and provide him with a copy of the NH anti-counterfeiting law. Mr. Sepatis [sic] will then give these vendors a verbal warning and ask that they leave the market. The vendors are not allowed to return to the market if they continue to sell the counterfeit items. We will also provide Mr. Sepatis [sic] with copies of your trademarks as reference materials.

Trip #2: complete a compliance check and regroup with Mr. Sepatis [sic]. A detailed report will be sent to you at the end of the compliance check.

Doc. No. 70-1.

Coach did not accept this proposal, Doc. No. 51-2, but one

unidentified brand owner authorized Powers’s firm to begin

working with Sapatis. Doc. No. 70-1. Sapatis agreed to meet

with one of the firm’s investigators to “walk the market to be

educated on the vendors selling the counterfeit items.”

He

subsequently met with Surette on September 28, 2011. They

discussed the alleged counterfeiting and Sapatis requested and

received a copy of the New Hampshire counterfeiting law printed

in English and Mandarin.

they tell you these are used, these are real. How are we ever going to know?”

6 Surette returned to inspect the Flea Market, without

payment from Sapatis, on October 9, 2011. Sapatis testified

that he was disappointed that Surette completed the inspection

without him, but the two subsequently spent fifteen to twenty

minutes touring the Flea Market together. Doc. No. 36-4.

Surette reported that “[t]he number of counterfeit items for

sale in plain view in this market has been drastically reduced

and nearly 100% eliminated,” explaining to Sapatis that the Flea

Market was “clean, but not to say that you’re going to stay

th[at] way.” Doc. Nos. 36-4, 70-1. Sapatis informed Surette

that he had distributed copies of the counterfeiting law to the

vendors and informed them that he would not tolerate further

sales of counterfeit goods. Doc. No. 70-1. According to

Surette, these actions “had a big impact on the items these

vendors had out for sale.”

Sapatis also informed Surette

that he had considered banning all Asian vendors, but was

concerned about possible legal consequences arising from any

action taken on the basis of ethnicity.

Surette concluded:

Sepatis [sic] is . . . eager and willing to work with myself or anyone else to combat the sale of counterfeit property in his market. . . . I believe Mr. Sepatis [sic] is being genuine in his willingness to work with any brand name representatives or law enforcement . . . . I do believe that if the Asian vendors travelling to the market from NY state continue to do business at this 7 market the sale of counterfeit property will never be eliminated completely and will require regular monitoring.

In a letter dated November 9, 2011 to a recipient whose

identity has been redacted, Powers summarized Surette’s

inspection of the Flea Market on October 9th.

Powers

reported that “no vendors were observed offering products

bearing your trademarks” either during that inspection or a

compliance check on October 22, 2011.

The same day, Powers

sent a letter to Sapatis on behalf of twelve brand owners that

included examples of their trademarks for Sapatis’s reference.

Doc. Nos. 36-7, 70-1. The letter was not sent on behalf of

Coach and did not include any examples of Coach’s trademarks.

See Doc. No. 36-7.

On April 29, 2012, another private investigator employed by

Powers’s firm, Ralph Shalsi, visited the Flea Market and

observed five vendors selling at least seventeen counterfeit

Coach items, some openly displayed and some hidden under the

vendors’ tables. Doc. No. 53-3. Shalsi returned to inspect the

Flea Market on May 5, May 13, and May 20, 2012. Doc. No. 70-1.

On at least one of these occasions, Shalsi observed a vendor

“display[ing] small amounts of counterfeit products [so] as not

8 to bring attention to herself by the owners. Most of her

counterfeit items are stored beneath her tables and inside of

her vehicles.”

It is unclear if Shalsi observed

counterfeit Coach goods during these three visits.

On May 14, 2012, Coach mailed another letter to the Flea

Market that was similar in content to the August 2nd letter.

Doc. No. 36-3. In response, Sapatis called Ethan Lau, Coach’s

counsel, seeking “help in taking care of this counterfeiting

problem.” Doc. No. 36-4. Lau testified that Sapatis had

informed him “that he is willing to help us to stop counterfeit

activity in the flea market, and if we come across any

information that people are selling counterfeit [sic] at the

flea market, let him know.” Doc. No. 51-2. He noted that

Sapatis had not asked for any specific training from Coach and

that Coach would have declined to train him even if he had, as

“Coach does not educate and assist flea markets or other

businesses in identify [sic] vendors selling counterfeit Coach

products.” Doc. No. 42-13; see Doc. No. 51-2 (“[W]e only train

our private investigators. . . . [and] law enforcement agencies.

. . . with the understanding that all the information is

proprietary and confidential and not to be disclosed.”).8

8 When asked why Coach maintains this policy, Lau explained that 9 On October 21, 2012, investigator Shalsi returned to the

Flea Market, observed “[a]pproximately 12 vendors . . . offering

counterfeit Coach merchandise for sale. . . . in plain view,”

and purchased six counterfeit Coach products from various

vendors. Doc. No. 53-3. He noted that a police officer was

walking around the Flea Market during his inspection.

During this visit, Shalsi did not recognize any of the same

vendors from his prior inspection of the Flea Market in April

2012. Doc. No. 65-3.

Shalsi returned to inspect the Flea Market five or six more

times in 2012. Doc. No. 50-4. On two of those occasions, he

did not see any indication of counterfeit sales.

On the

other occasions, Shalsi noted the presence of counterfeit goods

bearing the trademarks and copyrighted material of brands other

than Coach, but could not recollect whether vendors were selling

counterfeit Coach goods.

Since at least 2010, Sapatis has collaborated with Paul and

Morrow to develop annual vendor policy statements including this

provision: “Counterfeit . . . items are not to be brought/sold

“I have my suspicions that [defendants] are working with the vendors, and it doesn’t make any sense to teach them the specific method or methods of how to identify counterfeit goods, because if this information ultimately goes to the vendors, they can make a better fix and undermine my entire operation.” Doc. No. 51-2. 10 at the flea market. . . . Management . . . reserves the right

to refuse admission to any vendor . . . at any time.” Doc. No.

36-5; see Doc. No. 42-2. Paul testified that throughout 2011

and 2012, Sapatis frequently sought the assistance of a police

officer upon discovering problems with vendors such as

counterfeiting. Doc. Nos. 36-4, 53-7. In turn, Sapatis noted

that Paul used the trademark examples sent by Powers to help her

identify counterfeit goods. Doc. No. 42-12.

Sapatis, Paul, Morrow, various police officers, and other

individuals affiliated with the Flea Market contributed to a log

book documenting their frequent patrols of the Flea Market

grounds. Doc. No. 36-6. The log book repeatedly references

designer brands, including Coach.9

Sapatis testified that

9 Log book entries referencing potential counterfeiting during the relevant period are as follows:

[Morrow] saw several plaid scarves made of cashmere – will ck w Burberry paperwork. Most scarves plain or designs. . . . [Paul] . . . saw a vendor selling Polo & Lacoste . . . [Sapatis] went to speak w/ him – I went by @ 2pm – vendor has store in Manchester – will bring licenses to sell – nx wk. . . . Both Qui & Yang packed & gone. . . . Saw vendor slide pocketbook under arm then put it under bag on table – Spoke to [Sapatis] – He must leave (Yu Yang). 2 other vendors left on their own. Were not here 8/10 or 8/11 (Shenghai Chen, J. Jiang). . . . Report of Oakley glasses not found. Found 1 Rayban box. . . . Removed. . . . [Morrow] watched a . . . vendor sell bags try to hide them when he saw me. Approached him 11 he, Paul, or Morrow would brief the police officers about

current counterfeiting concerns prior to their patrols. Doc.

No. 42-12. When vendors were caught selling potentially

counterfeit items, they were told to leave or, on some

occasions, to remove the offending products. Doc. Nos. 36-6;

42-12.

& told him he would need to be out by next Sat (Qu). . . . [Morrow] picked-up boxes & bags in pocketbook area. (1) bag fell out of a box – Found MK tissues & Gucci tags – Called vendor – Told him he must pack & be gone on 8/3 (Chayu Yang). . . . Looked for Oakley glasses. None found. . . . Vendor reported selling cologne from back of stand. Inspected – selling. Asked to pack & leave. Joe Chen. . . . Notified vendor no MK or Michael Kors – Had gone online to see that only cosmetics were not under trademark due to lawsuit – Our mistake – Told vendors to remove all MK. . . . pulled (1) pair Rayban (1) MK bag. . . . 3 items found. . . 1 MK clutch. 1 MK bag 1 MK clutch 1 bag colors only of Coach. Vendor told last time – Put on warning – Chanyen Yang. . . . Officer Doyle found a vendor selling Coach wallets & Rolex watches – Management asked vendor to pack-up & leave – Song Yechen. . . . Customer came to main gate – vendor selling Coach – went to investigate – no Coach products found. . . . Customer said vendor selling Coach – unable to find any Coach items. . . . [Sapatis] feels same customer as Sat. . . . 2 vendors selling asked to leave – (1) selling Chanel, Vuitton (Song). (2) I-Pad covers, phone covers, etc. All trademarked (new vendor) Chen. . . . . Officer Doyle clear w/ everyone re: trademarks.

Doc. No. 36-6. 12 II. STANDARD OF REVIEW

Federal courts apply the law of the forum state to

determine whether to grant a prejudgment attachment. Malone v.

Cemetery St. Dev., Inc., No. 94-339-B,

, at *7

(D.N.H. Feb. 17, 1995) (citing Fed. R. Civ. P. 64; Diane Holly

Corp. v. Bruno & Stillman Yacht Co.,

(D.N.H. 1983)). “In New Hampshire, prejudgment attachments may

be granted only after notice to the defendant, and upon

defendant’s objection, following a hearing.”10

(citing

-A:2 to :3). First, “the burden shall be

upon the plaintiff to show that there is a reasonable likelihood

10 Although section 511-A:3 generally mandates a hearing once the defendant objects to a motion to attach - as Sapatis has here – the parties have briefed the relevant issues and neither has requested a hearing. Section 511-A:3’s hearing requirement, its heightened evidentiary standard, and its burden shifting framework are all procedural protections primarily intended to safeguard the defendant’s “constitutionally protected property interests.” See Diane Holly Corp.,

(courts should “[c]onstru[e section 511-A:3] narrowly in light of the special protections afforded property interests in this state”). Because I have concluded on the pleadings that Coach is clearly not entitled to the relief it seeks, a hearing is not necessary to safeguard Sapatis’s rights in his property. Cf. Chagnon Lumber Co., Inc. v. Stone Mill Constr. Corp.,

(1984) (“RSA chapter 511-A[’s] . . . . most obvious feature is its provision for notice and hearing before property interests can be encumbered by a pre-judgment attachment.” (emphasis added)); Hampton Nat’l Bank v. Desjardins,

(1974) (“[Chapter 511-A] require[s] a plaintiff to give to a defendant . . . an opportunity for a preliminary hearing before the attachment is made.” (emphasis added)). 13 that the plaintiff will recover judgment . . . on any amount

equal to or greater than the amount of the attachment.”

-A:3. If this burden is met, “the

plaintiff shall be entitled to the attachment unless the

defendant establishes . . . that his assets will be sufficient

to satisfy such judgment . . . .”

The “reasonable likelihood” standard falls between a

preponderance of the evidence and proof beyond a reasonable

doubt. See Avery v. Hughes, No. 09-CV-265-JD,

,

at *2 (D.N.H. Jan. 20, 2010) (citing Chi Shun Hua Steel Co. v.

Crest Tankers, Inc.,

(D.N.H. 1989)). It

demands that a plaintiff “make a strong preliminary showing that

he or she will ultimately prevail on the merits and obtain

judgment in the requested amount.”

(quoting Diane Holly

Corp.,

)); see Gembitsky v. DeSteph, No. 09-

CV-140-JM,

, at *4 (D.N.H. May 7, 2009)

(describing the plaintiff’s burden as “pro[of] by clear and

convincing evidence”).

III. ANALYSIS

To obtain a pre-judgment attachment, Coach must make “a

strong preliminary showing” that it satisfies each element of

14 its contributory infringement claims against Sapatis. See Diane

Holly Corp.,

. Specifically, Coach must

prove that Sapatis “(1) knew or had reason to know of the

alleged infringement of Coach’s trademarks and copyrights at the

Flea Market; (2) exercised sufficient control over the vendors

engaged in the ongoing infringement; and (3) failed to take

sufficient steps to stop it.”11 See Sapatis II,

, 7-

8 & n.6 (citing Sony Corp. of Am. v. Universal City Studios,

Inc.,

(1984); Inwood Labs., Inc. v. Ives

Labs., Inc.,

(1982); Coach, Inc. v.

Goodfellow,

(6th Cir. 2013)). I conclude that

Coach has failed to meet its burden with respect to the third

element.12

11 As a threshold matter, Coach must also prove that certain vendors at the Flea Market directly infringed Coach’s trademarks or copyrights. See, e.g., Suntree Techs., Inc. v. Ecosense Int’l, Inc.,

(11th Cir. 2012) (“To demonstrate that [defendants] were contributory infringers, Suntree was required to present evidence that [a third party] directly infringed on its mark.”). 12 Coach relies heavily on my earlier denial of Sapatis’s motion for summary judgment, but that decision dealt only with the second element of Coach’s contributory infringement claims. See Sapatis I,

, 12 n.4 (“For purposes of this motion . . . the parties dispute only Sapatis’s degree of control over the Flea Market and its vendors, not . . . his notice of the vendors’ infringing conduct and the sufficiency of any steps taken to stop it. I take no position concerning the latter issues at this time.” (citation omitted)). It provides no 15 Coach claims that “Sapatis continued to freely allow the

sales of Counterfeit Products on Flea Market premises” and that

his efforts to prevent the sale of counterfeit Coach products

were “token, transparently designed more for the appearance than

the actual prevention of knock-off sales.”13 Doc. No. 53-1. I

disagree. Sapatis took a number of reasonable steps following

the first inspection that even Coach’s own investigators felt

were undertaken in good faith and genuinely designed to prevent

the sale of counterfeit goods.

For example, Sapatis repeatedly reached out to the

investigators, Coach’s counsel, and law enforcement to seek

support to Coach with respect to the third element, which I find to be dispositive. 13 The only evidentiary support for these otherwise conclusory allegations is six messages sent from the Flea Market’s email account, two bearing Sapatis’s name, that purportedly “promote the sales of Counterfeit [Coach] Products.” See Doc. No. 53-1. Both Sapatis and Paul testified that Paul was the only individual with access to the account and that she signed Sapatis’s name to certain messages because “I don’t have a cell phone. People can’t get ahold of me. If they are going to call the office, they would call . . . him.” Doc. No. 65-1; see Doc. No. 65-2. It is difficult to square Coach’s prior concession based on this testimony “that Sapatis did not read and send e- mails from the [Flea Market’s] e-mail account,” see Doc. No. 47- 1, with its current allegation that Sapatis “was the individual who sent these emails.” See Doc. No. 53-1. Regardless, the messages - none of which expressly mention Coach or the presence of counterfeit goods at the Flea Market – are insufficient to demonstrate a “strong preliminary showing” of Coach’s ultimate success on the merits. See Diane Holly Corp.,

. 16 assistance in preventing the sale of counterfeit goods. Doc.

Nos. 34, 36-4, 50-3, 51-2, 53-3, 53-7, 68-2; see Doc. No. 70-1

(“I believe Mr. Sepatis [sic] is being genuine in his

willingness to . . . combat[] this issue.”). He requested that

Powers send him copies of the trademarks allegedly being

infringed in order to learn to identify Coach’s products.14 Doc.

14 Although other brand owners working with the investigators agreed to provide Sapatis with copies of their trademarks, see Doc. Nos. 36-7, 70-1, Coach did not. Doc. No. 51-2. According to Coach, “whether (and how) Coach engages in assisting Defendants and their personnel in identifying Coach products will have no bearing on Defendants’ liability to Coach.” Doc. No. 42-13. I disagree. First, the willingness of twelve brand owners to provide copies of their trademarks to Sapatis is evidence of the reasonableness of his request. See Doc. Nos. 36-7, 70-1. Even assuming that training flea market operators on “specific . . . methods . . . to identify counterfeit goods” would ultimately help vendors “make a better fix and undermine [a brand owner’s] entire operation,” see Doc. No. 51-2, simply distributing copies of trademarks would not reasonably be expected to do so. Second, it is difficult to understand how Sapatis could be expected to successfully identify counterfeit Coach products without, as he claims, “know[ing] Coach’s trademarks.” See Doc. No. 42-12. One of Coach’s own investigators testified that he was unable to distinguish counterfeit from authentic goods. See Doc. No. 51-3 (“I’m not able to authenticate anything, so what could be counterfeit or not counterfeit, I can’t – I don’t decipher that.”). Lau concedes that familiarity with Coach’s trademarks is an important prerequisite to successfully identifying counterfeit Coach goods. See Doc. No. 51-2 (“We actually go out and train [law enforcement] on how to identify counterfeit products. . . . [including t]rademarks . . . . [because] it’s important for the . . . officials to have some understanding of Coach’s products and trademarks when they’re investigating . . . . I actually had a one-on-one with [Powers] . . . . to help her to . . . pick out our brand to identify 17 Nos. 42-12, 68-2. On multiple occasions, Sapatis distributed

bilingual anti-counterfeiting literature to vendors and informed

them that counterfeit sales would not be tolerated. Doc. Nos.

36-4, 68-2, 70-1. He worked with Paul and Morrow to develop

vendor policies prohibiting the sale of counterfeit products.

Doc. No. 36-5, 42-2. Sapatis and others associated with the

Flea Market briefed police officers on recent counterfeiting

developments prior to the officers patrolling the grounds. Doc.

Nos. 42-12. Sapatis patrolled the premises as well, logging

instances of possible counterfeiting and noting the corrective

action taken. Doc. No. 36-6. Vendors identified as selling

counterfeit Coach products were generally evicted, although at

times they were told to remove the offending goods. Doc. Nos.

36-6, 42-11. Sapatis also considered a more draconian measure -

banning vendors on the basis of their national origin - but

ultimately rejected it.15 Doc. Nos. 70-1.

products.”). Coach’s claim that Sapatis “should not need help identifying the sale of hundreds of counterfeit designer handbags . . . . [because i]t is obvious that these are counterfeit sales,” see Doc. No. 42-13, is seriously undermined by the importance Coach places on providing such help to law enforcement and its own investigators. 15 In an indication of the difficulty of the task, Surette opined that to completely halt the sale of counterfeit goods, Sapatis would have to bar an entire class of Asian vendors from the Flea Market. See Doc. No. 70-1; cf. 1-800 Contacts, Inc. v. 18 Contributory infringement doctrine does not impose a strict

liability standard, and Coach has failed to demonstrate that

Sapatis did not take “reasonable remedial measures” to prevent

known infringers from continuing to use the Flea Market’s

services to infringe. See 1-800 Contacts, 722 F.3d at 1249,

1252 (citing Inwood, 456 U.S. at 853–54; Goodfellow,

) (defendant must “make reasonable efforts to halt the”

infringement once he or she knows or has reason to know of it);

Goodfellow,

(noting that a defendant must

“undertak[e] a reasonable investigation or tak[e] other

appropriate remedial measures” to avoid contributory liability).

By way of comparison, the Second Circuit in Tiffany (NJ)

Inc. v. eBay Inc. held that eBay had taken reasonable remedial

measures to halt sellers’ infringement of Tiffany’s trademarks

on its site by investing heavily in fraud prevention efforts,

maintaining a strong anti-counterfeiting policy, permitting

trademark holders to screen suspicious listings before they were

published, utilizing a program to search for and delete

infringing listings within twelve hours, and suspending many

Lens.com, Inc.,

(10th Cir. 2013) (“[T]he plaintiff did not describe any way for the defendant to stop an unidentified infringer without also interfering with legitimate [activity] . . . . A defendant has no obligation under contributory-infringement doctrine to stop a practice . . . simply because the practice might be exploited by infringers.”). 19 suspected infringers.

, 98–100 (2d Cir. 2010); see

also 1-800 Contacts,

(noting that a single

remedial measure - “ordering an email blast that would

necessarily reach the publisher and stop the . . . [infringement

without] interfer[ing] with any lawful conduct of other

affiliates” – would be sufficient under the circumstances). In

contrast, the Sixth Circuit in Goodfellow held that a flea

market operator had not taken sufficient action when he failed

to train employees to identify counterfeit goods, exclude known

infringing vendors, inspect vendors’ goods or question their

authenticity, ask vendors if they were licensed to sell Coach

products, or require vendors to agree not to sell counterfeit

products.

. The few steps taken by the

defendant in that case - distributing anti-counterfeiting

pamphlets at random, posting an anti-counterfeiting sign

targeting counterfeit currency rather than counterfeit goods,

and holding a poorly-attended meeting with vendors that was

rendered ineffective by language barriers – were not a

reasonable response to the ongoing blatant sale of counterfeit

goods at the market. Id.; see also Coach, Inc. v. Gata Corp.,

10-CV-141-LM,

, at *10 (D.N.H. June 9, 2011)

(holding a flea market operator liable for contributory

20 infringement when it posted a sign stating that counterfeit

sales were prohibited, yet failed to inspect vendors’

merchandise or vehicles prior to the vendors setting up, failed

to train employees conducting walk-throughs of the flea market

on how to detect counterfeit merchandise, counseled at least one

vendor on how to hide counterfeit merchandise, and confiscated

counterfeit goods without evicting a single vendor, in

contravention of the flea market’s own policies).

Sapatis’s efforts to combat the sale of counterfeit Coach

merchandise more closely resemble the reasonable remedial

measures deemed sufficient in Tiffany than the insufficient

steps taken in Goodfellow. Moreover, even assuming Coach is

correct that “[t]o constitute reasonable efforts, Sapatis’s

actions must at a minimum have discouraged the sale of

Counterfeit [Coach] Products,” see Doc. No. 53-1, it is far from

clear that Sapatis’s actions did not have exactly that effect.

The number of allegedly infringing vendors reported by Coach’s

investigators generally declined over time. Doc. Nos. 53-3

(noting thirty offending vendors on June 26, 2011, ten vendors

on August 13, 2011, and five vendors on April 29, 2012), 70-1

(noting no offending vendors on October 9, 2011), 50-4 (noting

no offending vendors on at least two other unspecified dates in

21 2012). Over time, the investigators noted that vendors began

hiding counterfeit Coach goods to avoid drawing the management’s

attention and responded “no” when asked about such goods. Doc.

No. 53-3. One investigator noted that “[t]he number of

counterfeit items for sale in plain view in this market has been

drastically reduced and nearly 100% eliminated. . . .

[Sapatis’s actions] had a big impact on the items these vendors

had out for sale.” Doc. No. 70-1. Although more offending

vendors were identified during an inspection in October 2012

than had been identified during a prior inspection in April, see

Doc. No. 53-3, one investigator present during both inspections

reported that he did not recognize any of the same vendors.

Doc. No. 65-3. Given the investigators’ positive assessment of

Sapatis’s efforts, the declining trend in the number of vendors

identified as selling counterfeit Coach products, the

increasingly clandestine nature of the vendors’ counterfeit

sales, and the lack of evidence of repeat offenders, a jury

could conclude that Sapatis’s actions were a reasonably

effective deterrent to the sale of counterfeit goods. Coach has

not presented “clear and convincing evidence” to the contrary.

See Gembitsky,

, at *4.

22 IV. CONCLUSION

Coach has failed to make a strong preliminary showing that

it will succeed on the merits of its contributory infringement

claims against Sapatis. Accordingly, I deny the motion for a

prejudgment writ of attachment. (Doc. No. 53).

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

June 27, 2014

cc: Erica Mecler Caron, Esq. Jeffrey K. Techentin, Esq. Kyle Zambarano, Esq. Lisa Snow Wade, Esq. Robert S. Carey, Esq. Jeremy T. Walker, Esq. Nicholas F. Casolaro, Esq.

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