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Luxottica Group, S.P.A. v. Airport Mini Mall, LLC

United States Court of Appeals, Eleventh Circuit

August 7, 2019

LUXOTTICA GROUP, S.p.A., an Italian corporation, OAKLEY, INC., a Washington corporation, Plaintiffs-Appellees Cross Appellants,
v.
AIRPORT MINI MALL, LLC, a Georgia limited liability company, d.b.a. Old National Discount Mall, YES ASSETS, LLC, a Georgia limited liability company, CHIENJUNG YEH, a.k.a. Jerome C. Yeh, DONALD C. YEH, individually, JENNY YEH, ALICE JAMISON, Defendants - Appellants Cross Appellees.

          Appeals from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:15-cv-01422-AT

          Before WILSON, JILL PRYOR and TALLMAN, [*] Circuit Judges.

          JILL PRYOR, CIRCUIT JUDGE

         Luxury eyewear manufacturers holding registered trademarks brought a contributory trademark infringement action under the Lanham Act against owners of a discount mall whose subtenants were selling counterfeit eyewear. At trial, the jury returned a verdict in the plaintiffs' favor. After careful review and with the benefit of oral argument, we conclude that none of the issues the defendants raise on appeal demonstrates reversible error, so we affirm the jury's verdict.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Plaintiffs Luxottica Group, S.p.A. and its subsidiary Oakley, Inc. (collectively and individually "Luxottica") manufacture and sell luxury eyewear and own registered trademarks for the Ray-Ban and Oakley brands. Defendants Jerome and Jenny Yeh own defendant Yes Assets, LLC. In 2004, Yes Assets purchased the Old National Village Shopping Center in College Park, Georgia. The Shopping Center included about 30 store fronts as well as an approximately 79, 000-square-foot indoor space (the "Mall"), which contained between 120 and 130 booths to lease to individual vendors. Defendant Alice Jamison, the Yehs' daughter, managed the Shopping Center. Her responsibilities included reviewing leases, collecting rent, and visiting the Shopping Center and Yes Assets' tenants, including the lessee of the Mall.

         Until December 1, 2009, Yes Assets leased the Mall to a tenant, who assigned it to a subtenant, who subleased it to former Georgia congressman Pat Swindall, who in turn subleased the booths to vendors. From December 1, 2009 forward, Yes Assets leased the Mall to defendant Airport Mini Mall, LLC ("AMM"), a company Jerome and Jenny created and later gave to their son, defendant Donald Yeh, and the Mall became known as the International Discount Mall, AMM's tradename. Under the lease agreement, Yes Assets provided AMM and its subtenants (the vendors in the 120 to 130 booths) with a variety of services-including lighting, water, sewerage, maintenance and repairs, painting, and cleaning-and a parking area for customers. Greg Dickerson, whom Jerome hired as AMM's property manager, subleased the booths to vendors and reported to Jamison and Jerome until 2013, when Jerome had a stroke, and to Jamison and Donald afterward.

         AMM's tenure as the Mall's landlord saw three law enforcement raids there, during which officers executed search warrants, arrested subtenants, and seized alleged counterfeits of Luxottica eyewear and other brands' products. After the first raid, law enforcement left a copy of the search warrant and a list of items seized, including eyewear bearing Luxottica's marks, at the raided booth. The second raid lasted more than 14 hours and involved approximately 30 federal and local law enforcement agents who shut down the Mall to execute search warrants, arrested subtenants for selling counterfeit goods, seized thousands of counterfeit items bearing Luxottica's marks, and loaded the items onto a tractor-trailer parked in front of the Shopping Center. Dickerson witnessed the second raid from the Shopping Center's parking lot and notified Jamison, Donald, and Jerome and Jenny's attorney, Louis Bridges. Dickerson later walked through the Mall to compile a list of the booths where law enforcement had seized goods and informed Jamison, Jerome, and Bridges about his inquiries of subtenants regarding the raid and whether they were selling counterfeit items. Each subtenant denied selling counterfeit merchandise, but Jamison admitted that she would expect the subtenants to lie if they were selling counterfeit goods. On Bridges' advice, the defendants decided to take no action against the subtenants unless the subtenants were convicted of a crime. More than a year after Luxottica filed this lawsuit, police executed several more search warrants at the Mall and seized additional counterfeit items bearing Luxottica's marks.

         Luxottica twice sent letters notifying the defendants that their subtenants were not authorized to sell Luxottica's eyewear and that any mark resembling Ray-Ban or Oakley marks would indicate that the glasses were counterfeit. The second letter also identified specific booths Luxottica suspected of selling counterfeit eyewear. Jamison and Donald were aware of both letters. Dickerson visited the booths named in the second letter but made no attempt to determine whether those vendors' eyewear products were counterfeit or to terminate their leases. After Luxottica filed this lawsuit, Jamison and Bridges attended a meeting at the College Park Police Department to discuss the unlawful selling of counterfeit products at the Mall.

         Despite the raids, letters, and meeting with law enforcement, the defendants took no steps to evict the infringing subtenants; they even renewed leases with several of the subtenants who had been arrested during the 14-plus-hour raid. In the month leading up to the filing of this lawsuit, Isabel Rozo, an employee of Luxottica's private investigator Geanie Johansen, purchased and photographed $15 and $20 counterfeit Ray-Ban glasses at several booths. Ray-Ban glasses normally retail for $140 to $220 a pair.

         Luxottica sued the defendants for contributory trademark infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114. The district court denied the defendants' motions in limine to exclude evidence, except for their second motion, which it granted in part to limit the evidence Luxottica could introduce regarding sales at the Mall of counterfeit non-Luxottica brands and counterfeit sales that occurred before AMM took over as the Mall's landlord. After an 11-day trial, the jury returned a special verdict holding all defendants except Jenny liable for contributory trademark infringement and assessing $100, 000 in damages for each infringed trademark, totaling $1.9 million in damages. Having moved for judgment as a matter of law after the close of all the evidence, the defendants renewed their motion, which the district court denied.

         The defendants appeal the jury verdict, a portion of the district court's instructions to the jury regarding the application of Georgia landlord-tenant law, and the district court's denials of their motions in limine and renewed motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b).[1]

         II. STANDARDS OF REVIEW

         We review de novo questions of law, such as the legal standard for liability for contributory trademark infringement. U.S. Sec. & Exch. Comm'n v. Big Apple Consulting USA, Inc., 783 F.3d 786, 795 (11th Cir. 2015). We also review de novo a district court's denial of a Rule 50(b) motion. Id. at 813. "Judgment as a matter of law is appropriate only if the facts and inferences point overwhelmingly in favor of one party, such that reasonable people could not arrive at a contrary verdict." Equal Emp't Opportunity Comm'n v. Exel, Inc., 884 F.3d 1326, 1329 (11th Cir. 2018) (internal quotation marks omitted), cert. denied, 139 S.Ct. 1373 (2019). "We consider all the evidence, and the inferences drawn therefrom, in the light most favorable to the nonmoving party." Id. (internal quotation marks omitted). "We will not second-guess the jury or substitute our judgment for its judgment if its verdict is supported by sufficient evidence." Id. (internal quotation marks omitted).

         Orders denying motions in limine are reviewed for abuse of discretion. Kropilak v. 21st Century Ins. Co., 806 F.3d 1062, 1067 (11th Cir. 2015). Under that standard, we will reverse a district court's ruling "only if the court applie[d] an incorrect legal standard, follow[ed] improper procedures in making the determination, or ma[d]e[] findings of fact that are clearly erroneous." Id. (internal quotation marks omitted). The movant must also establish "substantial prejudicial effect." Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1276 (11th Cir. 2008).

         This Court reviews jury instructions de novo to determine whether they "misstate the law or mislead the jury to the prejudice of the objecting party." Bhogaita v. Altamonte Heights Condo. Ass'n, 765 F.3d 1277, 1285 (11th Cir. 2014) (internal quotation marks omitted). Although our review is de novo, we will reverse based on a district court's jury instructions "only where we are left with a substantial and ineradicable doubt as to whether the district court properly guided the jury." Id. (internal quotation marks omitted).

         III. DISCUSSION

         We affirm the district court on each issue appealed. The district court (1) correctly determined that the evidence was sufficient-even under the legal standard the defendants urge us to adopt-to support the jury's verdict finding the defendants liable for contributory trademark infringement; (2) committed no reversible error in instructing the jury; (3) correctly determined that the evidence was sufficient to support the jury's verdict on each defendant's individual liability; and (4) did not abuse its discretion in the challenged evidentiary rulings.

         A. Luxottica Presented Sufficient Evidence to Sustain the Jury's Verdict on Contributory Trademark Infringement.

         Under the Lanham Act, the owner of a registered trademark may hold someone contributorially liable for trademark infringement if that person induces or knowingly facilitates the infringement. The defendants argue that the district court should have followed the reasoning of a Second Circuit case that they believe imposed a tougher knowledge requirement for contributory trademark infringement claims. Under that court's reasoning, the defendants argue, the evidence was insufficient to prove that they had the requisite knowledge of, or demonstrated willful blindness to, their subtenants' direct infringement. We disagree and affirm the district court's denial of the defendants' Rule 50(b) motion. First, we explain the elements of the contributory trademark infringement cause of action. Second, because the defendants do not contest that landlords may be held contributorially liable for their (sub)tenants' direct trademark infringement, we assume without deciding that contributory liability for trademark infringement extends to the landlord-tenant context. Third, we resolve the defendants' argument about the proper legal standard by assuming without deciding that liability for contributory trademark infringement requires that the defendant have knowledge of specific acts of direct infringement. Even under this standard, the evidence was sufficient to support the jury's verdict because the defendants had at least constructive knowledge of their subtenants' direct infringement.

         1. Contributory Liability Under the Lanham Act

         The contributory trademark infringement cause of action stems from the application of "basic tort liability concepts to determine the scope of liability" under the Lanham Act. Duty Free Americas, Inc. v. Estée Lauder Cos., 797 F.3d 1248, 1276 (11th Cir. 2015) (internal quotation marks omitted).[2] The Supreme Court first acknowledged the existence of this cause of action in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982). In that case, manufacturers had supplied pharmacists with a generic version of a drug whose brand name was trademarked. Id. at 846-48. Some pharmacists had infringed the brand name manufacturer's mark by mislabeling bottles containing generic capsules as containing brand name capsules. Id. at 848-51, 854. But instead of suing the infringing pharmacists, the brand name manufacturer sued the generic manufacturers, id. at 846-47, 849-51, prompting the Supreme Court to recognize in the Lanham Act a cause of action for contributory infringement: "if a manufacturer or distributor intentionally induces another to ...


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