Jury Correctly Recognizes That Print-On-Demand Website Isn't A 'Counterfeiting' Business Engaged In Infringement

Trademark

from the good-to-see dept

Phew. Earlier this year, I wrote about a case I witnessed down in LA, in which the print-on-demand website RedBubble was deemed by a jury to have infringed on the trademark rights of the clothing store Brandy Melville, despite not actually selling any items that matched Brandy Melville’s trademarks on clothing that Brandy Melville sells — and being extraordinarily proactive in taking down things once alerted to the fact that certain designs might be infringing. Again, as noted, I served as an expert witness in that case and filed a report, but did not need to testify. The very same law firm, representing a few different plaintiffs, has been busy suing RedBubble and other print-on-demand businesses, apparently trying to carve out a niche. Since that ruling, there has been a lot of back and forth between the parties (some of it quite… emotional), but as it stands now, the ruling has been appealed to the 9th Circuit, where it should be an interesting one to watch.

Another case, from the same law firm, against RedBubble was filed on behalf of Atari. Again, I was an expert, and filed a report. As the trial approached, the lawyers for Atari sought to exclude me from testifying, which was (at the very least) amusing, as it claimed that I “cannot offer an opinion as to the difficulty of content moderation generally” (despite highlighting how much academic work I’ve done doing research, reports, and other projects regarding content moderation). For a variety of reasons (unrelated to that filing), I didn’t get to testify this time either, but thankfully the end result of this case was different than the one in LA: the jury found no infringement at all by RedBubble.

I wasn’t able to attend this case in person like the last one, so I didn’t get to witness the full trial, but RedBubble’s Motion for Judgment as a Matter of Law filed at the conclusion of the trial lays out a pretty clear picture of what happened. At the trial, it was made clear that RedBubble, as a print-on-demand service, is simply an intermediary, not the actual seller of any of the products.

Here, the evidence introduced at trial shows as a matter of law that Redbubble is merely a transactional intermediary. First, it is undisputed that Redbubble does not control essential terms of the transaction. As Redbubble?s witnesses Mr. Deshais, Mr. Toy, and Mr. Hosking testified, Redbubble does not select the art that is offered for sale, the particular products (such as t-shirts or mugs) on which a piece of art may be printed, the title and tags for a product listing, or the price of product?the artist controls those details. Mr. Hosking also testified that Redbubble exists to allow artists to sell their art to a global audience. See Milo & Gabby LLC v. Amazon.com, Inc., 693 F. App?x 879, 886?87 (Fed. Cir. 2017) (holding that Amazon was not a ?seller? for direct copyright infringement, in part because Amazon ?did not control what information or pictures were put on the product-detail page, nor did it control the price for which the product was sold?; rather, ?third-party sellers as applicable to their products, controlled these details at all times?); see also Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 103 (2d Cir. 2010) (eBay not directly liable for sale of counterfeit Tiffany jewelry on its website). Indeed, in Y.Y.G.M. SA v. Redbubble, Inc., the court granted summary judgment for Redbubble on the question of direct trademark liability, reasoning that because Redbubble?s service fee is the same regardless of the price charged by the artist, Redbubble?s ?fee-based business model indicates the role of a service provider rather than a seller, as a seller almost invariably adjusts its price in relation to the value of the goods in question.?

Also, a key in both cases is that the law firm for the plaintiffs wanted to show counterfeiting (which has significant statutory damages). But to counterfeit, you have to show that they’re selling an actual copy of a product being sold and that the seller knew it was counterfeit. That didn’t happen:

Atari has not shown that Redbubble intentionally used a counterfeit mark or knew that the mark was counterfeit. The Ninth Circuit has held that to receive statutory damages for counterfeiting, the plaintiff must show that ?(1) [The defendant] intentionally used a counterfeit mark in commerce; (2) knowing the mark was counterfeit; (3) in connection with the sale, offering for sale, or distribution of goods; and (4) its use was likely to confuse or deceive.? State of Idaho Potato Comm?n v. G&T Terminal Packaging, Inc., 425 F.3d 708, 721 (9th Cir. 2005); McCarthy 25:10 (?Counterfeiting is the act of producing or selling a product with a sham trademark that is an intentional and calculated reproduction of the genuine trademark.? (emphasis added)).

Even assuming Atari can prove that a counterfeit mark was used on Redbubble, Atari did not provide any evidence that Redbubble acted with intent or knowledge that any design was a counterfeit mark. Indeed, the Court already resolved the issue of Redbubble?s knowledge at summary judgment, holding that ?Atari fails to establish either knowledge or willful blindness to infringement of Atari?s copyrights,? Dkt. No. 97 at 31, and that it ?reaches the same result as to Atari?s trademark claims,? Dkt. No. 127 at 2. This is because ?Atari provides no evidence that Redbubble knew of specific infringing material.? Dkt. No. 97 at 28-29 (cleaned up). To know that a mark was counterfeit and intentionally use a counterfeit mark in commerce, Redbubble would have to know of the specific material in question, which the Court has already ruled Redbubble does not. Even had the Court not already decided that issue, Atari did not provide any evidence at trial suggesting Redbubble had knowledge of specific material on its website, much less that any specific material constituting a counterfeit mark. Thus, the Court should grant judgment for Redbubble on Atari?s counterfeiting claim.

I am assuming that Atari will appeal to the 9th Circuit, and these two cases are going to be fairly important in determining whether or not print-on-demand can even exist as a business.

In my post on the Brandy Melville case, I noted that it was a sneak peek into a world without intermediary liability protections like Section 230 (since courts have determined that trademark is outside of the protections of 230). Even this “victory” highlights how important protections like Section 230 are. The key benefit of Section 230 is that it helps get cases like this one dismissed early and inexpensively. Even with RedBubble’s win here, this case had to go through many expensive stages, including all the way through a jury trial (which is insanely expensive).

I’ve seen some people say that without 230 things will be fine because companies can still win down the road, but the expense of reaching “down the road” may be way too much for many companies, especially smaller ones, to survive. It’s good that RedBubble won here, though I expect the real battle over all this is only just about to start on the appeal.

Filed Under: copyright, counterfeiting, intermediary liability, jury, print on demand, section 230, trademark
Companies: atari, redbubble