June 14, 2017

Although there is no shortage of counterfeit products on the market, it is not everyday that a high fashion designer sues your local flea market. Recently, Louis Vuitton reportedly filed a lawsuit against Dr. Flea’s Flea Market for intentionally selling a handbag that was evidently in violation of Canadian trademark and copyright laws.

In November 2008 and April 2012, Toronto Police Services executed a criminal search warrant at Dr. Flea’s Flea Market, leading to over $1 million of counterfeit merchandise being seized – some of which included Louis Vuitton products. Unfortunately, the flea market did not learn from its past mistakes. In November 2015, The Fashion Group Couture Group – a vendor operating out of Dr. Flea’s Flea Market – was once again caught selling counterfeit Louis Vuitton products. The well-known fashion brand is now seeking compensation from the landlord of the flea market for negligence, vicarious liability, and (as will be focused on within this article) intellectual property infringement.

Unfortunately, lawsuits involving intellectual property infringement are certainly not unheard of in the fashion industry. From independent artists accusing fashion giants of copying their work, to bloggers using their fashion icons as a source of design inspirations, intellectual property rights remain a significant issue for both corporations and individuals. However, what makes this lawsuit different from any other infringement within the industry?

It is common practice for brands to bring lawsuits against the vendors of counterfeit products. However, bringing lawsuits against the landowners of retail space is a relatively new legal phenomenon in Canada. The ability to hold landlords accountable for their vendors’ activities has already been established and legislated under U.S. law. Canada, however, has never implemented regulations in this area, and is seen as lagging behind its southern neighbour.

One of the few guiding cases is Chanel S. de R.L. v. Lam Chan Kee Company Ltd. In this case, the defendant was found by the Court to have infringed the rights of Chanel Inc., which holds the licence to use Chanel trademarks in Canada. Pursuant to section 53.2 of the Trade-marks Act, the Court granted: declaratory relief confirming the validity and ownership of the Chanel trademarks, injunctive relief precluding the subject defendants from continuing their infringing activities, and injunctive relief requiring the delivery up and destruction of any remaining infringing goods within twenty-one days of the original judgment. Ultimately, the federal judge ordered the landowner selling the knock-off goods to pay over $300,000 in compensation. However, without many cases in this area, the fate of Dr. Flea’s Flea Market is still subject to debate.

Landowners have argued that consumers are not necessarily cleared of responsibility either when it comes to purchasing counterfeit products. The RCMP’s website gives tips on how to ensure that the product the consumer is buying is not counterfeit or pirated. Further, the website outlines the necessary steps if one suspects a bought product is illegitimate. For example, visiting the Canadian Anti-Counterfeiting Network’s website for further warnings and information. Such caution signs include, but are not limited to, bargain prices, incorrect logos, and/or the lack of a certification label. Ultimately, landowners claim that it is extremely difficult to even tell the difference between authentic and counterfeit products. They argue that the consumers should be held accountable for purchasing the knock-off goods, and inadvertently funding organized crime.

Although this lawsuit is just beginning, one thing is assured: if Louis Vuitton successfully sues the owners of the flea market, Canadian brands will now have an extra tool in protecting themselves against infringements involving intellectual property. With more at stake for landowners, this increased responsibility will hopefully encourage landowners to better regulate the products that their vendors are selling. The question remains, is this enough to end the fight against counterfeit products?

Giuseppina D’Agostino, founder and director of IP Osgoode, commented on this lawsuit in a recent Globe and Mail article stating that, “Should the case be successful, it would increase pressure on landlords to monitor their tenants… [however] those changes will be toothless without enforcement. You can have whatever contract written down, whatever law, whatever lawsuit, if it’s not enforced, the problem proliferates. […] I think it may change some behaviour in terms of landlords being more judicious in who they lease their space to but long term I don’t think it will really address the bigger problem of infringing merchandise.”

The reality is, even with a successful precedent set by this case, the need to codify reform in this area of law remains pressing. If one thing is certain, however, it is that no one can “flea” from Louis Vuitton, not even the local flea market down the road.