United States: Beware Of Facilitating Counterfeiting And Trademark Infringement

Published in NH Bar News (6/19/2017)

It is common knowledge that those who manufacture or sell counterfeit goods may face both criminal and civil liability. What often catches some by surprise, however, is that brand owners often pursue those who facilitate counterfeiting more aggressively than the actual counterfeiters. There are various reasons for this strategy, and the consequences can be severe, so diligence is critical when an attorney advises a business that could somehow be facilitating trademark infringement.

Counterfeiting, from jewelry to handbags, continues to run rampant in the United States. With technological advances, it is becoming much easier and cheaper to produce nearly identical knock-offs of all types of products. Counterfeit goods can severely affect the market value of a brand. When consumers purchase what they believe to be the products of a high-end brand, they can be disappointed in the poor quality and associate low quality with the brand. Companies that find success through strong brand identity, such as Coach, Tiffany, and Louis Vuitton, aggressively pursue counterfeiters and forums where counterfeiters sell their knock-offs.

It might seem more direct to pursue the makers and sellers of counterfeit goods, but brand owners often find that to be challenging. Manufacturers of counterfeit goods often operate in remote parts of foreign countries, and finding and stopping them presents various hurdles. Furthermore, individuals who sell counterfeit goods online typically do so through multiple anonymous user accounts. Individuals who sell to customers at auction houses or flea markets are a dime a dozen and often move from one forum to another to elude authorities. Even if many of these individuals are successfully prosecuted, others will fill the void.

Making the Case

In a direct infringement claim under the federal Lanham Act, a trademark owner generally must prove that a defendant has used a similar mark in commerce, in a way that creates a likelihood of confusion, mistake or deception with the consuming public. Although not encoded in the Lanham Act, the law of contributory trademark infringement has evolved such that brand owners now have meaningful remedies against those forums where counterfeiting takes place.

In 1982, the United States Supreme Court established a cause of action for contributory trademark infringement, in Inwood Labs Inc. v. Ives Labs Inc. (1982). A trademark owner can recover damages from one who knowingly induces another to infringe a trademark, or otherwise facilitates the infringement of a trademark, either with knowledge or with reason to know of the infringement occurring. Thus, flea markets, auction houses or online auction services, such as eBay, cannot turn a blind eye when vendors using their services are selling counterfeit goods. Even if the flea markets and the online services are not directly selling or profiting from the sale of counterfeit goods, their failure to take reasonable measures to stop trademark infringement exposes them to significant liability.

If successful in proving contributory infringement, brand owners can recover damages ranging from $1,000 to $200,000 per counterfeit mark, per type of good sold or offered for sale, and up to $2 million per mark if willful infringement. Brand owners have effectively used the doctrine of contributory infringement to recover large verdicts, which often cause the counterfeiting forum to go out of business. For instance, in Louis Vuitton Malletier v. Akanoc Solutions (2011), the Ninth Circuit Court of Appeals upheld a $10.5 million verdict of contributory infringement against three California-based Internet service providers for hosting websites used by Chinese sellers to sell counterfeits that infringed Louis Vuitton's trademarks.

Coach, the maker of famous designer handbags and clothing, has aggressively pursued flea markets throughout the country where vendors may be selling counterfeit goods. Coach has successfully obtained large verdicts, often resulting in closure of the markets – undoubtedly Coach's primary goal. In 2012, for example, Coach obtained a jury verdict of more than $5 million against a flea market in Tennessee. In 2014, Coach sued another Kissimmee, Florida, flea market and reached a settlement that ultimately resulted in the flea market filing for bankruptcy.

Granite State Cases

New Hampshire flea markets also have been the target of Coach lawsuits. In 2011, Coach obtained a summary judgment for contributory trademark against a Derry flea market, which resulted in a settlement that closed the decades-old flea market. This author represented a Londonderry flea market in a lawsuit brought by Coach for contributory trademark infringement that went to a jury trial in the United States District Court in Concord in November 2014.

In that case, Coach presented evidence to the jury of its various undercover inspections at the flea market during which it found counterfeit goods being sold by certain flea market vendors. Coach argued that despite numerous warnings to the flea market owner, vendors continued to sell counterfeit products bearing Coach trademarks. The flea market owner, however, produced substantial evidence that it had taken reasonable measures, particularly for a small business owner, to prevent the sale of counterfeit goods. Ultimately the jury found that the flea market was not liable for contributory trademark infringement, and the flea market continues to operate.

The developing law of contributory trademark infringement makes it clear that businesses providing potential forums for others to sell counterfeit goods must take reasonable measures to stop such counterfeit activity. If businesses turn a blind eye to the activity, they may be on the losing end of a crippling verdict.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions