Landlord Liability For Tenants Trading In Counterfeit Goods

Counterfeit merchandise is costing American business and government billions of dollars each year in lost profits and tax revenues. Sophisticated counterfeiting operations hoping to cash in on the burgeoning trade in counterfeit goods have replaced street-corner peddlers pushing knock-offs. Cheaper technology has also enabled counterfeiters to copy legitimate goods much more easily. This growth is also changing the battleground over counterfeit goods. In addition to targeting the counterfeiters, copyright and trademark holders have started going after commercial landlords whose tenants deal in fake merchandise. It is felt that this new strategy is needed in part because the counterfeiting retailers possess very few assets that can be seized and liquidated to compensate the copyright or trademark holder. On the other hand, the landlord owns the building, an insurance policy, and quite often an abundance of other tangible assets. Consequently, while neither the Copyright Act of 1947 nor the Lanham Act governing trademarks expressly provide a cause of action for copyright or trademark infringement against a third-party such as a landlord, courts have been willing to hold them liable for such illegal acts under theories of vicarious liability and contributory infringement. The evolution of this case law is important, as the courts have gradually expanded the scope of liability for landlords.