Wednesday, July 28, 2021

Conventions and Contributory Liability


I’ve been thinking about the return of comic book conventions. More specifically, I’ve been thinking about contributory infringement. Recently, the second circuit decided a case involving contributory infringement of a trademark at a retail property in New York. Contributory trademark infringement allows a trademark owner to pursue liability against a third party who did not directly infringe the trademark but somehow benefited from the infringement or encouraged it. As most convention attendees know, there is a good amount of unlicensed merchandise being produced and sold at conventions. Whether or not this case could have implications for operators of comic book conventions is a fascinating question. In particular, it is an interesting question to determine whether or not a vendor’s sale of goods or art could lead to contributory infringement on the part of the convention operator.

In the case Omega SA v. 375 Canal LLC[1], the Second Circuit Court of Appeals upheld a jury verdict awarding the manufacturer of Omega watches $1.1 million in damages. The decision focused on a building owner’s willful blindness of the infringing activities taking place at their building, namely repeated sales of counterfeit high-end watches and luxury handbags, and the owner’s failure to reasonably act to stop the infringing activity upon learning of it.

Whenever people talk with me about the legal issues surrounding fan art and publisher enforcement, one of the issues I bring up is how difficult it would be for publishers to monitor for infringing activities at the numerous conventions held across the country. I know of instances where a publisher’s employees have complained about infringing goods being sold at a convention. Typically, when a publisher’s employee complains the vendor is removed or the infringing item is removed. Obviously, the burden on publishers’ employees to enforce their intellectual property could be substantive. However, this decision in 375 Canal, and other similar cases, does present an opportunity for publishers to exert more pressure on convention owners to take steps to monitor and mitigate infringing activity.

In my experience, the typical convention operator handles claims of infringement in two ways. First, they will have exhibitors sign a contract stating the goods they sell do not infringe any 3rd party’s rights, and the exhibitor will cover the convention operator’s costs if the operator suffers harm due to the vendor’s sales of infringing goods. Second, if someone complains about a particular item or vendor, the operator may remove the vendor from the convention.

The contractual part is a good first step, and recommended, but still leaves the operator exposed because most vendors would not be able to reimburse the operator in the event of a lawsuit. However, the contract is necessary to establish that the operator is taking infringement seriously. As for asking a vendor to leave due to infringement, this policy is a must. If the operator knows the vendor is selling unlicensed or counterfeit goods and does nothing, then they could be liable for contributory trademark infringement.  

As mentioned above, protecting and enforcing trademark rights at conventions around the country (and world) can be difficult for publishers. I’m certain trademark owners would love to force operators to take a harder stance on preventing infringement, and this case opens a slight door to do so. If a convention operator has a history of allowing infringing goods to be sold at their conventions and a history of turning a blind eye to such infringement, then the operator could be found guilty of contributory trademark infringement.

[1] 984 F.3d 244 (2021).