Landlords Can Be Liable For A Tenant’s Sale Of Counterfeit Goods

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Should a landlord be concerned about trademark or copyright law? Perhaps, not overly concerned (considering how many other challenges they face), but the answer is: “Yes.” Simply stated, a landlord can be liable to legitimate product suppliers if a tenant is selling counterfeit goods. Is it as simple as that? Well, no – but that’s the law, and there are court decisions that have cost some landlords “big bucks.”

The “problem” is mostly at flea market or swap shop projects, but there is no legal principle that would exempt “legitimate” shopping centers if a tenant is selling counterfeit goods. What we find interesting is that the only places we’ve seen a lease provision directly addressing this issue are at “super-max” centers where the probability of a tenant deliberately selling such goods is pretty low.

We’ll begin with some background. Everyone knows that trademarks are protected by law. To get all of us on the same page, here is how the United States Patent and Trademark Office explains a trademark: [Read more…]

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How Do I Lose An Exclusive Use Right? Let Me Count The Ways

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If you operate a liquor store at a shopping center, would you like to be the only one there? Of course, you would. It isn’t like a dress shop where other stores would have different styles and price points and those other dress shops will bring you business as well. But, when it comes to wine and liquor, everybody carries the same core items. Some will skew their wine offerings in one direction; others may have a different wine focus. But, when it comes to wine and liquor, all merchants have the same merchandise available to them and all can sell whatever everyone else sells.

So, it will come as no surprise that a large-scale liquor store at a shopping center negotiated and was granted some exclusive use protection. This is exactly what its lease provided: [Read more…]

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Go Ahead, Just Slap On Some Extra Words!

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Is it masochistic to want to read court decisions? Given that most of society frowns upon masochists, it’s probably good that very few of us who create transaction documents actually read any such decisions. [That’s sarcasm.] It seems to us that what we do is engage in some “on the job training,” but mostly we rely on the wisdom of our ancestors – those who wrote the documents we use as templates. If today’s blog posting were a sermon then, fortunately, we’d be preaching to the choir. You, our readers, by being such and, almost certainly, by your reading of more erudite materials than these postings, are, unfortunately, the exception in our chosen field. Today, Ruminations salutes you.

We’re not sure why we felt compelled to express those thoughts today. Perhaps it is because we were thinking about the mix of topics in our blog postings and why we use court decisions as to the central focus for about two-thirds of those postings. Our conclusion was that we learn more from mistakes than successes. In general, it is often difficult to find a mistake, and in our own work, very much more so. [That’s not necessarily because our own work, and we’re talking “collectively,” couldn’t be “better.” It’s just that we don’t see errors in it where others do.] Almost all court decisions point out mistakes people have made. Reading such decisions is how we learn. [Read more…]

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Parking Clauses, Parking Clauses, Everywhere, But Not An Answer To Be Found

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Seek and ye shall find isn’t always true. An example will be today’s blog posting. We’ll raise some issues but offer no solutions. Today is audience participation day. If so inclined to publically offer some thoughts, the comment feature at the bottom will be your ultimate destination.

We’ve been in a number of parking lots lately – schools, churches, public, airports, shopping centers, and more. Many have been far emptier than we’re remembering and we’ve been seeing changes. We have been seeing the tell-tale logos of “Transportation Network Companies,” a/k/a Uber, Lyft, Taxify, etc. We’ve been doing the slaloms around motorized scooters from some of those providers and many others, mostly with four-letter names. A number of times already, we’ve expressed our sense that these and other non-owned transportation alternatives will reduce the need for shopping center parking. So, we’re not going to say those things again. If you are interested in those thoughts, use the Ruminations’ search feature. [Read more…]

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Exclusive Use Rights: Common Language Knowledge May Not Work

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We doubt that our next paragraph, let alone the rest of today’s blog posting, will make much sense to readers who haven’t seen last week’s posting. So, if that means you, we suggest you click: HERE.

After receiving a number of “off-line” comments from readers, we took a look at the various types of rice in our pantry and found the following: Carnaroli, Jasmin, Wild Rice, Arborio, California Sushi, Basmati Light Brown, Brown Jasmin, Extra Long Grain Rice, Brown Rice, and a Rice Blend (something that offers the look of much more expensive Wild Rice, but, with some white rice in the blend, is not as expensive). Who knew? Yes, to the eye some of these types clearly are “white”; some are not; some are “different minds will differ.” Thus, an expert organoleptically examining our pantry’s selection, would call some versions “white” and call others “brown.” But, when these, other than Long Grain White Rice and the straightforward Brown Rice, were offered for sale, the merchants wanted them to be seen as something other than “white” or “brown” rice. Those two boring descriptions imply “commodity” rice. Carnaroli Rice, which by the way we highly recommend over Arborio rice, for preparing risotto, costs the consumer more even though its production costs might not support that “bump.” [Read more…]

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When It Comes To Tenant Exclusives, Forget What You Think You Know

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Ruminations has always had an interest in understanding the “why” of things. That includes understanding why we do certain things certain ways and especially how we can get led astray. We double down when it comes to the subject of exclusive uses. That’s why a July 5, 2018 decision out of the Superior Court of Rhode Island caught our interest. The original lawsuit was filed in 2005 and the dispute, one that started no later than in 2000, had already made two trips to the Rhode Island Supreme Court. Here’s the opening line from the 2018 decision, one that will probably intrigue readers: “Before this Court is the sticky question of which competing food-court vendors had the right to sell certain oriental foods – primarily various types of rice – at the [subject shopping center].” As long as we are quoting the Court, we’ll let you know that it characterized the case before it (for over 15 years) as a “saga.” Similarly, today’s posting will be a “saga,” and will conclude next week when we’ll reveal our pithy “take-aways.” [Read more…]

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Operating, Managing, Policing, Insuring, Repairing, And Maintaining

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Most retail leases have a “CAM” provision and though they are formulated in a myriad of ways, a common element can be found in the way “common area maintenance” (CAM or Operating Expenses) is defined. The words used are seen so often that many eyes glaze right over them. They are so familiar that, long ago, we stopped thinking about them. This occurred to Ruminations as we read an unpublished February 19 decision from the Court of Appeals of Arizona (an “intermediate” appellate court).

Here’s what that court told us. A bunch of shopping center tenants, as a group, sued their common landlord over a Common Area Maintenance (CAM) billing for capital expenses. Exactly what is a capital expense? There are too many definitions used for a “capital expense,” and even the Internal Revenue Code doesn’t provide much help because its “definition,” if you can call it that, relies on some principles. Here is what those might be: [Read more…]

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Fighting The Last War

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In 1934, Edward P. Warner, writing about the implementation of the National Recovery Act (N.R.A.), expressed the following: “There is a saying that is rather common among the critics of the military profession that ‘soldiers are always preparing to fight the last war.’ Business must not incur the rebuke that it is devoting itself to preparing to sell goods under the conditions of the last economic cycle.”

The language is a little “1934” stiff, but the message remains relevant. We shouldn’t be structuring deals for the future as if the future will be unchanged from the past. That’s not to say we should fashion every deal tabula rasa (as if on a blank slate). Of course, much of what has worked in the past remains valid today. But, “much” falls short of “everything.” The trick is knowing what to save and what to discard. Until a genuine “crystal ball” is invented, we’ll need to divine the future unaided by a magical device. Instead, what we all need to do is to pay attention to early trends, some of which have been in front of our eyes for years, even decades. [Read more…]

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