Coach, Inc. et al. v. Farmers Market & Auction

Filing 37

MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 8/7/2012. (kns, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION
COACH, INC. et al.,

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Plaintiffs,
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v.
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Civil Action No. AW–11–01239
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FARMERS MARKET & AUCTION
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a/k/a CHARLOTTE HALL FLEA
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MARKET et al.
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Defendants.
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MEMORANDUM OPINION
Plaintiffs Coach, Inc. and Coach Services, Inc. (“Coach”) bring this action against, inter
alia, Defendants Farmers Market & Auction a/k/a Charlotte Hall Flea Market (“Farmers Market
& Auction”) and Benjamin H. Burroughs, Jr. (“Burroughs”) (collectively “the Market
Defendants”). Plaintiffs assert direct and contributory claims for trademark infringement and
counterfeiting, trade dress infringement, false designation of origin and false advertising,
trademark dilution, copyright infringement, and unjust enrichment. Pending before the Court is
the Market Defendants’ Motion to Dismiss or, in the Alternative, Motion to Strike (“Motion to
Dismiss”). The Court has reviewed the motions papers and record and finds no hearing
necessary. For the reasons articulated below, the Court DENIES the Market Defendants’ Motion
to Dismiss.
I.

FACTUAL AND PROCEDURAL BACKGROUND
The following facts are taken from the Third Amended Complaint and assumed to be

true. Coach, Inc. is a Maryland corporation with its principle place of business in New York.
Doc. No. 33–3 at 2. Coach Services, Inc. is a Maryland corporation with its principle place of
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business in Florida. Id.1 Coach manufactures, markets, and sells products such as handbags,
wallets, and watches. Id. at 4. These products may be purchased from Coach through its stores or
website, or from third parties. Id. Coach products are recognizable due to the company’s use of
trademarks, trade dresses, and design elements. Id. Coach protects its intellectual property
through the use of trademarks, trade dresses, design elements, and copyrights. Id. The trademarks
and trade dresses at issue have been continuously used and have never been abandoned, and the
trademarks and copyrights at issue have been registered with the appropriate government offices.
Id. at 9–10.2
Defendant Farmers Market & Auction is a Maryland corporation with its principal place
of business in Maryland. Id. at 2. Defendant Burroughs is an individual residing in
Mechanicsville, Maryland, and does business as Farmers Market & Auction in Charlotte Hall,
Maryland. Id. at 3. Although there are several other Defendants, the instant Motion to Dismiss
seeks dismissal of the claims against only the Market Defendants.
On or about June 10, 2008, the Farmers Market & Auction site was raided by the St.
Mary’s County Sheriff’s Department. Id. at 11. Numerous articles were seized, including a total
of more than 600 counterfeit Coach items (e.g., handbags, sunglasses, wallets, shorts, keychains,
and jewelry). Id. Ten vendors were prosecuted pursuant to this raid, each of whom pleaded guilty
to counterfeiting or received deferred sentencing. Id. Two years later, on or about June 12, 2010,
the same sheriff’s department conducted a second raid of the site, during which about fifty
counterfeit Coach handbags, wallets, and pairs of shoes were seized. Id. Each of the counterfeit

1

Throughout their Third Amended Complaint, both Plaintiff corporations refer to themselves only as
“Coach.” As they do not differentiate between themselves, the term “Coach” will refer to both companies
together.
2
Trademarks: Reg. No. 3,696,470; 2,626,565; 3,441,761; 2,088,707; 1,070,999. Copyrights:
VA0001694571.

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items bore at least one registered Coach mark. Id. at 11–12. Two vendors were charged with
felony trademark counterfeiting. Id. at 12.
On or about June 29, 2010, Coach sent the Market Defendants a cease and desist letter,
wherein Coach demanded that the Market Defendants halt all allegedly infringing activities. Id.
at 12. On or about August 9, 2010, Burroughs responded by letter, stating only that Farmers
Market & Auction distributes a flier that states “no bootleg . . . merchandise may be sold” and
attaching a copy of that flier. Id. On or about August 9, 2010, Coach wrote a letter to Burroughs
to inform him of its belief that he had a duty to police the flea market, but he never responded.
Id.
On or about January 15, 2011, a Coach investigator visited the site and witnessed three
vendors openly offering for sale products bearing Coach marks. Id. The investigator approached
one of the booths and observed about twenty handbags bearing Coach marks, one of which the
investigator purchased for thirty dollars.3 Id. Additionally, the investigator observed at another
booth about twenty-five handbags bearing Coach marks, one of which he purchased for thirty
dollars.4 5 Id. at 13. A Coach investigator examined both handbags and determined them to be
counterfeit. Id. None of these vendors had a license, authority, or permission from Coach to use
any of the described marks in connection with the designing, manufacturing, advertising,
promoting, distributing, selling, and/or offering for sale of the products. Id. at 13–14.
On or about November 5, 2011, a Coach investigator, accompanied by St. Mary’s County
law enforcement officers, visited the site and observed a vendor offering five items bearing
3

“Op Art” Trademark (Reg. No. 3,696,740); “Heritage Logo” Trademark (Reg. No. 3,441,761); “Coach
& Lozenge Design” Trademark (Reg. No. 1,070,999).
4
“Op Art” Trademark (Reg. No. 3,696,740); “Signature C” Trademark (Reg. No. 2,626,565); “Coach &
Tag Design Trademark (Reg. No. 2,088,707); “Coach & Lozenge Design” Trademark (Reg. No.
1,070999).
5
Coach’s motion papers list several trademark numbers incorrectly. We have attempted to list these
correctly.

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Coach marks. Id. The officers seized those items, which were identified by the investigator as
counterfeit Coach products. Id. None of these vendors had a license, authority, or permission
from Coach to use any of the described marks in connection with the designing, manufacturing,
advertising, promoting, distributing, selling, and/or offering for sale of the products. Id. at 13–14.
Coach alleges the following causes of action against the Market Defendants: (1)
contributory trademark counterfeiting under 15 U.S.C. § 1114; (2) contributory trademark
infringement under 15 U.S.C. § 1114; (3) contributory trade dress infringement under 15 U.S.C.
§ 1125(a); (4) contributory false designation of origin and false advertising under 15 U.S.C. §
1125(a); (5) contributory trademark dilution under 17 U.S.C. § 1125(c); and (6) contributory
copyright infringement under 17 U.S.C. § 501. See id. at 21–29.
Coach filed its original Complaint on May 9, 2011. Doc. No. 1. The Market Defendants
filed their Motion to Dismiss on June 17, 2011. Doc. No. 4. In response, Coach filed an
Amended Complaint on July 8, 2011. Doc. No. 7. The Market Defendants filed a Second Motion
to Dismiss on July 29, 2011. Doc. No. 13. Coach filed its response to the Second Motion to
Dismiss on August 19, 2011. Doc. No. 16. The Market Defendants replied on September 6,
2011. Doc. No. 17.
On September 22, 2011, Coach filed a Motion for Leave to File a Second Amended
Complaint. Doc. No. 18. This Court granted that Motion on January 5, 2012. Doc. No. 23. The
Second Amended Complaint was registered on the same day. Doc. No. 24. The Market
Defendants filed a Third Motion to Dismiss on January 26, 2012. Doc. No. 27. On March 12,
2012, after having filed a response to the Third Motion to Dismiss, Coach filed a Motion for
Leave to file a Third Amended Complaint. Doc. No. 33. The Court granted that motion on April
2, 2012. Doc. No. 35. Coach and the Market Defendants agree that the Third Motion to Dismiss

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(referred to hereinbelow simply as “Motion to Dismiss”) applies to the Third Amended
Complaint.
II.

STANDARD OF REVIEW
The purpose of a motion to dismiss is to test the sufficiency of the plaintiff’s complaint.

See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). In two recent cases, the
U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions. Ashcroft v.
Iqbal, 129 S. Ct. 1937 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). These cases
make clear that Rule 8 “requires a ‘showing,’ rather than a blanket assertion, of entitlement to
relief.” Twombly, 550 U.S. at 556 n.3 (quoting Fed. R. Civ. P. 8(a)(2)). This showing must
consist of at least “enough facts to state a claim to relief that is plausible on its face.” Id. at 570.
In deciding a motion to dismiss, the court should first review the complaint to determine
which pleadings are entitled to the assumption of truth. See Iqbal, 129 S. Ct. at 1949–50. “When
there are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. The court
must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999). The Court need not,
however, accept unsupported legal allegations, Revene v. Charles County Commissioners, 882
F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual allegations, Papasan v.
Allain, 478 U.S. 265, 286 (1986), or conclusory factual allegations devoid of any reference to
actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979).

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III.

LEGAL ANALYSIS

A. Contributory Trademark Counterfeiting and Infringement
Coach contends that the Market Defendants are liable for contributory trademark
counterfeiting and infringement under the Lanham Act, 15 U.S.C. § 1114, because they knew or
should have known of the alleged violations and permitted them to continue. See Doc. No. 33–3
at 21–24. The Lanham Act exposes to liability any person who, without authorization,
use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of
a registered mark in connection with the sale, offering for sale, distribution, or
advertising of any goods or services on or in connection with which such use is
likely to cause confusion, or to cause mistake, or to deceive . . . .
15 U.S.C. § 1114(a). Regarding the claims for contributory trademark counterfeiting and
infringement, the Market Defendants essentially assert that the Lanham Act does not create a
contributory liability regime. See Doc. No. 27–1 at 8–9. While they concede that contributory
liability for trademark violations has been recognized by courts, including the Supreme Court,
they believe that such judicial extensions only pertain to manufacturers or distributors. See id. at
9–10 (citing Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 853–54 (1982)).
This argument reflects a misreading of the applicable case law. See, e.g., Rosetta Stone
Ltd. v. Google, Inc., 676 F.3d 144, 160–63 (4th Cir. 2012). In Rosetta Stone, the Fourth Circuit
overturned the district court and held that genuine issues of material fact precluded summary
judgment on Rosetta Stone’s contributory trademark infringement claim. Id. at 163. The Rosetta
Stone court characterized Google as a search-engine operator. See id. at 150. Manifestly, then,
Rosetta Stone belies the notion that Inwood Laboratories limits contributory trademark
infringement liability to manufacturers and distributors.
The contention that contributory liability for trademark violations applies only to
manufacturers or distributors is likewise inconsistent with precedent from other circuits. See
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Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 984 (9th Cir. 1999) (holding
that Internet domain name registration company may be sued for contributory trademark
infringement); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264–65 (9th Cir. 1996)
(Inwood Laboratories may apply to “swap meet” operators); Hard Rock Licensing Corp. v.
Concession Servs., Inc., 955 F.2d 1143, 1148–49 (7th Cir. 1992) (extending Inwood
Laboratories to flea market operator). Accordingly, the Court rejects the Market Defendants’
contention that Inwood Laboratories’ contributory liability regime attaches to only
manufacturers and distributors.
The Market Defendants insist that, even if Inwood Laboratories contributory liability
applies to them, Coach improperly seeks to impose a novel duty to police their place of business
to prevent trademark violations. See Doc. No. 27–1 at 12–14. In so arguing, however, the Market
Defendants misconstrue the duty being imposed. Although the Market Defendants correctly note
that there is generally no duty to police a premises for unknown violations, there is nonetheless a
duty to prevent known, ongoing violations. See, e.g., Inwood, 456 U.S. at 854–55; Fonovisa, 76
F.3d at 264–65; Hard Rock, 955 F.2d at 1148–50. In Hard Rock, for instance, the Seventh
Circuit held that “willful blindness” would meet the statutory requirement of “actual knowledge
for purposes of the Lanham Act.” See 955 F.2d at 1149. Similarly, in Fonovisa, the Ninth Circuit
indicated that raids and seizures, notifications of violations, and the presence of company
investigators implied awareness. See 76 F.3d at 261. But cf. Perfect 10, Inc. v. Amazon.com, Inc.,
508 F.3d 1146, 1176 (9th Cir. 2007) (noting that notification of violations does not, without
more, invariably imply “actual knowledge of specific infringing activities” such that a defendant
“could have taken reasonable and feasible steps”); Fare Deals Ltd. v. World Choice Travel.com,
180 F. Supp. 2d 678, 691 (D. Md. 2001) (no willful blindness present where the only evidence of

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violations was a demand letter alleging violative activities and the defendant did not act to
ameliorate the situation within sixteen days).
In this case, Coach has stated a facially plausible claim for contributory trademark
violations. As in Fonovisa, Coach has alleged prior raids and seizures, a notification of
violations, and the sending of company investigators. Furthermore, Coach transmitted this
information through its letter to Burroughs, which supports the inference that Burroughs had
actual knowledge of the alleged violations. Additionally, after Coach sent the June 2010 letter (to
which Burroughs responded in August 2010), it returned to the market in January 2011 and
allegedly discovered more violations. In other words, these allegations support the inference that
(1) Burroughs had knowledge of Lanham Act violations and (2) failed to take any remedial
measures for a half-year period despite the violations’ continuance. These allegations distinguish
this case from Fare Deals, in which the court held that no willful blindness was present when the
defendant received notice of potential violations and failed to address them during the following
sixteen days. Therefore, although the Market Defendants arguably had no duty to “police” its
vendors, the alleged facts make it plausible that the Market Defendants knew or should have
known of the violations, or were willfully blind to them. Accordingly, the Market Defendants’
Motion to Dismiss Counts X and XI is denied.
B. Contributory Trade Dress Infringement
Coach also claims the Market Defendants are liable for contributory trade dress
infringement under 15 U.S.C. § 1125(a) because they knew or had reason to know of the alleged,
ongoing trade dress infringement on their premises and did nothing to prevent it. See Doc. No.
33–3 at 24–25. Under the Lanham Act,
(1) Any person who, on or in connection with any goods or services, or any container for
goods, uses in commerce any word, term, name, symbol, or device, or any combination
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thereof, or any false designation of origin, false or misleading description of fact, or false
or misleading representation of fact, which—(A) is likely to cause confusion, or to cause
mistake, or to deceive as to the affiliation, connection, or association of such person with
another person, or as to the origin, sponsorship, or approval of his or her goods, services,
or commercial activities by another person . . . shall be liable in a civil action by any
person who believes that he or she is or is likely to be damaged by such an act.

15 U.S.C. § 1125(a). To analyze whether Coach has stated a facially plausible claim for
contributory trade dress infringement, the Court will start by analyzing whether Coach’s
allegations state a claim for trade dress infringement as to the Vendor Defendants. Then, the
Court will consider issues specifically related to the issue of contributory liability.
Trade dress is protected under the Lanham Act. Ashley Furniture Indus., Inc. v.
SanGiacomo N.A. Ltd., 187 F.3d 363, 368 (4th Cir. 1999) (citation omitted). “The trade dress of
a product consists of its total image and overall appearance, including its size, shape, color or
color combinations, texture, graphics, or even particular sales techniques.” Id. (quoting Two
Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 764 n.1 (1992)). The purpose of trade dress
protection is to “secure the owner of the trade dress the goodwill of his or her business and to
protect the ability of consumers to distinguish among competing products.” 74 Am. Jur. 2d
Trademarks and Tradenames § 36 (2012) (citing Amazing Spaces, Inc. v. Metro Mini Storage,
608 F.3d 225, 251 (5th Cir. 2010)). To state a claim for trade dress infringement, plaintiffs must
show “(1) [their] trade dress is primarily non-functional; (2) the alleged infringement creates a
likelihood of confusion; and (3) the trade dress either (a) is inherently distinctive or (b) has
acquired secondary meaning.” Id. “‘To establish secondary meaning, a [plaintiff] must show that,
in the minds of the public, the primary significance of a product feature or term is to identify the
source of the product rather than the product itself.’” M. Kramer Mfg. Co., Inc. v. Andrews, 783
F.2d 421, 449 (4th Cir. 1986) (quoting Inwood Labs., 456 U.S. at 851 n.11).

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In this case, Coach adequately alleges the first element by alleging ownership of “a
variety of unique and distinctive trade dresses consisting of a combination of one or more
features, including sizes, shapes, colors, designs, fabrics, hardware, hangtags, stitching patterns
and other non-functional elements comprising the overall look and feel incorporated into Coach
products . . . .” Doc. No. 33–3 at 9–10. Coach adequately alleges the second element by alleging
that the Vendor Defendants “are engaged in designing, manufacturing, advertising, promoting,
distributing, selling, and/or offering for sale products bearing logos and source-identifying
indicia and design elements that are studied imitations of the Coach Trademarks, the Coach
Trade Dresses, and the Coach Design Elements . . . .” Id. at 11. Coach adequate alleges the third
element by alleging that “products bearing the Coach Marks are widely recognized and
exclusively associated by consumers, the public, and the trade as being high quality products
sourced from Coach, and have acquired strong secondary meaning.” Id. at 4.
Admittedly, Coach has not used the words “trade dress” during its descriptions of the
infringing events. However, Coach explicitly included “trade dress” within the collective term
“Coach Marks” as defined in the Third Amended Complaint. See Doc. No. 33–3 at 4. Therefore,
where Coach generally alleges infringement of “Coach Marks,” this implies the infringement of
trade dress. Regarding the events of January 2011, Coach alleges that the investigator observed
at least forty-five handbags “depicting Coach Marks being offered for sale.” See id. at 12–13. In
addition, the two seizures conducted by the Coach investigator resulted in specific identification
of the violated marks and the conclusion that the seized products were counterfeits, plausibly
justifying the inference that the “total image and overall appearance” of the seized items could
have led to confusion.

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Furthermore, in its memoranda, Coach notes that it cannot make more specific allegations
regarding the other seizures because most of that evidence is still in police custody. See Doc. No.
31 at 6–7; No. 33–3 at 11–13; see also Arista Records LLC v. Doe 3, 604 F.3d 110, 119–20 (2d
Cir. 2010) (citations and internal quotation marks omitted) (noting that plaintiffs may plead
based on information and belief when facts are “peculiarly within the possession and control of
the defendant”); see generally Wynn v. Hewlett-Packard Co., Civil Action No. 8:11–cv–01287–
AW, 2012 WL 113390, at *3 (D. Md. Jan. 12, 2012) (citing Pegram v. Herdrich, 530 U.S. 211,
230 & n.10 (2000)) (noting that “the Court may consult plaintiffs’ legal briefs to clarify the
meaning of ambiguous complaints”). Although the facts here are technically not “peculiarly
within the possession and control of the defendant,” they are effectively within the peculiar
possession and control of local law enforcement officials. Therefore, at this early juncture,
Coach’s allegations meet the requisite degree of specificity.
As with the Counts discussed above, the Market Defendants maintain that contributory
trade dress infringement is not a cognizable cause of action. See Doc. No. 27–1 at 16. In
addition, they argue that, even if contributory trade dress infringement is actionable, Coach has
not alleged sufficient facts to support its claim. See id. However, their contentions ignore that
several influential courts have recognized contributory trade dress infringement as a cause of
action. See Bauer Lamp Co., Inc. v. Shaffer, 941 F.2d 1165, 1171 (11th Cir. 1991); Coach, Inc.
v. We Care Trading Co., Inc., 67 Fed. App’x 626, 630 (2d Cir. 2002) (upholding a claim of
contributory trade dress infringement); R.F.M.A.S., Inc. v. Mimi So, 619 F. Supp. 2d 39, 84
(S.D.N.Y. 2009) (“[A]ll those who knowingly play a significant role in furthering trade dress
infringement are liable as contributing parties.”).

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In Bauer, the Eleventh Circuit examined a case where a lamp company sued former sales
representatives for trade dress infringement. In affirming the decision below, the Bauer court
held that “a person who knowingly participates in furthering . . . trade dress infringement is
liable as a contributing party.” 941 F.2d at 1171 (emphasis added). Although the defendants did
not concede knowing participation in the infringing activities, the defendants’ contacting of other
lamp manufacturers to request the production and delivery of lamps similar to the plaintiff’s
lamps was construed to equate to “knowing participation” in the resulting trade dress
infringement. See id. Similarly, in R.F.M.A.S., the Southern District of New York heard a suit
alleging that some of the defendant’s jewelry pieces “infringed the trade dress of the ‘look’ of the
[plaintiff]’s collection.” See 619 F. Supp. 2d at 47. Testimony allowing the inference of knowing
participation in, or willful blindness to, trade dress infringement was held to suffice as factual
support for a claim of contributory trade dress infringement. See id. at 84–85.
Coach’s argument that contributory trade dress infringement is cognizable stands on
firmer footing. While Bauer and R.F.M.A.S. involved defendants who arguably participated more
actively in the infringement, these cases nevertheless propose that knowledge and/or willful
blindness may support a claim of contributory trade dress infringement. In this case, as explained
in Part III.A, supra, Coach has alleged facts plausibly supporting the inference that the Market
Defendants were willfully blind of the alleged trademark violations. In short, the allegations of
raids, notification letters, on-site investigations, and inaction despite having had adequate time to
take remedial measures justify the inference that Market Defendants were at least aware of
wrongdoing yet willfully failed to investigate it. Accordingly, for the foregoing reasons, Coach
has stated a cognizable claim for contributory trade dress infringement.

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C. Contributory False Designation of Origin and False Advertising
Coach further asserts that the Market Defendants are liable for contributory false
designation of origin and false advertising under 15 U.S.C. § 1125(a) because they knew or had
reason to know of the alleged false designation of origin or false advertising on their premises
and did nothing to prevent it. See Doc. No. 33–3 at 26. The Market Defendants counter that
contributory false designation of origin and false advertising are cognizable claims under the
Lanham Act or any judicial extensions thereof. See Doc. No. 27–1 at 16–17.
Contributory false designation of origin and false advertising are actionable. See Societe
Des Hotels Meridien v. LaSalle Hotel Operating P’ship, L.P., 380 F.3d 126, 133 (2d Cir. 2004);
(reinstating claim for contributory false advertising after holding that the lower court erred in
dismissing the direct claim for false advertising); Fare Deals, 180 F. Supp. 2d at 686–87
(citation omitted) (stating that contributory liability “applies equally to both infringement
provisions of the Lanham Act”); Grant Airmass Corp. v. Gaymar Indus., Inc., 645 F. Supp.
1507, 1511–12 (S.D.N.Y. 1986) (noting that Lanham Act claims sounding in contributory
liability “survive summary judgment so long as the evidence viewed most favorably toward [the
plaintiff] supports a finding” that the defendant alleged to be contributorily liable could have
anticipated the other defendant’s wrongdoing).
The Market Defendants also argue that, even if contributory false designation of origin
and false advertising are actionable, Coach has not alleged sufficient facts to state a claim
separate from contributory trademark infringement. To state a claim for false designation of
origin and false advertising under the Lanham Act, Coach “must allege that the defendant in
connection with goods or services . . . used in commerce the plaintiff’s mark in a manner likely
to confuse consumers about the source or sponsorship of the goods or services.” Fare Deals, 180

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F. Supp. 2d at 683–84 (citations and internal quotation marks omitted). Thus, to state a claim for
contributory false designation of origin and false advertising, Coach must allege facts sufficient
to support the inference that (1) despite knowing that the Vendor Defendants were using “in
commerce the plaintiff’s mark in a manner likely to confuse consumers about the source or
sponsorship of the goods or services,” (2) the Market Defendants continued to supply a means of
infringement (3) over which they had means of control or monitoring and which they have
actively supported through various promotional efforts. See id. at 690–91.
Here, the alleged facts support a plausible inference that the Market Defendants knew
that the Vendor Defendants were using “in commerce the plaintiff’s mark in a manner likely to
confuse consumers about the source or sponsorship of the goods or services.” Assuming
arguendo the allegations fail to justify the inference that the Market Defendants had actual
knowledge of the infringing activity, they nevertheless make it plausible that the Market
Defendants had constructive knowledge and/or displayed willful blindness. Coach alleges that
the infringing items, adorned with Coach’s marks, were easily seen and identified by the Coach
investigator during her visit. Additionally, the raids and notification letters plausibly provided
notice to the Market Defendants that various vendors were using the market site for infringing
activities, such as selling counterfeit items at bargain-basement prices. Thus, Coach has alleged
facts from which one can plausibly infer that the Market Defendants knew or should have known
of the activities.
Second, the allegations further support the inference that, despite the Market Defendants’
actual or constructive knowledge of the ongoing infringing activities, they continued to supply
the means of infringement, i.e., the market sites. It may also plausibly be inferred that the Market
Defendants had the means of controlling or monitoring the site as they were the owners and

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operators of the flea market site. To reiterate, the alleged facts make it plausible to infer that the
Market Defendants had at least constructive knowledge of the false designation of origin or false
advertising and allowed the infringing behavior to continue unabated. Thus, Coach has stated a
cognizable claim for contributory false designation of origin and false advertising under the
Lanham Act. Accordingly, the Court denies the Market Defendants’ Motion to Dismiss as to
Count XIII.
D. Contributory Trademark Dilution
Coach also argues that the Market Defendants are liable for contributory trademark
dilution under 15 U.S.C. § 1125(c) because they knew or had reason to know of the alleged,
ongoing trademark dilution on their premises and did nothing to prevent it. See Doc. No. 33–3 at
27. Although the Market Defendants assert that no appellate court has recognized a cause of
action for contributory trademark dilution, they ignore both an appellate and several federal
district court rulings suggesting that contributory trademark dilution comports with the policy
concerns underlying the Trademark Dilution Act. See, e.g., Lockheed Martin Corp., 194 F.3d at
986 (quoting Inwood Labs., 456 U.S. at 854); Microsoft Corp. v. Shah, No. C10–0653 RSM,
2011 WL 108954 at *4 (W.D. Wash. Jan. 12, 2011) (noting “contributory dilution is a tort-like
cause of action which naturally lends itself to the theory of contributory liability” and that “[i]t
would be inconsistent with the Trademark Dilution Act to prohibit a cause of action for
contributory dilution”); Coach, Inc. v. Gata Corp., No. 10–CV–141–LM, 2011 WL 1582954 at
*4–5 (D.N.H. Apr. 26, 2011) (citation omitted) (“There is no logical reason why the doctrine of
contributory infringement should not apply to a claim under the federal antidilution law.”);
Steinway v. Ashley, No. 01 CV 9703 GEL, 2002 WL 122929, at *2 (S.D.N.Y. Jan. 29, 2002)
(“While Defendants are correct that the notion of ‘contributory dilution’ remains somewhat

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novel, the viability of such a claim seems entirely plausible . . . .”); Kegan v. Apple Computer,
Inc., No. 95 C 1339, 1996 WL 667808, at *11–12 (N.D. Ill. Nov. 15, 1996).
To support its contributory trademark dilution claim, Coach must show that the Market
Defendants either encouraged others to dilute or, as in Inwood Laboratories, continued to supply
their product “to one whom it knows or has reason to know is engaging in trademark
infringement . . . .” See Lockheed Martin, 194 F.3d at 986 (quoting Inwood Labs., 456 U.S. at
854); Kegan, 1996 WL 667808, at *11–12 (“Apple’s motion for summary judgment . . . is
denied to the extent that genuine issues of material fact exist as to whether Apple’s
encouragement of other software developers to create software in the --GUIDE family
constitutes contributory dilution . . . .”). As explained above, willful blindness constitutes
knowledge under the Lanham Act. See, e.g., Hard Rock, 955 F.2d at 1149.
Here, Coach has stated a cognizable claim for contributory trademark dilution. As the
preceding analysis evinces, Coach has alleged that the Market Defendants knew or should have
known, or were willfully blind to, the violations that allegedly caused the trademark dilution
(e.g., raids, seizures, investigations, and the provision of notice). The Court has already discussed
the significance of these allegations at length; to do so again is to belabor the point. Notably,
moreover, Coach has alleged that the Market Defendants continued to rent space to the alleged
violators. This allegation, in context, makes it plausible that the Market Defendants were
“encouraging” the violations despite knowledge of their existence. Furthermore, while the
Market Defendants call for the application of an “active encouragement” standard, this standard
is artificially high and contravenes the logic and spirit of the contributory liability cases set forth
above. For these reasons, the Court denies the Market Defendants’ Motion to Dismiss as to
Count XIV.

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E. Contributory Copyright Infringement
Lastly, Coach alleges that the Market Defendants are liable for contributory copyright
infringement under 15 U.S.C. § 501 because they provided the site and facilities for known
infringing activity and failed to take any action to prevent that infringing activity. See Doc. No.
33–3 at 27–29. While the Market Defendants recognize that contributory copyright infringement
is actionable, they argue that Coach has failed to state a facially plausible direct copyright
infringement claim as to the Vendor Defendants. Therefore, as contributory liability is derivative
of direct liability, see, e.g., A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n.2 (9th
Cir. 2001), the Market Defendants conclude that they cannot incur contributory copyright
infringement liability.
The Copyright Act of 1976, 17 U.S.C. §§ 101 et seq., protects “‘original works of
authorship fixed in any tangible medium of expression, now known or later developed, from
which they can be perceived, reproduced, or otherwise communicated.’” Universal Furniture
Intern., Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 428 (4th Cir. 2010) (quoting 17
U.S.C. § 102(a)). A copyright holder has exclusive rights to use and to authorize the use of his
work in five qualified ways: (1) to reproduce the work; (2) to prepare derivative works; (3) to
distribute copies of the work to the public; (4) to perform the work publicly; and (5) to display
the work publicly. Advance Magazine Publishers, Inc. v. Leach, 466 F. Supp. 2d 628, 634 (D.
Md. 2006) (internal quotation marks omitted) (citing Sony Corp. v. Universal City Studios, Inc.,
464 U.S. 417, 432–33 (1984)). A person who violates one or more of these five rights incurs
liability for copyright infringement. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361
(1991). To bring a claim for copyright infringement, plaintiffs must establish “(1) ownership of a
valid copyright, and (2) copying of constituent elements of the work that are original.” Id.

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(citation omitted); see also Keeler Brass Co. v. Cont’l Brass Co., 862 F.2d 1063, 1065 (4th Cir.
1988) (citation omitted) (“In essence, a plaintiff must establish two elements in a copyright
infringement action: ownership of the copyright by the plaintiff and copying by the defendant.”).
In this case, Coach has stated a facially plausible direct copyright infringement claim.
Coach adequately alleges the first prong under Feist by alleging ownership of a valid registered
copyright in its Op Art design, which Coach identifies with registration number VA0001694574.
Doc. No. 33–3 at 10. Coach adequately alleges the second Feist prong by stating that on
“information and belief, the Vendor Defendants had access to and copied the Op Art design . . .
.” Id. at 28. Moreover, Coach alleges that the Vendor Defendants, without permission, consent,
or other authorization from Coach, created and distributed products incorporating elements
substantially similar to the copyrightable matter present in the copyrighted Op Art design. Id. at
13–14, 28.
The Market Defendants argue that Coach has failed to plead its copyright infringement
claim with sufficient specificity under Federal Rule 8(a), contending that there is a heightened
pleading requirement for copyright cases. This is a curious argument. Rule 8 is the general rule
for pleading, requiring only that a pleading stating a claim for relief contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Rule
9, for its part, concerns the pleading of special matters, including specificity.
The Market Defendants do not support their gloss on Rule 8(a) with any controlling
caselaw. Instead, they rely on an opinion from the District of Connecticut. See Doc. No. 27–1 at
21 (citing RBC Nice Bearing, Inc. v. Peer Bearing Co., No. 06–cv–1380, 2009 WL 3642769, at
*3 (D. Conn. Oct. 27, 2009)). Based on this authority, the Market Defendants contend that
copyright claims must be alleged with specificity, which includes “(1) which specific works are

18

the subject of the claim, (2) that the plaintiff owns the copyright in these works, (3) that the
copyrights in question have been registered in compliance with the Copyright Act, and (4) by
what acts and during what time the defendant infringed the copyright.” Id.
Coach’s copyright infringement claim would be cognizable even if Peer Bearings’
“heightened” pleading requirement applied to it. First, Coach alleges that its design Op Art is the
subject of the claim.6 Second, Coach alleges that it owns the copyright in this work (copyright
registration number VA0001694574). Third, the Third Amended Complaint’s allegations support
the inference that this copyright has been registered in compliance with the Copyright Act.
Fourth, Coach contends that the Vendor Defendants copied the Op Art design and created and
distributed infringing products “incorporating elements substantially similar to the copyrightable
matter in the Op Art design . . . .” They further allege several instances in which allegedly
counterfeit items were observed to bear the Op Art design. Perhaps Coach’s generalized
allegations of other copyright violations would fail to fulfill the heightened pleading
requirement. In any event, the Third Amendment Complaint, at a minimum, suffices with respect
to Op Art. Accordingly, the Court denies the Market Defendants’ Motion to Dismiss as to Count
XV.
F. Whether, in the Alternative, to Strike All Allegations Regarding Forty-Five Trademarks
that Are Supposedly Immaterial and Impertinent
The Market Defendants also argue that forty-five trademarks not alleged to be infringed
by the Vendor Defendants should be struck from the Third Amended Complaint. The Court sees
no valid reason to do so.
Motions to strike are governed by Rule 12(f) of the Federal Rules of Civil Procedure.
“The court may strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous
6

Coach also alleges that other copyrights were likely infringed, but states that it cannot substantiate this
suspicion as it lacks access to the seized items.

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matter.” Fed. R. Civ. P. 12(f). The Market Defendants claim that, of forty-seven trademarks
identified in the Third Amended Complaint, only two are alleged to have been infringed. See
Doc. No. 27–1 at 23. This is not quite true. The Third Amended Complaint alleges infringement
of five specific trademarks. This aside, additional trademarks might have been infringed. Coach
alleges that it does not yet have access to the seized items, and the Market Defendants do not
dispute this allegation. Therefore, at this early stage in the proceedings, it is sensible to permit
the entire list to remain in the Third Amended Complaint. Indeed, even if the Court struck those
trademarks, the Court would likely be inclined to grant leave to amend if discovery revealed
violations of any of those trademarks—a distinct possibility considering Coach’s undisputed
allegations regarding seizure of the items. Therefore, the Market Defendants’ contention that the
residual forty-two trademarks are immaterial to Coach’s claims is unsatisfying.
Moreover, the cases cited by the Market Defendants caution against the granting of
motions to strike. See Coach, Inc. v. Kmart Corp., 756 F. Supp. 2d 421, 425 (S.D.N.Y. 2010)
(citations and internal quotation marks omitted) (“Motions to strike are generally disfavored and
will not be granted unless it appears to a certainty that plaintiffs would succeed despite any state
of the facts which could be proved in support of the defense.”); Barry v. EMC Mortgage, Civ. A.
No. 10–cv–3120–DKC, 2011 WL 4352104, at *4 (D. Md. Sept. 15, 2011) (citations and internal
quotation marks omitted) (“In any context . . . Rule 12(f) motions seek a drastic remedy which is
disfavored by the courts and infrequently granted.”). In light of the preceding considerations,
nothing about the inclusion of the residual forty-two trademarks portends prejudice sufficient to
justify the invocation of a drastic remedy.

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III.

CONCLUSION
For the foregoing reasons, the Court DENIES the Market Defendants’ Motion to

Dismiss. A separate Order follows. Additionally, the Court will issue a Scheduling Order.
August 7, 2012
Date

/s/
Alexander Williams, Jr.
United States District Judge

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