Coach, Inc. v. Gata Corp., 98 USPQ2d 1911 (D.N.H. 2011)

'This article previously appeared in Incontestable Trademark Newsletter - June/July 2011'

ABSTRACT

The District of New Hampshire denied defendant flea-market operators' motion to dismiss plaintiff's contributory-trademark-dilution claim arising out of defendants' operation of a flea market in which counterfeit merchandise was sold by third-party vendors, finding that contributory trademark dilution is a valid cause of action. The court held that although the contributory-dilution cause of action is not well established, the limited jurisprudence on the subject makes clear that such a cause of action exists.

CASE SUMMARY

FACTS

Plaintiff Coach, Inc. ("Coach") manufactures and sells high-end purses, handbags, and other luxury goods. Coach brought suit against defendant Gata Corp. and its owner Martin Taylor (collectively "Gata") based on Gata's operation of a flea market in Derry, New Hampshire, where counterfeit Coach merchandise was allegedly sold by third-party vendors. Coach brought a number of claims against Gata, including contributory trademark infringement, contributory trademark dilution/tarnishment, and contributory and vicarious copyright infringement. Gata filed a motion to dismiss Coach's vicarious copyright infringement and contributory-trademark-dilution claims. With respect to the contributory-dilution claim, Gata based its motion to dismiss on the premise that such a cause of action does not exist.

ANALYSIS

To determine whether Coach had stated a valid claim for contributory trademark dilution, the court considered the opinion of a leading commentator and analyzed relevant decisions by other courts. The court first noted that Professor McCarthy approved the concept of contributory-dilution claims in his prominent trademark treatise. The court then analyzed three cases from other courts that had addressed the validity of contributory-dilution claims: Kegan v. Apple Computer, Inc., 72 USPQ2d 1053 (N.D. Ill. 1996); Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980 (9th Cir. 1999); and Tiffany (NJ), Inc. v. eBay, Inc., 576 F. Supp. 2d 463 (S.D.N.Y. 2008).

In Kegan, the plaintiff sued Apple for various trademark and unfair-competition claims arising out of use by Apple and third-party software developers of various GUIDE-formative marks for computer software. The court denied—without discussion—Apple's motion for summary judgment on Kegan's contributory-dilution claim because "genuine issues of material fact exist as...