Louis Vuitton unsuccessful in action against market owner

The Federal Court of Australia has dismissed a trademark infringement action filed by Louis Vuitton Malletier SA against the operator of a market where Louis Vuitton had discovered counterfeit goods. The decision is in contrast to a number of recent rulings from Asia and the United States in which landlords have been found liable for the acts of trademark infringement committed by their tenants (see, for example, Chinese courts continue attack on landlords and Louis Vuitton injunction: landlords liable in counterfeiting war).

Toea Pty Ltd operates Carrara Market and licenses stalls to its stallholders. The market is managed by Mr Rosenlund. Louis Vuitton engaged the services of a private investigator to monitor the sale of goods at the market and its case was primarily based on trap purchases made from three stallholders.

Louis Vuitton brought the infringing activities of at least three stallholders to the attention of Rosenlund. On each occasion, Rosenlund (or a member of his staff) visited the offending stallholder and informed them that they had been caught selling infringing products, served them with warning notices from Louis Vuitton, and a memorandum from Toea advising that the sale of counterfeit products was not permitted at the market and, in some cases, that it could result in the stallholder's exclusion from the market. The three offending stallholders all informed Rosenlund that they would no longer sell counterfeit Louis Vuitton goods. Despite this, the stallholders continued to discreetly sell counterfeit products.

Louis Vuitton commenced an action for trademark infringement against Toea and Rosenlund (jointly, the respondents) on the basis that the respondents were land owners and knew of the licensees infringing conduct, and because they took no effective action to stop that conduct, the respondents as land owner joined in the tort and, therefore, became independently liable for the infringement as a joint tortfeasor.

The Australian Trademarks Act 1995 does not contain any provision creating a civil liability for aiding and abetting a trademark infringement (the act only contains criminal offences for such actions) and, therefore, Louis Vuitton was forced to argue the case under tort law.

The court stated that in order for the respondents to be liable for the stallholders' infringements "there must be a concurrence in the act or acts causing damage, not merely a coincidence of separate acts which by their conjoined effect cause damage" and, therefore, in the present case, Louis Vuitton would need to demonstrate that the "respondents acted in concert with each stallholder in committing the tort".

The court rejected Louis Vuitton's assertion that the respondents did not do enough, or could have done more to deter the infringements. Instead, it stated that "it would have been virtually impossible for the respondents to control stallholders so as to prevent infringement", as the conduct of the stallholders would not have led to the conclusion that there would have been further infringements, especially since the stallholders had indicated that they would cease selling counterfeit goods. Therefore, the respondents had not encouraged the stallholders' infringements, as they had actively attempted to stop the sale of the infringing goods.

It was also held that the respondents had not acted in common with any of the stallholders in the infringing actions. The court stated that the respondents' control of the market did not imply a common purpose with the offending stallholders. Instead, they had different purposes, as the "respondents purpose was to conduct an efficient and profitable market", whereas, the stallholders' was to "conduct his or her own stall" successfully. Louis Vuitton therefore failed in its attempt to hold the respondents liable for trademark infringement as joint tortfeasors.

The case indicates that trademark owners have a significant barrier to overcome in seeking to hold market owners responsible for the sale of counterfeit goods in markets in Australia.

Lisa Ritson and Melissa Preston, Blake Dawson Waldron, Sydney