IP Law Daily, TRADEMARK—S.D. Tex.: Jury must decide luxury eyewear makers’ claims against Texas flea market accused of allowing knock-off sales, (Mar 23, 2022)

By Kevin M. Finson, J.D.

Question of fact relating to likelihood of confusion factors precluded deciding the eyewear designer’s contributory infringement claims.

Questions of material fact remained in a dispute between the designers and sellers of Ray-Ban® and Oakley® eyewear against the operator of a Texas a flea market that allegedly permitted vendors to sell knock-off goods, the federal district court in McAllen has held. The plaintiffs failed to present sufficient evidence to establish likelihood of confusion as a matter of law. Neither party was able to present evidence that would compel a reasonable jury to reach their preferred result (Luxottica Group, S.P.A. v. Ochoa’s Flea Market, LLC, March 21, 2022, Alvarez, M.).

Luxottica Group, S.p.A. and Oakley, Inc. (collectively, “Luxottica”) were the owners of the Ray-Ban® and Oakley® trademarks, and alleged that Ochoa’s Flea Market, LLC (Ochoa’s) and its owners operated a flea market that allowed open sale of counterfeit goods, including counterfeits of Luxottica’s eye glasses. Luxottica filed suit alleging trademark infringement, dilution, unfair competition, and unjust enrichment under both federal and Texas law. After a discovery dispute, Luxottica moved for a spoliation order and both parties moved for summary judgment.

Spoliation. Luxottica claimed that Ochoa’s destroyed vendor records which would have shown the sale of infringing goods and whether Ochoa took any action to terminate vendors in its flea market who sold infringing goods. Ochoa argued that it had no obligation to preserve those records. The court agreed that Ochoa was obligated to preserve records which would clearly be relevant in litigation both parties anticipated, but noted that Luxottica did not show the destruction was done in bad faith. Ochoa did not selectively destroy sensitive or relevant records, it merely refused to modify its existing document preservation system. The court found that this might be negligent or reckless, but it was not done in bad faith, so the spoliation order was denied.

Contributory trademark infringement. Luxottica moved for summary judgment on all counts, but agreed that all of its claims depended on contributory trademark infringement, so the court only addressed this claim in Luxottica’s summary judgment motion. Ochoa’s did not contest that Luxottica possessed a valid and enforceable mark, only that its vendors sold goods that were likely to be confused with Luxottica’s marks. Luxottica was unable to produce admissible evidence that Ochoa’s vendors sold eyewear which possessed similar or identical marks. The photographic evidence produced by Luxottica was based on inadmissible investigative reports. The court held that Luxottica was unable to show a likelihood of confusion, so summary judgment was denied.

Individual defendants. Ochoa’s individual owners moved for judgment on the pleadings and summary judgment that only Ochoa’s itself, and not them personally, could be liable for the alleged infringement. The court pointed out that Ochoa’s argued was misplaced, relying on the standard for piercing the corporate veil, which was not at issue. The allegations were that the individuals themselves acted with knowledge of trademark infringement and turned a blind eye to it, not that they should be liable solely because they were owners of the LLC. Reviewing the deposition testimony in the record, the court held that a reasonable jury could find the individuals liable and denied summary judgment.

The Case is No. 7:20-cv-00061.

Attorneys: Mandi M. Phillips (Klemchuk LLP) for Luxottica Group, S.P.A. and Oakley, Inc. Jaime Pena (Pena Aleczander) for Ochoa’s Flea Market, LLC, Norma Ochoa and Maria Janie Moreno.

Companies: Luxottica Group, S.P.A.; Oakley, Inc.; Ochoa’s Flea Market, LLC

Cases: Trademark TexasNews GCNNews