Trademark law. When landlords pay
| Author | Stephanie Zimmermann |
| Pages | 18-19 |
18
ABA JOURNAL | WINTER 2019-2020
It was a gorgeous spring day in
May 2012 when a woman walked
into a souvenir shop on Canal
Street in New York City looking
for a bargain price on an Omega watch.
Omega watches can cost $20,000 or
more, but the clerk in the shop at 375
Canal St. ducked into a hidden storage
room and brought out something much
cheaper: a pair of watches, smartly
appointed with the iconic brand’s marks
but priced far lower.
The woman paid $80 for one. The
clerk handed her the watch in a zip-
close bag.
Unbeknownst to the seller, though,
the shopper wasn’t a typical Canal
Street consumer giddy about getting
what looked like a brand-name watch
at a steep discount.
She was working for an investiga-
tive rm hired by Omega and Swatch,
which had been battling counterfeit
sales for years.
And now, the world-renowned
watchmaker would set its sights not
on the counterfeit manufacturer or
the illegal seller: It would focus on the
building’s owner.
At trial, attorneys for the watch
company in the case Omega v. 375
Canal Street in U.S. District Court for
the Southern District of New York
would offer plenty of evidence that the
landlord knew about illegal activity in
the building.
In previous years, the property had
been raided multiple times by police for
counterfeit activity, and the landlord
had been sued by New York City and
by Louis Vuitton, which alleged fake
handbags were being sold. To settle the
Louis Vuitton complaint, the landlord
had agreed to hire a private investigator
to monitor its property—but stopped
when the agreement ended.
Omega also had notied the landlord
about the activity by letter.
It took an expensive seven years
for the case to come to trial, attorney
Robert J. Gunther Jr. of WilmerHale,
representing Omega, told jurors in his
closing argument. “But Omega and the
Swatch Group decided not to settle this
case. They decided to invest the time
and give us the resources to take this
case to trial in the hope of breaking
the endless cycle of counterfeiting” and
“send a broader message.”
In March, the jury found in favor of
Omega, saying the building owner had
contributed to the trademark infringe-
ment with its “willful blindness” to the
activity. Attorney Avi Schick of Trout-
man Sanders, representing 375 Canal,
had argued at trial that the Omega
investigation was sloppy and that the
building owner “had a soft spot” for
small merchants, and that in any case,
the landlord did not exhibit “willful
disregard” toward Omega’s trademark.
The jury awarded Omega $1.1 million.
The landlord’s attorneys, with Trout-
man Sanders, led an appeal in Septem-
ber, arguing that Omega hadn’t proven
the landlord knew that this specic
vendor was selling counterfeit Omega
watches—and further arguing that the
damages were wrongly inated. But if
the verdict stands, the case will be part
of a growing body of law showing that
commercial landlords can be held liable
for the illegal actions of their tenants.
“The decision is absolutely correct,
and the law has been moving in this
fashion for quite a while,” says James
L. Bikoff, a partner in the intellectual
property practice of Smith, Gambrell &
Russell in Washington, D.C.
“Landlords can’t just look the other
way,” Bikoff says. “They have to take
action, and if they don’t take action,
they can be held liable.”
Counterfeits are big business,
estimated at $509 billion worldwide
in 2016. Increasingly since the 1990s,
brands are nding a strategy in going
after commercial landlords, who often
have deeper pockets than the sellers.
Property law expert Richard Epstein
says the Omega decision “is not a hard
case” given the building’s history of po-
lice raids and interactions with brands
that were harmed.
TRADEMARK LAW
When
Landlords
Pay
Commercial landlords are
increasingly found liable
for actions of rogue tenants
who sell counterfeit goods
BY STEPHANIE ZIMMERMANN
Photo illustration by Tahiti Spears/pexels.com
National Pulse | TRADEMARK
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