Roger Cleveland Golf Company Inc v. Prince et al

Filing 140

RESPONSE in Opposition re 131 MOTION for New Trial MOTION for Judgment as a Matter of Law Motion for New Trial, Motion for Relief from Judgment, 135 Supplemental MOTION for Judgment as a Matter of LawSupplemental MOTION for New TrialSupplemental MOTION for Relief from Judgment Response filed by Roger Cleveland Golf Company Inc.Reply to Response to Motion due by 5/19/2011 (Attachments: # 1 Exhibit A - Prince Trial Testimony Excerpts, # 2 Exhibit B - Gingrich Trial Testimony Excerpts, # 3 Exhibit C - Jury Charges & Motions Excerpts, # 4 Exhibit D - Campbell v. BP, # 5 Exhibit E - Golson v. Green Tree Financial, # 6 Exhibit F - Laubach v. Khajawai, M.D., # 7 Exhibit G - East Tennessee Natural Gas v. Acres in Wythe County, VA, # 8 Exhibit H - Coach v. Gata)(McElwaine, John)

Exhibit H

Page 1

Coach, Inc. and Coach Services, Inc. v. Gata Corporation, Martin Taylor, and John
Does 1 through 20
Case No. 10-cv-141-LM
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW
HAMPSHIRE
2011 U.S. Dist. LEXIS 45045

April 26, 2011, Decided
April 26, 2011, Filed
NOTICE:

NOT FOR PUBLICATION

COUNSEL: [*1] For Coach, Inc., Coach Services, Inc.,
Plaintiffs: Kelly Martin Malone, LEAD ATTORNEY,
Adler Pollock & Sheehan (MA), Boston, MA; Adam M.
Ramos, Jeffrey K. Techentin, PRO HAC VICE, Adler
Pollock & Sheehan (RI), Providence, RI.
For Gata Corporation, Martin Taylor, Defendants:
Thomas Morgan, Jr., LEAD ATTORNEY, Law Office of
Thomas Morgan PC, Salem, NH.
JUDGES: Landya McCafferty, United States Magistrate
Judge.
OPINION BY: Landya McCafferty
OPINION

ORDER
Coach, Inc. and Coach Services, Inc. (collectively
"Coach") have sued in ten counts, seeking both damages
and injunctive relief arising from the alleged sale of
goods that infringe or dilute their intellectual property at
a flea market that is operated by Gata Corporation
("Gata") and Martin Taylor.1 Before the court are: (1)
Coach's motion for summary judgment on Count I
(contributory trademark infringement); and (2) Coach's

motion to strike a document defendants submitted in
support of their objection to Coach's motion for summary
judgment. Defendants oppose the motion for summary
judgment, but have not responded to the motion to strike.
For the reasons that follow, Coach's summary judgment
motion is granted and its motion to strike is denied.
1 Coach has sued John Does [*2] 1 through 20
for trademark infringement (Count VI),
counterfeiting (Count VII), trade dress
infringement
(Count
VIII),
copyright
infringement (Count IX), and trademark dilution
and tarnishment (Count X). In addition, Coach
has sued Gata and Taylor for contributory
trademark infringement (Count I), contributory
counterfeiting (Count II), contributory trade dress
infringement (Count III), vicarious and/or
contributory copyright infringement (Count IV),
and contributory trademark dilution and
tarnishment (Count V).
Summary Judgment Standard
Summary judgment shall be granted "if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to a judgment as a matter
of law." Fed. R. Civ. P. 56(a). "The object of summary
judgment is to "pierce the boilerplate of the pleadings and
assay the parties' proof in order to determine whether trial
is actually required.'" Dávila v. Corporación de P.R. para

Page 2
2011 U.S. Dist. LEXIS 45045, *2

la Diffusión Pública, 498 F.3d 9, 12 (1st Cir. 2007)
(quoting Acosta v. Ames Dep't Stores, Inc., 386 F.3d 5, 7
(1st Cir. 2004)). "[T]he court's task is not to weigh the
evidence and determine the truth of the matter but to
determine whether there is a genuine [*3] issue for trial."
Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009)
(citations and internal quotation marks omitted).
"Once the moving party avers an absence of
evidence to support the non-moving party's case, the
non-moving party must offer 'definite, competent
evidence to rebut the motion,'" Meuser v. Fed. Express
Corp., 564 F.3d 507, 515 (1st Cir. 2009) (citing Mesnick
v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)), and
"cannot rest on 'conclusory allegations, improbable
inferences, [or] unsupported speculation,'" Meuser, 564
F.3d at 515 (quoting Welch v. Ciampa, 542 F.3d 927, 935
(1st Cir. 2008)). When ruling on a party's motion for
summary judgment, a trial court "constru[es] the record
in the light most favorable to the nonmovant and
resolv[es] all reasonable inferences in [that] party's
favor." Meuser, 564 F.3d at 515 (citing Rochester Ford
Sales, Inc. v. Ford Motor Co., 287 F.3d 32, 38 (1st Cir.
2002)).
Background
Before sketching the relevant factual background, the
court turns to two procedural matters that have a direct
bearing on the content of the summary judgment record.
The first arises out of the discovery process while the
second relates to defendants' objection [*4] to Coach's
summary judgment motion.
A. Requests for Admissions
On December 15, 2010, Coach served defendants
with a set of requests for admissions. Techentin Decl.
(doc. no. 40-2) ¶ 1. Under a cover letter dated January 19,
2011, defendants' counsel served Coach with an answer
to its requests. Doc. no. 40-5. The document defendants'
counsel served on Coach was dated January 15, 2011,
and bore a facsimile of Martin Taylor's handwritten
signature. Shortly after receiving defendants' answer,
Coach's counsel advised defendants' counsel that the
answer was untimely, and that Coach would, accordingly,
treat the matters covered in its requests as admitted,
unless the court made a determination to the contrary. It
is undisputed that defendants' counsel did not respond to
Coach's counsel, did not move the court to enlarge the
time for serving defendants' answer, and has not moved

to withdraw their admissions. Instead, on March 14,
defendants filed with the court, as an exhibit to their
objection to Coach's motion for summary judgment, a
different version of their answer to Coach's requests for
admissions than the one their counsel served on Coach.
The version defendants filed with the court was [*5]
dated January 8, rather than January 15, and bore Taylor's
typewritten signature, rather than a facsimile of his
handwritten signature.
After noting the differences between the document it
was served by defendants' counsel and the document
defendants filed with the court, Coach moved to strike the
version of defendants' answer that was attached to their
objection to summary judgment, on grounds of its falsity.
See doc. no. 40. Defendants have not objected to Coach's
motion to strike. Coach also continues to maintain that
the matters covered in its requests for admissions should
be deemed admitted, pursuant to Rule 36(a)(3) of the
Federal Rules of Civil Procedure (hereinafter "Federal
Rules"). For their part, defendants do acknowledge, if
obliquely, that "[i]n our case, there may have been a 2
day delay" in serving their answer to Coach's requests for
admissions. Defs.' Mem. of Law (doc. no. 38-4), at 6.
After careful consideration of the relevant
circumstances, the court concludes that the matters
covered in Coach's requests for admissions should be
admitted. Under the Federal Rules, "[a] matter is
admitted unless, within 30 days after being served, the
party to whom the request is directed [*6] serves on the
requesting party a written answer or objection addressed
to the matter and signed by the party or its attorney." Fed.
R. Civ. P. 36(a)(3). Here, defendants failed to serve their
answer within thirty days. The Federal Rules provide that
a longer time for responding may "be ordered by the
court," id., but defendants have never moved the court for
such an order. The Federal Rules also provide that the
court may, under certain circumstances, "permit[ ] [an]
admission to be withdrawn or amended." Fed. R. Civ. P.
36(b). Such permission, however, is to be granted "on
motion." Id. Defendants have not moved to withdraw
their admissions, and the reference to Rule 36(b) in their
objection to summary judgment is insufficient to invoke
the protection of that rule. See LR 7.1(a)(1) ("Objections
to pending motions and affirmative motions for relief
shall not be combined in one filing."). Defendants' failure
to file a motion to withdraw their admissions - after
having been given fair warning of Coach's intent to rely
on those admissions approximately two weeks before

Page 3
2011 U.S. Dist. LEXIS 45045, *6

Coach filed its summary judgment motion - renders
Pritchard v. Dow Agro Sciences, 255 F.R.D. 164 (W.D.
Pa. 2009), inapposite. [*7] Unlike the party seeking to
withdraw its admissions in Pritchard, defendants in this
case have not filed a motion to withdraw their
admissions. Accordingly, the matters covered in Coach's
requests for admissions are admitted.
B. Defendants' Objection
Coach also points out, in its reply to defendants'
objection to summary judgment, that defendants have not
properly opposed the statement of undisputed material
facts set out in the memorandum of law in support of its
summary judgment motion. Coach's point is well taken.
The Local Rules of this court require a party moving
for summary judgment to submit a memorandum that
"incorporate[s] a short and concise statement of material
facts, supported by appropriate record citations, as to
which the moving party contends there is no genuine
issue to be tried." LR 7.2(b)(1). Coach's memorandum
incorporates such a statement. The Local Rules also
provide:
A memorandum in opposition to a
summary
judgment
motion
shall
incorporate a short and concise statement
of material facts, supported by appropriate
record citations, as to which the adverse
party contends a genuine dispute exists so
as to require a trial. All properly supported
material facts set forth [*8] in the moving
party's factual statement shall be deemed
admitted unless properly opposed by the
adverse party.
LR 7.2(b)(2). Defendants' objection does not incorporate
the statement required by LR 7.2(b)(2). Accordingly, all
the properly supported material facts in Coach's factual
statement are deemed admitted. See Zimmerman v.
Puccio, 613 F.3d 60, 63 (1st Cir. 2010) (reiterating the
importance of rules such as LR 7.2(b)(2) and stating the
First Circuit's policy of treating trial courts' decisions to
apply those rules with deference) (citing Carreras v. Sajo,
García & Partners, 596 F.3d 25, 31 (1st Cir. 2010)).
The court further notes that defendants have
produced three items of evidence in support of their
objection to Coach's summary judgment motion: (1) the
January 8 version of Taylor's answer to Coach's requests

for admissions; (2) Taylor's deposition; and (3) Taylor's
affidavit. In that defendants rely on Taylor's answer to the
requests for admissions primarily for its "important
denials," rather than for any affirmative evidence
contained therein, the contribution of that answer to the
summary judgment record seems marginal, at best. See
Sensing v. Outback Steakhouse of Fla., LLC, 575 F.3d
145, 152 (1st Cir. 2009) [*9] ("At this stage, the
nonmoving party may not rest upon mere allegation or
denials . . . but must set forth specific facts showing that
there is a genuine issue of material fact . . . .") (quoting
DeNovellis v. Shalala, 124 F.3d 298, 306 (1st Cir.
1997)).
As for Taylor's affidavit and deposition testimony,
that evidence is properly a part of the summary judgment
record but, to the extent there is any conflict between
facts stated in the affidavit and deposition and facts stated
in Coach's requests for admissions, the facts stated in the
requests for admissions control. That is because
"[m]atters admitted in accordance with Rule 36, whether
explicitly admitted or admitted by default, are
conclusively established." James Wm. Moore, 7 Moore's
Federal Practice § 36.03[2], at 36-14. Moreover, "[a]ny
admission that is not amended or withdrawn cannot be
rebutted by contrary testimony or ignored by the court
even if the party against whom it is directed offers more
credible evidence." Id. at 36-15.
C. The Relevant Facts
As a result of defendants' failure to serve Coach with
a timely response to its requests for admissions, and their
failure to properly oppose the factual statement in
Coach's memorandum [*10] of law, the following
description of the factual background is drawn largely
from Coach's properly supported statement of undisputed
facts.
Coach manufactures and sells high-end purses,
handbags, and other similar items. It also holds an
extensive portfolio of intellectual property including
trademarks, trade dress, and copyrights.
Gata operates a flea market in Derry, New
Hampshire ("Flea Market) known variously as the
Grandview Flea Market and as the Derry Flea Market.
Taylor is Gata's sole owner and shareholder. He also
works regularly at the Flea Market.
In 2005, vendors selling counterfeit2 purses,

Page 4
2011 U.S. Dist. LEXIS 45045, *10

handbags, and related goods3 first began renting spaces at
the Flea Market. The Flea Market requires purse vendors
to pay a rental fee for booth space that is higher than the
fee paid by vendors who do not sell purses. As early as
2005, defendants knew that vendors at the Flea Market
were selling counterfeit Coach merchandise. Counterfeit
Coach purses are distinguishable from authentic ones on
the basis of both workmanship and price, with authentic
Coach purses selling for $300, on average, and
counterfeits selling at the Flea Market for less than $20.
Since 2005, the percentage of vendors [*11] selling
counterfeit purses at the Flea Market has increased to the
point where most of the vendors who rent spaces there
sell counterfeit purses, including counterfeit Coach
purses.
2 For convenience, the court will use the word
"counterfeit" to refer to both counterfeit goods, as
defined by the Lanham Act, and to all other kinds
of infringing goods.
3 For convenience, the court will use the word
"purses" interchangeably with "merchandise" to
refer to the full range of counterfeit items at issue
in this case.
The Flea Market has been raided by federal and state
law-enforcement officers on at least four occasions,
starting in June of 2009.4 Those raids resulted in the
seizure of, among other things, thousands of counterfeit
Coach purses. Those raids also resulted in the arrest and
prosecution of several vendors for selling, among other
things, counterfeit Coach merchandise. In addition,
surveys conducted by Powers & Associates (a private
detective agency), the federal Bureau of Immigration and
Customs Enforcement, and the Derry Police have
enumerated dozens of vendors offering, collectively,
thousands of counterfeit items for sale at the Flea Market
in early 2008, May of 2008, the end of [*12] 2008, June
of 2009, and October of 2009.
4 Subsequent raids took place in October and
December of 2009, and January of 2010.
By letter dated August 4, 2009, Coach's manager of
intellectual property informed Taylor of Coach's concern
over the sale of counterfeit Coach purses at the Flea
Market and directed Taylor to take various steps to curtail
those sales. At some point after the initial raid,
defendants posted a sign stating that no Coach
merchandise could be sold at the Flea Market, and they
had Flea Market employees conduct occasional

walk-throughs, to determine whether vendors were
selling counterfeit merchandise. Defendants took no other
steps to prevent infringing activity. After the initial raid
in June of 2009, surveys continued to show that vendors
were offering counterfeit Coach merchandise for sale.
On March 20, 2010, Andrea Powers of Powers &
Associates visited the Flea Market at Coach's request.
She saw several vendors offering counterfeit Coach
merchandise for sale, in plain view. Powers was able to
purchase counterfeit Coach merchandise from four
vendors, each of whom concealed their counterfeit
merchandise in their booths, and took care to wrap
Powers' purchases and place [*13] them inside her tote
bag, out of view. On one visit to the Flea Market, while
Powers was waiting to speak with a vendor about
purchasing a counterfeit Coach purse, she overheard an
employee of the Flea Market tell a vendor with
counterfeit merchandise on display that such goods had to
be kept under the table rather than out in the open.
This suit arises from Coach's allegations that
numerous vendors at the Flea Market have sold goods
that infringe on and/or tarnish their trademarks, trade
dress, and/or copyrights. In Count I of its complaint, the
only claim at issue here, Coach asserts that Gata and
Taylor are liable for contributory trademark infringement
because with actual knowledge of or willful blindness to
the infringing conduct of Flea Market vendors, they have
permitted those vendors to sell items that infringe
Coach's trademarks.
Discussion
Coach moves for summary judgment on Count I,
arguing that on the undisputed facts, it is entitled to
judgment as a matter of law that defendants are liable for
contributory trademark infringement. Without properly
identifying any factual disputes that would preclude
summary judgment, defendants argue that: (1) summary
judgment is rarely granted [*14] in willful blindness
cases; (2) the standard for establishing willful blindness is
exacting; and (3) the evidence does not support summary
judgment. Defendants' third argument is based, in large
measure, on a page-long list of "important denials"
contained in its untimely answer to Coach's requests for
admissions and testimony in Taylor's affidavit and
deposition that the court cannot consider because it
conflicts with matters that have been conclusively
established by means of defendants' admissions.

Page 5
2011 U.S. Dist. LEXIS 45045, *14

The Lanham Act identifies several forms of conduct
that constitute actionable trademark infringement. See 15
U.S.C. §§ 1114(1)(a) & 1125(a). Liability under the
Lanham Act may be imposed not just on direct infringers,
but also on those who induce or facilitate the infringing
conduct of others. See Inwood Labs., Inc. v. Ives Labs.,
Inc., 456 U.S. 844, 853-54, 102 S. Ct. 2182, 72 L. Ed. 2d
606 (1982)). In a case that involved claims that a generic
drug manufacturer was liable for contributory trademark
infringement, the United States Supreme Court
explained:
[I]f a manufacturer or distributor
intentionally induces another to infringe a
trademark, or if it continues to supply its
product to one whom it knows or has
reason to know [*15] is engaging in
trademark infringement, the manufacturer
or
distributor
is
contributorially
responsible for any harm done as a result
of the deceit.
Id. at 854 (citing William R. Warner & Co. v. Eli Lilly &
Co., 265 U.S. 526, 44 S. Ct. 615, 68 L. Ed. 1161, 1925
Dec. Comm'r Pat. 420 (1924); Coca-Cola Co. v. Snow
Crest Bevs., Inc., 64 F. Supp. 980 (D. Mass. 1946)). The
doctrine of contributory trademark infringement has been
extended from the factual context in which it first arose
into settings substantially analogous to the one presented
here.
In a case involving a claim of contributory trademark
infringement brought against the operator of a flea market
that included vendors selling infringing goods, the
Seventh Circuit held "that the Inwood Labs. test for
contributory liability applie[d]" and that the flea-market
operator could "be liable for trademark violations by [a
vendor] if it knew or had reason to know of them." Hard
Rock Cafe Licensing Corp. v. Concession Servs., Inc.,
955 F.2d 1143, 1149 (7th Cir. 1992). The court went on
to hold that the knowledge requirement could be met by a
demonstration of willful blindness, id. (citation omitted),
which it defined as follows: "To be willfully blind, a
person must suspect wrongdoing and deliberately [*16]
fail to investigate." Id. (citation omitted). The court
further explained that "the 'reason to know' part of the
standard for contributory liability requires [the defendant]
to understand what a reasonably prudent person would
understand." Id. Ultimately, the court of appeals vacated
the trial court's decision in favor of the trademark owner,

after a bench trial, because the trial court used a standard
for knowledge that was more akin to negligence than
willful blindness. Id.
In another flea-market case, the Ninth Circuit
reversed the trial court's dismissal of a claim for
contributory trademark infringement against a swap meet,
explaining that "Hard Rock Cafe's application of the
Inwood test is sound; a swap meet can not disregard its
vendors blatant trademark infringements with impunity."
Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 265
(9th Cir. 1996).
In Tiffany (NJ) Inc. v. eBay Inc., a case in which the
defendant was the operator of an on-line marketplace, the
Second Circuit restated the Inwood test to make it more
applicable to an accused contributory infringer that
provides services rather than goods:
[W]hen applying Inwood to service
providers, there are two ways in which
[*17] a defendant may become
contributorially liable for the infringing
conduct of another: first, if the service
provider "intentionally induces another to
infringe a trademark," and second, if the
service provider "continues to supply its
[service] to one whom it knows or has
reason to know is engaging in trademark
infringement."
600 F.3d 93, 106 (2d Cir. 2010) (quoting Inwood, 456
U.S. at 854). In the district court order holding the
defendant not to be liable for contributory infringement
that was affirmed in Tiffany, the trial judge explained:
"Willful blindness requires 'more than mere negligence or
mistake' and does not lie unless the defendant knew of a
high probability of illegal conduct and purposefully
contrived to avoid learning of it, for example, by failing
to inquire further out of fear of the result of the inquiry."
Tiffany (NJ) Inc. v. eBay, Inc., 576 F. Supp. 2d 463, 515
(S.D.N.Y. 2008) (quoting Nike Inc. v. Variety
Wholesalers, Inc., 274 F. Supp. 2d 1352, 1369-70 (S.D.
Ga. 2003)).
Based on their objection to Coach's motion for
summary judgment, defendants appear to concede the
underlying acts of direct trademark infringement by Flea
Market vendors, in violation of 15 U.S.C. §§ 1114(1)(a)
[*18] and 1125(a), on which Count I is based. Their

Page 6
2011 U.S. Dist. LEXIS 45045, *18

objection to summary judgment rests on one factual
argument and one legal argument. Factually, they argue
that Coach has not met its burden of producing evidence
that they possessed the requisite level of specific
knowledge of infringing activity to be held liable for
contributory infringement. Legally, they argue that Coach
overstates the amount of affirmative action they were
required to take to police Coach's trademarks. The court
considers each argument in turn.
Defendants' factual argument is based on the
opinions in Tiffany, and in particular, the holding that
"[f]or contributory trademark infringement liability to lie,
a service provider must have more than a general
knowledge or reason to know that its service is being
used to sell counterfeit goods." 600 F.3d at 107.
According to defendants, Coach has failed to produce
evidence that they had anything more than general
knowledge of infringing activities at the Flea Market. The
court does not agree.
As a preliminary matter, the court notes that Tiffany,
and the two cases on which it relies in its discussion of
general knowledge, Inwood and Sony Corp. of America
v. Universal City Studios, Inc., 464 U.S. 417, 104 S. Ct.
774, 78 L. Ed. 2d 574 (1984), [*19] involved situations
where the infringing activity and the alleged contributory
infringer were physically remote from one another. In
Tiffany, the infringers were sellers using the defendant's
online marketplace. 600 F.3d at 96. In Inwood, the
infringers were pharmacists who dispensed a generic
drug manufactured by the defendant. 456 U.S. at 846. In
Sony, the infringers were people who used devices
manufactured by the defendant to record television
programs in their homes. 464 U.S. at 419. Here, by
contrast, the infringers are vendors who bring their
merchandise to a venue operated and patrolled by
defendants on a daily basis. The issue of proximity, in
turn, is related to the issue of control, which is a key
component of the analysis:
[T]he Ninth Circuit concluded that
Inwood's test for contributory trademark
infringement applies to a service provider
if he or she exercises sufficient control
over the infringing conduct. Lockheed
Martin Corp. v. Network Solutions, Inc.,
194 F.3d 980, 984 (9th Cir. 1999); see also
id. ("Direct control and monitoring of the
instrumentality used by a third party to

infringe the plaintiff's mark permits the
expansion of Inwood Lab.'s 'supplies a
product'
[*20]
requirement
for
contributory infringement.").
Tiffany, 600 F.3d at 104-05. Suffice it say that the
operator of a flea market that rents spaces to vendors
exercises substantially more control over potential
infringers than the defendants in Tiffany, Inwood, and
Sony exercised over the infringers in those case.
Given the circumstances of this case, Coach has met
its burden of producing undisputed evidence of
defendants' knowledge of the underlying infringement. It
is conclusively established that: (1) "Defendants knew
that Counterfeit Merchandise, including the Coach
Counterfeit Merchandise, had been offered for sale and
sold by vendors to customers at the . . . Flea Market prior
to June of 2009 and as early as 2005," Pl.'s Reqs. for
Admiss. #16; (2) "After the first raid of the . . . Flea
Market by federal and local law enforcement officials in
June 2009, . . . Defendants knew that Counterfeit
Merchandise, including the Coach Counterfeit
Merchandise, continued to be offered for sale and sold by
vendors to customers at the . . . Flea Market," id. #23; (3)
"In 2010, Defendants knew and continue to know that
Counterfeit Merchandise, including the Coach
Counterfeit Merchandise, has been offered [*21] for sale
and sold by vendors to customers at the . . . Flea Market,"
id. #32; and (4) "Prior to the 2009 and 2010 raids on the .
. . Flea Market by federal and local law enforcement
officials, the Counterfeit Merchandise offered for sale at
the Flea Market, including the Counterfeit Coach
Merchandise, was openly displayed for sale by vendors at
the . . . Flea Market," id. #36.
While it might be argued that the admissions quoted
above demonstrate only general knowledge of
infringement, rather than specific knowledge, it is
important to bear in mind that a flea-market operator with
general knowledge of infringing activity by vendors is
hardly analogous to a web site operator, a drug
manufacturer, or a manufacturer of home electronics with
general knowledge of infringing activity by online
vendors, pharmacists, or television viewers. Unlike the
other three, who would have to conduct complicated
investigations to confirm and specify their general
knowledge, all Taylor had to do was step out of his ticket
booth and take a walk around the Flea Market. Moreover,
it is conclusively established that counterfeit goods were

Page 7
2011 U.S. Dist. LEXIS 45045, *21

openly displayed at the Flea Market. And, it is undisputed
that a reasonable [*22] person could have easily
identified the counterfeit goods offered for sale at the
Flea Market based on their dramatically low prices.5
Finally, once law-enforcement agencies began raiding the
Flea Market, arresting vendors, and seizing counterfeit
merchandize, a lack of specific knowledge on defendants'
part could only have resulted from willful blindness;
those raids provided defendants with a veritable roadmap
to infringing vendors and merchandise. Similarly, the fact
that defendants did not train the employees conducting
occasional walk-throughs to search for counterfeit
merchandise counts as a deliberate failure to investigate
suspected infringing activity, see Hard Rock Cafe, 955
F.2d at 1149, or a purposeful contrivance to avoid
learning of infringing activity, see Tiffany, 576 F. Supp.
2d at 515, sufficient to establish willful blindness. In
sum, the court has no difficulty concluding that Coach
has produced undisputed evidence that defendants rented
spaces at the Flea Market to vendors it knew, or should
have known, were engaging in infringing activity.
5 As Hard Rock Cafe makes clear, the "reason to
know" standard is based on what a reasonably
prudent person would understand, [*23] see 955
F.2d at 1149, not what would be understood by a
person as uninformed as Taylor makes himself
out to be in his affidavit, see Defs.' Obj. Ex. A
(doc. no. 38-1) ¶¶ 2-5. In any event, because the
affidavit in which Taylor asserts an ignorance of
handbags that precluded him from identifying
counterfeits contradicts evidence of his
knowledge of the presence of counterfeit bags at
the Flea Market that has been conclusively
admitted, his affidavit must be disregarded. See
Moore, supra, § 36.03[2], at 36-15 ("[A]ny matter
conclusively established is treated as a judicial
admission, not an evidentiary admission. Thus,
both the court and the parties are bound by
admissions.").
Defendants' principal argument is the one addressed
above, i.e., that Coach has failed to produce undisputed
evidence that they knew about, or should have known
about, the infringing activity of vendors at the Flea
Market. Defendants also appear to raise - but not fully
develop - a second argument related to the degree to
which they were legally obligated to monitor and control
the activities of their vendors. In defendants' view, the
various steps they took to clamp down on infringing

activity after the 2009 raid [*24] were sufficient under
the law. In so arguing, defendants rely on Tiffany for the
proposition that the law did not require them to further
police Coach's trademarks. In terms of the elements of
Coach's cause of action, the obligation of a person in
defendants' position to prevent infringement by another
would appear to derive from the rule that one who has
knowledge of the infringing acts of another is liable for
that other person's infringement when he or she
"continues to supply [a] [service] to [the infringer]."
Tiffany, 600 F.3d at 106.
In Tiffany, there were two categories of underlying
infringers: (1) those that eBay knew to be selling
counterfeit goods; and (2) those that Tiffany said eBay
should have known to be selling counterfeit goods. The
former are the proper analog to the infringers in this case,
given the court's disposition of defendants' claim that
they lacked sufficient knowledge of the infringing acts of
the Flea Market's purse vendors. With respect to them, as
soon as "eBay [had] reason to know that particular
listings were for counterfeit goods, eBay did not continue
to carry those listings once it learned that they were
specious." 600 F.3d at 106. Moreover:
The [trial] [*25] court found that eBay's
practice was promptly to remove the
challenged listing from its website, warn
sellers and buyers, cancel fees it earned
from that listing, and direct buyers not to
consummate the sale of the disputed item.
The court therefore declined to hold eBay
contributorially liable for the infringing
conduct of those sellers.
Id. (citations to the district court order omitted). The
plaintiff in Tiffany did not challenge that ruling, and the
court of appeals agreed with the trial court. Id.
Here, defendants' handling of the vendors it knew or
should have known to be infringing Coach's trademarks
falls far short of the standard the Tiffany Court held to be
sufficient to avoid liability for contributory infringement.
It has been conclusively established that after the first
raid on the Flea Market, defendants took only two steps
to prevent the sale of counterfeit Coach merchandise:
posting a sign stating that no Coach merchandise could
be sold at the Flea Market and conducting occasional
walk-throughs to see if any counterfeit Coach
merchandise was being sold. It has also been

Page 8
2011 U.S. Dist. LEXIS 45045, *25

conclusively established that: (1) defendants do not
inspect vendors' merchandise before allowing [*26] them
to set up; (2) the walk-throughs that defendants perform
are not conducted on a regular basis and are not designed
to prevent the sale of counterfeit merchandise; and (3) the
employees conducting those walk-throughs are not
trained in how to detect counterfeit merchandise or sales
thereof. Unlike eBay, which disallowed infringers from
using its service, defendants have never asked a vendor to
leave the Flea Market for selling counterfeit Coach items.
This is so, notwithstanding Taylor's testimony that after
the first raid, the Flea Market instituted a policy of
evicting vendors for selling counterfeit goods, and the
undisputed fact that two of the Flea Market's employees
have caught vendors in the act of selling counterfeit
name-brand merchandise on at least twenty-five
occasions. Finally, it is undisputed that on at least one
occasion, a Flea Market employee counseled a vendor on
how to hide the counterfeit merchandise in his or her
booth. Teaching a vendor how to conceal infringing
merchandise drifts perilously close to, and may well
cross, the line between allowing known infringers to use
its service and actually inducing infringement.

Flea Market to vendors it knew to be engaging in
trademark infringement and/or vendors it had reason to
know were engaging in trademark infringement, Coach is
entitled to judgment as a matter of law on Count I.
Motion to Strike
The court has already alluded to Coach's motion to
strike the January 8 version of defendants' answer to the
requests for admissions. Because the court must disregard
that document, for reasons explained above, Coach's
motion to strike is effectively moot, but for Coach's
request to have defendants' counsel pay the attorneys'
fees and costs it incurred in filing the motion. Because
Coach has not identified the authority under which the
court should, or could, grant its request for attorneys'
fees, that request is denied.
Conclusion
For the reasons given, Coach's motion for summary
judgment on Count I, doc. no. 31, is granted, and its
[*28] motion to strike, doc. no. 40, denied.
SO ORDERED.

The bottom line is this. Like the defendant [*27] in
Tiffany, defendants in this case knew that vendors were
using the service they provided to conduct infringing
activities. The defendant in Tiffany barred those known
infringers from using its service. Gata and Taylor did not.
Because the undisputed factual record demonstrates
that defendants continued to supply the services of the

/s/ Landya McCafferty
Landya McCafferty
United States Magistrate Judge
April 26, 2011