The fashion world has presented an interesting case of potential secondary liability for trademark infringement, targeting the distributors of allegedly infringing products to the retailers who sell the products to the public.
IHF Ltd and Mona B, LLC, Plaintiffs in the case, have found success in designing and selling handbags from recycled or “up-cycled” materials under the “Mona B” trademark. Sales are made directly to consumers via the Mona B website as well as through retailers carrying the products.
According to a Complaint filed in U.S. District Court for the Northern District of Ohio, Plaintiffs are part of family owned and operated businesses that have been providing “unique copyrighted consumer products” since 2007. IHF first used the Mona B brand in January of 2012, and “Mona B.” was registered as a U.S. Federal Trademark on February 24, 2015, with IHF as the trademark owner.
Again, according to the Complaint, Plaintiffs engaged Defendants Khemchand Handicrafts and its owner to mass produce handbags for IHF under the Mona B brand name in April of 2013. The supplier relationship “resulted in the necessary sharing of product design files, marketing files and materials, and other confidential information standard in a supplier customer relationship.” The relationship was alleged to have ended in July of 2016.
Subsequent to ending the supplier relationship, Plaintiffs “noticed a complete rebranding of the Khemchand Handicrafts under (the brand name) Myra Bags,” beginning at a trade show in India in April 2017. The Complaint alleges that trademark violations continued to grow in scope in 2018 “until Khemchand Handicrafts and Myra Bags unit had completely copied all aspects of [the] Mona B LLC business model.”
The Complaint lists numerous specific violations of alleged trade dress violations, with side-by-side photos of Mona B bags and Myra bags to show their similarities. The Complaint alleges that Plaintiffs provided design files for its Mona B brand tags to Defendants for mass production. Defendants allegedly used the print files to create substantially similar Myra brand tags, with photos in the Complaint again illustrating the similarities. Myra Bag copied Mona B’s handbag lining design and sewn-in product care labels, with photographs again supporting the allegations. Plaintiffs further allege that Myra Bag copied its catalog layout formats, website design and even the placement of brand tags on Myra Bag products.
Plaintiffs filed their initial Complaint against Myra Bag, Khemchand Handicrafts and Khemchand Khatri for various trademark, trade dress, copyright and related state law claims on May 2, 2018. However, on July 6, 2018, Plaintiffs filed an Amended Complaint to include nine different independent sales agencies, located in various areas of the country, which distribute Myra bags from that company to retailers who then sell the bags to consumers. The agencies allegedly conspired with Myra Bag to sell the infringing products through their own channels and sales representatives. Plaintiffs also name as defendants the unknown “John and Jane Does” individual sales representatives working with the agencies.
Myra Bag sells products directly to consumers through its own website, so Mona B has a basis for claiming direct violations of federal trademark and related laws by Myra Bag for that reason. Furthermore, Myra Bag is not a company that can easily mask its identity or shut down and reopen its website under a different domain name to avoid liability. Therefore, it seems unusual to pursue these independent distributors, especially when most of them likely do no business or have no contact in the Northern District of Ohio that would provide personal jurisdiction for bringing suit against them there.
Secondary trademark violation liability can be established when a defendant knows of the infringement and the defendant materially contributes to or induces the infringement. Secondary liability requires proof of an underlying direct infringement claim, however. To establish direct trademark infringement, plaintiff must show: (1) ownership of a valid trademark, and (2) a likelihood of confusion resulting from a defendant’s alleged infringing use.
Plaintiffs focus their claims against the distributors for contributory trademark and trade dress infringement under the Lanham Trademark Act, 15 U.S.C. § 1114, by “conspiring to sell and offering for sale Myra Bag’s deceptively and confusingly similar products in the United States.” The Amended Complaint further claims that by using “Mona B’s trademark and/or trade dress without Plaintiff’s permission, Defendants are unfairly benefiting from Mona B’s investment in the Mona B® trademark and/or trade dress and the reputation, success, and goodwill that Mona B has cultivated through its marketing and promotion of its Mona B® products.”
Motions to Dismiss for lack of personal jurisdiction for seven of the Defendant distributors were filed last fall. The motions, backed by affidavits, showed that the distributors had no offices in Ohio, no employees in the state, made no sales in Ohio and did not even solicit business there. Nonetheless, Plaintiffs sought to conduct discovery to prove sufficient contacts with the state.
Based upon jurisdictional case law, the Plaintiffs will have an uphill climb to keep any distributor not doing business in Ohio in the lawsuit. In the meantime, bringing suit against Myra Bag’s channels of distribution for its products is certainly putting additional pressure on Myra Bag as the alleged direct infringer.