April 26, 2012
If anyone who has purchased a Coach product ever wondered why they are so pricey, this case may explain at least part of the reason for it.
On April 15 of 2011, Coach, Inc. sued Wagon Wheel Flea Market, Inc. for trademark and copyright infringement.
Last month, a flurry of motions and memorandums were filed by both parties seeking summary judgment in their respective favors.
Wagon Wheel operates a flea market that runs on the weekends.
It’s a pretty sizeable one at that, with over 1,000 vendors operating on any given Saturday or Sunday.
Wagon Wheel only provides the space to the vendors, who operate independently from Wagon Wheel in all other respects.
Apparently, on several different occasions over a several year period, one of Coach’s investigators observed a few different vendors selling allegedly counterfeit Coach products at Wagon Wheel’s flea market.
In addition to Wagon Wheel and its owner, Coach also named several of the vendors as defendants in its lawsuit.
Of course, suing the sellers of the counterfeits themselves doesn’t make too much of a dent in the counterfeit trade, since, even if the suit is enough to deter these sellers from selling again in the future, there are always more sellers willing to take their place.
Moreover, those sellers likely have very little money to pay a civil judgment.
Thus, Coach goes after the venue in which the counterfeits are sold – the flea market itself.
This suit by itself probably doesn’t contribute much to the price of Coach products, but something I came across when reviewing the documents in this case almost certainly does.
That “something” is several other cases cited by Coach in their arguments – of Coach suing other flea markets for trademark and copyright infringement.
There are two cases in Wagon Wheel’s responsive motion and memo (the document featured on Thomson Reuters News & Insight): Coach, Inc. v. Gata Corp and Coach, Inc. v. The Southwest Flea Market a/k/a 3rd Street Flea Market, both of which were decided in the past year.
I can’t really fault Coach for vigorously protecting its trademark, since its entire business model is based on maintaining its high value, but Coach seems to be a little overvigorous in this case.
This conjecture is admittedly only based on the parties’ pleadings on summary judgment, but, the facts here seem to be noticeably different than the two cases cited above.
Here, Wagon Wheel didn’t have any direct financial benefit from the counterfeiters’ sales, and it seems, at least according to the facts, that Wagon Wheel didn’t know about these sales outside of two unrelated incidents separated by two years.
In the other cases, the flea markets seemed to either derive actual economic value from the sales of the counterfeit products (i.e. receive a portion of the sale), or the markets knew about the sales and tolerated them because they were a draw for the flea market itself.
That doesn’t seem to be the case here, and Coach’s dogged aggressiveness is a bit unsettling, since it is reminiscent of the aggressiveness of the intellectual property owners behind the Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA).
Specifically, the drive to enforce IP rights leads to the push for strict controls over large fora such as flea markets or the Internet – so strict that these controls unreasonably suppress economic and expressive freedoms of the public at large.
As I mentioned earlier, since their entire business models almost completely rest on them, IP owners can’t really be faulted for aggressively enforcing their property rights, even to unreasonable degrees.
It’s up to everyone else – including judges and legislators – to take these demands for stricter enforcement with a grain of salt.