Court upholds $5M trademark infringement ruling in fake handbag sales

An appeals court has upheld a $5 million trademark infringement judgment against a flea market operator whose vendors sold counterfeit luxury goods.

Friday's ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Coach Inc. and Coach Services Inc. v. Frederick Goodfellow et al. said Mr. Goodfellow's Memphis, Tenn., flea market continued to sell counterfeit versions of the luxury brand of handbags and other leather goods, despite warning letters from the New York-based firm and the local district attorney.

Three raids were conducted at the flea market. At the third raid, more than 4,600 counterfeit Coach products were seized and the flea market was shut down permanently, according to the ruling.

Coach sued Mr. Goodfellow and the flea market, alleging trademark infringement in violation of the Lanham Act. A Memphis, Tenn., federal jury awarded Coach $5 million after a 2012 trial, and the court granted Coach's motion for an additional $187,000 in attorney fees.

Mr. Goodfellow appealed both awards.

A three-judge panel said although Mr. Goodfellow did not have a partnership relationship with the sellers, whom he charged $15 a day for booth rentals, he was subject to “contributory liability” and “knew or had reason to know” about the sellers' trademark infringement.

Although Mr. Goodfellow maintained he had taken remedial measures to address the issue, throughout a sustained period of time he “failed to deny access to offending vendors or take other reasonable measures to prevent use of flea market resources for unlawful purposes, and failed even to undertake a reasonable investigation,” the three-judge panel said in its decision unanimously affirming the lower court's ruling and $5 million judgment.