Luxottica Group, S.p.A. v. Airport Mini Mall, LLC
Opinion
Luxury eyewear manufacturers holding registered trademarks brought a contributory trademark infringement action under the Lanham Act against owners of a discount mall whose subtenants were selling counterfeit eyewear. At trial, the jury returned a verdict in the plaintiffs' favor. After careful review and with the benefit of oral argument, we conclude that none of the issues the defendants raise on appeal demonstrates reversible error, so we affirm the jury's verdict.
*1309 I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs Luxottica Group, S.p.A. and its subsidiary Oakley, Inc. (collectively and individually "Luxottica") manufacture and sell luxury eyewear and own registered trademarks for the Ray-Ban and Oakley brands. Defendants Jerome and Jenny Yeh own defendant Yes Assets, LLC. In 2004, Yes Assets purchased the Old National Village Shopping Center in College Park, Georgia. The Shopping Center included about 30 store fronts as well as an approximately 79,000-square-foot indoor space (the "Mall"), which contained between 120 and 130 booths to lease to individual vendors. Defendant Alice Jamison, the Yehs' daughter, managed the Shopping Center. Her responsibilities included reviewing leases, collecting rent, and visiting the Shopping Center and Yes Assets' tenants, including the lessee of the Mall.
Until December 1, 2009, Yes Assets leased the Mall to a tenant, who assigned it to a subtenant, who subleased it to former Georgia congressman Pat Swindall, who in turn subleased the booths to vendors. From December 1, 2009 forward, Yes Assets leased the Mall to defendant Airport Mini Mall, LLC ("AMM"), a company Jerome and Jenny created and later gave to their son, defendant Donald Yeh, and the Mall became known as the International Discount Mall, AMM's tradename. Under the lease agreement, Yes Assets provided AMM and its subtenants (the vendors in the 120 to 130 booths) with a variety of services-including lighting, water, sewerage, maintenance and repairs, painting, and cleaning-and a parking area for customers. Greg Dickerson, whom Jerome hired as AMM's property manager, subleased the booths to vendors and reported to Jamison and Jerome until 2013, when Jerome had a stroke, and to Jamison and Donald afterward.
AMM's tenure as the Mall's landlord saw three law enforcement raids there, during which officers executed search warrants, arrested subtenants, and seized alleged counterfeits of Luxottica eyewear and other brands' products. After the first raid, law enforcement left a copy of the search warrant and a list of items seized, including eyewear bearing Luxottica's marks, at the raided booth. The second raid lasted more than 14 hours and involved approximately 30 federal and local law enforcement agents who shut down the Mall to execute search warrants, arrested subtenants for selling counterfeit goods, seized thousands of counterfeit items bearing Luxottica's marks, and loaded the items onto a tractor-trailer parked in front of the Shopping Center. Dickerson witnessed the second raid from the Shopping Center's parking lot and notified Jamison, Donald, and Jerome and Jenny's attorney, Louis Bridges. Dickerson later walked through the Mall to compile a list of the booths where law enforcement had seized goods and informed Jamison, Jerome, and Bridges about his inquiries of subtenants regarding the raid and whether they were selling counterfeit items. Each subtenant denied selling counterfeit merchandise, but Jamison admitted that she would expect the subtenants to lie if they were selling counterfeit goods. On Bridges' advice, the defendants decided to take no action against the subtenants unless the subtenants were convicted of a crime. More than a year after Luxottica filed this lawsuit, police executed several more search warrants at the Mall and seized additional counterfeit items bearing Luxottica's marks.
Luxottica twice sent letters notifying the defendants that their subtenants were not authorized to sell Luxottica's eyewear and that any mark resembling Ray-Ban or Oakley marks would indicate that the *1310 glasses were counterfeit. The second letter also identified specific booths Luxottica suspected of selling counterfeit eyewear. Jamison and Donald were aware of both letters. Dickerson visited the booths named in the second letter but made no attempt to determine whether those vendors' eyewear products were counterfeit or to terminate their leases. After Luxottica filed this lawsuit, Jamison and Bridges attended a meeting at the College Park Police Department to discuss the unlawful selling of counterfeit products at the Mall.
Despite the raids, letters, and meeting with law enforcement, the defendants took no steps to evict the infringing subtenants; they even renewed leases with several of the subtenants who had been arrested during the 14-plus-hour raid. In the month leading up to the filing of this lawsuit, Isabel Rozo, an employee of Luxottica's private investigator Geanie Johansen, purchased and photographed $15 and $20 counterfeit Ray-Ban glasses at several booths. Ray-Ban glasses normally retail for $140 to $220 a pair.
Luxottica sued the defendants for contributory trademark infringement under § 32 of the Lanham Act,
The defendants appeal the jury verdict, a portion of the district court's instructions to the jury regarding the application of Georgia landlord-tenant law, and the district court's denials of their motions in limine and renewed motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). 1
II. STANDARDS OF REVIEW
We review
de novo
questions of law, such as the legal standard for liability for contributory trademark infringement.
U.S. Sec. & Exch. Comm'n v. Big Apple Consulting USA, Inc.
,
Orders denying motions in limine are reviewed for abuse of discretion.
Kropilak v. 21st Century Ins. Co.
,
This Court reviews jury instructions
de novo
to determine whether they "misstate the law or mislead the jury to the prejudice of the objecting party."
Bhogaita v. Altamonte Heights Condo. Ass'n
,
III. DISCUSSION
We affirm the district court on each issue appealed. The district court (1) correctly determined that the evidence was sufficient-even under the legal standard the defendants urge us to adopt-to support the jury's verdict finding the defendants liable for contributory trademark infringement; (2) committed no reversible error in instructing the jury; (3) correctly determined that the evidence was sufficient to support the jury's verdict on each defendant's individual liability; and (4) did not abuse its discretion in the challenged evidentiary rulings.
A. Luxottica Presented Sufficient Evidence to Sustain the Jury's Verdict on Contributory Trademark Infringement.
Under the Lanham Act, the owner of a registered trademark may hold someone contributorially liable for trademark infringement if that person induces or knowingly facilitates the infringement. The defendants argue that the district court should have followed the reasoning of a Second Circuit case that they believe imposed a tougher knowledge requirement for contributory trademark infringement claims. Under that court's reasoning, the defendants argue, the evidence was insufficient to prove that they had the requisite knowledge of, or demonstrated willful blindness to, their subtenants' direct infringement. We disagree and affirm the district court's denial of the defendants' Rule 50(b) motion. First, we explain the elements of the contributory trademark infringement cause of action. Second, because the defendants do not contest that landlords may be held contributorially liable for their (sub)tenants' direct trademark infringement, we assume without deciding that contributory liability for trademark infringement extends to the landlord-tenant context. Third, we resolve the defendants' argument about the proper legal standard by assuming without deciding that liability for contributory trademark infringement requires that the defendant have knowledge of specific acts of direct infringement. Even under this standard, the evidence was sufficient to support the jury's verdict because the defendants had at least constructive knowledge of their subtenants' direct infringement.
*1312 1. Contributory Liability Under the Lanham Act
The contributory trademark infringement cause of action stems from the application of "basic tort liability concepts to determine the scope of liability" under the Lanham Act.
Duty Free Americas, Inc. v. Estée Lauder Cos.
,
A claim for contributory trademark infringement thus has two elements: (1) a person or entity commits direct trademark infringement under the Lanham Act; and (2) the defendant (a) "intentionally induces" the direct infringer to commit infringement, (b) supplies a "product" to the direct infringer whom it "knows" is directly infringing (actual knowledge), or (c) supplies a "product" to the direct infringer whom it "has reason to know" is directly infringing (constructive knowledge).
See
In support of its theory that the defendants had at least constructive knowledge of their subtenants' infringement, Luxottica presented evidence tending to show that the defendants exhibited willful blindness to the subtenants' unlawful conduct. Across the circuits, a consensus has developed that willful blindness is one way to show that a defendant had constructive knowledge in cases of contributory trademark infringement.
See
Coach, Inc. v. Goodfellow
,
*1313
Hard Rock Cafe Licensing Corp. v. Concession Servs., Inc.
,
2. Landlord Liability for Contributory Trademark Infringement
Whether contributory liability for trademark infringement extends to the landlord-tenant context is a question of first impression for this Court. The defendants in
Inwood
supplied the very product the direct infringers mislabeled with the plaintiff's trademark.
3. The Evidence Was Sufficient to Prove That the Defendants Had at Least Constructive Knowledge of Specific Acts of Infringement.
Pursuing a knowledge theory of contributory trademark infringement, Luxottica sought to prove that the defendants knew or had reason to know that their subtenants were selling counterfeit items yet continued to supply services (space, utilities, maintenance, and parking) that enabled the subtenants to sell their goods. The question that arises-another one of first impression for this Court-is whether the knowledge theory of contributory liability requires the plaintiff to prove that the defendant had actual or constructive knowledge of specific infringing acts. We need not answer this question, however, because even if liability for contributory trademark infringement requires the defendant to have knowledge of specific acts of direct infringement, the evidence in this case was sufficient for a reasonable *1314 jury to find that the defendants had at least constructive knowledge of (or were willfully blind to) specific acts of direct infringement by their subtenants.
The defendants argue that the district court should have applied what they deem a stricter standard from
Tiffany (NJ) v. eBay Inc.
,
The defendants articulate
Tiffany
's legal standard for contributory trademark infringement as whether "Plaintiffs provide[d] notice to Defendants that a particular seller was then selling counterfeit versions of Plaintiffs' product." Appellants' Initial Br. at 22 (internal quotation marks omitted). The defendants err, though, in asserting that
Tiffany
narrowed the sources of a defendant's actual or constructive knowledge to just one: notice by the trademark holders.
Tiffany
did not categorically shift the burden onto trademark holders to provide notice to defendants; it simply clarified that certain facts of the case-a marketplace of 100 million listings and eBay's inability to inspect goods in person and lack of expertise to distinguish Tiffany from non-Tiffany jewelry-made it unlikely that eBay could identify the infringing vendors on its own, without help from Tiffany.
Tiffany
,
In any event, we need not decide today whether a defendant must be found to have had knowledge of specific acts of direct infringement for contributory liability to attach. Even if specific knowledge is necessary, the trial evidence was sufficient to prove that the defendants had at least constructive knowledge of specific instances where their subtenants infringed Luxottica's marks. Unlike in
Tiffany
, the defendants here did not need Luxottica's help to identify the infringing subtenants. Although
Inwood
created "no affirmative duty to take precautions against the sale of counterfeits,"
Hard Rock Cafe
,
What's more, previously we have held that evidence of "serious and widespread" infringement makes it more likely that a defendant knew about the infringement.
Mini Maid Servs. Co. v. Maid Brigade Sys., Inc.
,
In sum, evidence of the defendants' knowledge of specific infringing acts by subtenants who relied on the services the defendants provided (including space, utilities, and maintenance) amply supported the jury verdict. The district court did not err in denying the defendants' Rule 50(b) motion.
B. The District Court Made No Reversible Error in Instructing the Jury.
The defendants take issue with two of the district court's instructions to the jury. We discern no reversible error in either one.
First, the defendants protest the district court's instruction to the jury that Georgia law permits landlords to evict commercial tenants without resort to legal proceedings where the tenant has contractually waived its right to those procedural protections.
See
Rucker v. Wynn
,
*1316 defaults. They argue that without clear evidence of their subtenants' defaults, they could have been sued for wrongful eviction had they attempted "to use self-help to evict [their] [sub]tenants." Appellants' Initial Br. at 46.
Yet the defendants' contention that they lacked clear evidence of their subtenants' defaults belies the evidence presented at trial and ignores the provisions in AMM's subleases that would have permitted the defendants to evict infringing subtenants. AMM's standard sublease agreement provided that a "[v]erified written complaint[ ]" that a subtenant was selling counterfeit goods would constitute an "immediate breach" of the lease and authorize AMM to dispossess the subtenant "immediately." Doc. 162-12 at 21.
6
Bridges, Jerome and Jenny's counsel, acknowledged at trial that a search warrant accompanied by a sworn affidavit would qualify as a "[v]erified written complaint[ ]."
7
Even if law enforcement had refused to provide copies of the search warrants, the defendants had another tool at their disposal. AMM's standard sublease agreement also provided that a subtenant's failure to comply with trademark law would constitute a default on the sublease. Thus, the jury reasonably could have found that the defendants could have photographed the booths displaying counterfeit Luxottica-brand eyewear for sale-just as Rozo, the employee of Luxottica's private investigator Johansen, did-which would have assisted the defendants in establishing that their subtenants were in breach of their subleases. Upon a subtenant's first default under the sublease agreement, AMM could evict the subtenant and retake possession of the booth after providing five days' notice; no notice was necessary for a subsequent default.
Likewise, Yes Assets' lease with AMM required AMM to "comply with all applicable laws," and failure to do so would constitute a default on the lease, entitling Yes Assets to terminate the lease and immediately assume possession of the Mall. Doc. 162-9 at 7, 31. AMM's continued provision of services to the infringing subtenants despite having at least constructive knowledge of their infringement violated the Lanham Act. See Part III.A.3. In turn, AMM's continuing support of infringing subtenants put it in default of its lease with Yes Assets and gave Yes Assets grounds to terminate the lease and dispossess AMM.
As part of their contention that they lacked clear evidence of their subtenants' breaches of the subleases, the defendants further argue that Luxottica's notice letters were nothing more than unsubstantiated hearsay insufficient to provide clear evidence of breaches. We reject this argument as well. For one thing, the defendants never objected at trial to the letters' admission. For another, the letters were admissible for their effect on the recipient, not for the truth of the matter asserted, so they were not hearsay. Fed. R. Evid. 801(c). And even without these letters, the jury reasonably could have found that the search warrants or photographs of counterfeit eyewear on display would have provided the defendants with clear evidence of their subtenants' breaches of their subleases.
*1317
Second, the defendants protest the district court's instruction that the jury could find that the defendants had the ability to control their subtenants' activities in the Mall if "Airport Mini Mall, LLC, Yes Assets, LLC, Jerome Yeh, Jenny Yeh, Donald Yeh,
and/or
Alice Jamison possessed the right, ability[,] or authority to control either (i) the use of the physical retail space that it rented at the Discount Mall, or (ii) the activities that any of its vendors could engage in while occupying such space at the Discount Mall." Doc. 155 at 17 (emphasis added). Essentially, the defendants object on appeal to the district court's use of "and/or." The defendants easily could have requested that the district court fix this conjunction, but they forfeited this objection by failing to raise it to the district court. Even if they had preserved it, however, the district court's instruction was not reversible error. Although AMM was the Mall's sole landlord, a corporation may act only through its agents.
See
United Techs. Corp. v. Mazer
,
We find no reversible error in either of the challenged jury instructions.
C. The Evidence Was Sufficient to Support the Jury's Verdict on the Individual Defendants' Liability for Contributory Infringement.
The defendants contest the sufficiency of the evidence supporting the jury's verdict holding Jerome, Donald, and Jamison individually liable for contributory trademark infringement. Construing the evidence in the light most favorable to Luxottica, as we must in reviewing the denial of the defendants' Rule 50(b) motion,
Exel
,
Jerome was copied on e-mails between Swindall, who leased the Mall from Yes Assets up until December 2009, and the College Park Police Department regarding alleged sales of counterfeit goods at the Mall in 2008. The jury could infer from Swindall's testimony that these e-mails would have put a reasonable landlord on notice to watch out for sales of counterfeit goods, including goods bearing Luxottica's marks. Jerome was also informed about Dickerson's conversations with subtenants after the 14-plus-hour raid that took place during AMM's tenure as the Mall's landlord. Donald admitted he knew about Luxottica's notice letters and widespread sales of counterfeit merchandise. And Jamison, who managed the Shopping Center, knew about Luxottica's notice letters and at least one of the raids and attended a meeting at the College Park Police Department after this lawsuit was filed to discuss the sale of counterfeit products at the Mall. 8
*1318 D. The District Court Did Not Abuse Its Discretion in Its Evidentiary Rulings.
The defendants appeal five sets of the district court's evidentiary rulings. We conclude that the district court did not abuse its discretion in any of these rulings. First, the defendants argue that the district court abused its discretion in admitting the testimony of and counterfeit eyewear obtained by Rozo, an employee of Johansen, who was the investigator Luxottica hired to make undercover purchases and take photographs of counterfeit eyewear at the Mall. They assert that Rozo's testimony was unduly prejudicial because the destruction of her contemporaneous notes hindered both her ability to give reliable testimony and their ability to cross-examine her.
9
We reject the defendants' contention because the e-mails Rozo sent to Johansen within 24 hours of her visits to the Mall provided a near-contemporaneous account, and we have found no case holding that destruction of a witness's contemporaneous notes-especially when not done in bad faith-requires the harsh sanction of complete exclusion of the witness's testimony. Excluding evidence as unduly prejudicial under Federal Rule of Evidence 403 "is an extraordinary remedy [that] should be used sparingly," and, in applying the rule, "courts must look at the evidence in a light most favorable to admission."
Aycock v. R.J. Reynolds Tobacco Co.
,
Second, the defendants protest the district court's rearrangement of Exhibit 646, a collection of counterfeit glasses Rozo purchased at the Mall and the bags associated with each pair of glasses.
10
As
*1319
we understand it, shortly after Rozo purchased each pair of glasses, she placed them in plastic bags and affixed stickers showing the number of the booth that sold her the glasses.
11
During the trial, three witnesses handled the exhibit, and somehow the glasses got placed into the wrong bags.
12
When counsel for both sides were unable to agree on how to restore the exhibit, the district court rearranged the exhibit's contents outside of the presence of the jury and counsel to ensure that each pair of glasses was placed in the correct bag before making the exhibit available to the jury for its deliberations. Citing no authority, the defendants argue that determining the proper relationship between the glasses and the bags was a job for the jury, not the judge. We conclude that the district court did not abuse its discretion in rearranging the exhibit because trial judges retain discretion "to enable the jury to hear [and examine] the evidence in a clear, orderly and methodical manner."
United States v. Watson
,
Third, the defendants object to the admission of evidence of supposed counterfeit sales that took place before AMM's assumption of the Mall's lease, arguing that this evidence was irrelevant and unduly prejudicial. But evidence of "serious and widespread" sales of counterfeit goods increases the likelihood that the defendants knew about and failed to stop the infringement of Luxottica's marks.
See
Mini Maid
,
Fourth, the defendants object to the admission of evidence of alleged
*1320
infringement of non-Luxottica brands, arguing that this evidence was also irrelevant and unduly prejudicial because Luxottica failed to show that the non-Luxottica goods were actually counterfeit. Yet the jury reasonably could have inferred that even mere allegations of counterfeit sales of non-Luxottica products should have alerted the defendants to watch out for infringement of Luxottica's brands, so this evidence was relevant to the jury's determination of liability. Further, in ruling on the defendants' second motion in limine, the district court required Luxottica to ensure that the evidence of infringement of non-Luxottica products did not outweigh the evidence it presented of infringement of its own products. The defendants make no argument that the evidence of infringement of non-Luxottica brands predominated over evidence of infringement of Luxottica brands. In addition, the district court gave the jury a limiting instruction that it could not find the defendants liable based solely on evidence of alleged infringement of other brands, a straightforward instruction "that the jury could easily understand and take to heart."
United States v. Mateos
,
Fifth, the defendants object to the testimony from Swindall, the Mall's landlord prior to December 2009, because Luxottica failed to name Swindall in the pretrial witness list as a rebuttal witness and, according to the defendants, his testimony was irrelevant and unduly prejudicial. Neither reason persuades us. "Rebuttal witnesses are a recognized exception to all witness disclosure requirements,"
United States v. Windham
,
*1321 We affirm the district court's rulings on each evidentiary issue that the defendants appeal.
IV. CONCLUSION
The evidence was sufficient to support the jury's verdict holding the defendants liable for contributory trademark infringement under the Lanham Act. Concluding that the district court made no reversible error regarding any of the issues the defendants submit for our review, we affirm.
AFFIRMED.
The defendants appeal the denial of their first motion for judgment as a matter of law made under Rule 50(a), but because the only way to preserve a Rule 50(a) motion is to renew it under Rule 50(b), we review only the denial of their renewed motion under Rule 50(b). The defendants also appeal the district court's submission to the jury of the amount of statutory damages to be awarded. Because they make no argument about the statutory damages issue in their briefs on appeal, however, we deem it abandoned.
Sapuppo v. Allstate Floridian Ins. Co.
,
The plain text of § 32 of the Lanham Act prohibits only direct infringement: a person may not "use" or "reproduce, counterfeit, copy, or colorably imitate a registered mark ... in connection with the sale ... of goods or services" if such use "is likely to cause confusion."
The Supreme Court ultimately ruled in the generic manufacturers' favor, holding that the Court of Appeals should not have disturbed the district court's findings that the generic manufacturers had not "suggested, even by implication, that pharmacists should dispense generic drugs incorrectly identified as" the brand name drug.
Inwood
,
We note that three circuits have applied
Inwood
to owners of flea markets whose tenants sold counterfeit goods.
See
Hard Rock Cafe
,
One of Luxottica's witnesses acknowledged that there is a legitimate secondary market for Ray-Ban and Oakley eyewear, so the statements in Luxottica's letters that the Mall's tenants were unauthorized retailers were of limited use to the defendants. Nevertheless, the jury reasonably could have found that the defendants knew or should have known that $15 and $20 eyewear bearing Ray-Ban trademarks was counterfeit.
"Doc. #" refers to the numbered entry on the district court's docket.
Bridges did not represent the defendants at trial.
The defendants argue that Luxottica failed to pierce the corporate veil under Georgia law and show that the individual defendants were the "moving, active, conscious force[s]" behind their subtenants' infringement. Appellants' Initial Br. at 55 (internal quotation marks omitted). But Luxottica needed to prove only the elements of contributory trademark infringement: (1) direct infringement by a third party and (2)
either
intentionally inducing the direct infringement
or
providing a product or service to the direct infringer despite having actual or constructive knowledge of the direct infringement. The evidence was sufficient to support the jury's finding that Luxottica established both elements as to Jerome, Donald, and Jamison. Piercing the corporate veil is irrelevant to proving individual contributory liability, as is demonstrating that the defendants were the "moving, active, conscious force[s]" behind their subtenants' infringement, which is the standard for imposing individual liability for
direct
, not
contributory
, infringement.
Chanel, Inc. v. Italian Activewear of Fla., Inc.
,
Luxottica argues that the defendants failed to preserve their objection to the admission of Rozo's testimony and the eyewear she purchased at the Mall. Because we conclude that the district court did not abuse its discretion in admitting this evidence, we need not decide whether the defendants preserved this objection or, if not, whether the district court committed plain error.
The defendants have abandoned the argument they made to the district court about spoliation of evidence because they make no such argument in their briefs on appeal.
See
Sapuppo
,
Luxottica argues that the defendants also failed to preserve their objection on this issue. Again, because we determine that the district court did not abuse its discretion in rearranging the exhibit, we need not decide whether the defendants preserved this objection or, if not, whether the district court committed plain error.
The record leaves unclear whether Rozo or Mall vendors supplied the bags. In addition, the trial transcript suggests that Rozo was inconsistent about putting the stickers on the glasses versus the bags, and she also testified that the stickers sometimes fell off, both of which may have contributed to the glasses becoming disassociated from their bags.
Rozo handled the exhibit first, then Johansen, then Luxottica's director of intellectual property for the Americas. Twice-during Johansen's testimony and after the director's testimony-it emerged that the glasses were no longer in the proper bags, but it is unclear how this happened. To resolve this issue, we need not determine how the glasses became separated from their proper bags.
Decisions of the former Fifth Circuit rendered before the close of business on September 30, 1981 are binding on this Court.
See
Bonner v. City of Prichard
,
Although the defendants repeatedly emphasize that Swindall had previous perjury convictions, they cite no authority suggesting that the district court had to exclude his testimony based on that fact.
See
United States v. Swindall
,
Reference
- Full Case Name
- LUXOTTICA GROUP, S.P.A., an Italian Corporation, Oakley, Inc., a Washington Corporation, Plaintiffs - Appellees Cross Appellants, v. AIRPORT MINI MALL, LLC, a Georgia Limited Liability Company, D.B.A. Old National Discount Mall, Yes Assets, LLC, a Georgia Limited Liability Company, Chienjung Yeh, A.K.A. Jerome C. Yeh, Donald C. Yeh, Individually, Jenny Yeh, Alice Jamison, Defendants - Appellants Cross Appellees.
- Cited By
- 36 cases
- Status
- Published