Eisenhauer Road Flea Market is a large indoor flea market in San Antonio, Texas. Some of the tenants of booths there sold fake Louis Vuitton products.
Louis Vuitton notified the owner/landlords of the flea market and asked them to stop renting to people who sold such knock offs. The landlords said that it was not their responsibility to do Louis Vuitton's work of policing the use of their brands.
Louis Vuitton sued the landlords alleging that the landlords engaged in contributory infringement. A jury agreed after the judge gave a jury instruction that a landlord/tenant relationship could lead to contributory infringement.
The jury returned a verdict for $3.6 million dollars and the court issued a far reaching injunction. The injunction provided that the defendants were prohibited from (i) engaging in further acts of contributory infringement; (ii) leasing to tenants who the landlords knew, had reason to know or have been presented with credible evidence about their dealing in counterfeit Louis Vuitton items; (iii) manufacturing or dealing in counterfeit Louis Vuitton products; or (iv) engaging in conduct that contributes, directly or indirectly to counterfeiting by a tenant.
In addition, the defendants are required to : (i) periodically inspect the booths for evidence of counterfeiting; (ii) promptly terminate the lease of anyone they find engaging in counterfeiting or if they are presented with credible evidence of such counterfeiting; (iii) include a provision in their leases prohibiting such counterfeiting; (iv) put warning signs at all entrances indicating that counterfeit material can not be sold on the premises; and (v) allow representatives of the plaintiffs to make periodic inspections for counterfeit material.
We have not yet had the opportunity to review the transcript of the case, but this seems to indicate either a case of run away jury or of egregious behavior by the defendants that does not appear in the order. This is a case of first impression in Texas and should give all landlords reason to reassess their situations.
It is also not a large step to find internet service providers, web designers and operators or others involved, directly or indirectly, in the on-line sale of counterfeit merchandise to be in the same situation. We had reported on one before but if this decision stands, it is likely that we will see more cases of this sort, at least in the Western District of Texas.