IP Lawsuits Against Print-on-Demand Vendors Continue to Vex the Courts–OSU v. Redbubble & More

February 26, 2021 · by Eric Goldman · in Copyright, Derivative Liability, Publicity/Privacy Rights, Trademark

[This post covers three recent print-on-demand cases. After the Ohio State writeup, keep reading for more fun and confusion.]

Redbubble operates in the print-on-demand industry, but it’s adopted a different organizational structure than some of its competitors. Redbubble outsources manufacturing to third-party manufacturers, leaving Redbubble to act as the front-end marketing arm for its customer-vendors. Redbubble won a remarkable ruling two years ago, where the district court held that Redbubble wasn’t the “seller” for trademark law purposes in a lawsuit brought by The Ohio State University. That ruling opened up some new jurisprudential frontiers, but those frontiers may have closed back down. The Sixth Circuit reversed the grant of summary judgment to Redbubble, sending the case back to the district court for further consideration of the facts.

Trademark

The court summarizes its conclusion: “Redbubble facilitates the creation of goods bearing OSU’s marks that would not have existed but for Redbubble. And that’s why we disagree with the district court’s ruling that Redbubble could not be liable because of its similarity to Amazon, eBay, and other passive online marketplaces.” Ugh, the legal test can’t be just but-for causation. However, the court struggles to articulate exactly where that line is.

The court categorizes the trademark liability of analogous actors:

Liable
- “the creator or manufacturer of the offending goods”
- “a direct seller of the offending goods (e.g., a brick-and-mortar store or company website)”
Not Liable
- “a company that auctions trademark-offending website domain names”
- “the eBay/Amazon model.” Later, the court clarifies: “An online marketplace like eBay that clearly indicates to consumers that they are purchasing goods from third-party sellers.”

So where does Redbubble fit into all of this? The court says:

it appears that products ordered on Redbubble’s website do not yet exist, come into being only when ordered through Redbubble, and are delivered in Redbubble packaging with Redbubble tags. Under those facts, the district court erred in affirmatively placing Redbubble on the passive end of the liability spectrum….Redbubble brings trademark-offending products into being by working with third-party sellers to create new Redbubble products, not to sell the artists’ products. So it’s more than just a passive facilitator. And Redbubble classifies its goods as “Redbubble products” and makes clothes identifiable as “Redbubble garments.” That differs from Amazon’s marketplace and makes more “use” of the trademark than non-liable facilitators in cases from other circuits.

I think the court’s distinction between “passive” vs. “non-passive” facilitators is ultimately doomed to fail. Passivity-as-a-defense runs through many legal doctrines (sounds like a good paper topic), including several strands of Internet Law (such as Section 230, “thanks” to the Roommates.com case). In the online context, passivity is usually a nonsensical legal standard because few online activities are truly “passive” in the lay sense of the term. For example, merely publishing content would never really be “passive” because publication necessarily prioritizes some content over others.

If online publishing isn’t passive, however, then all online marketplaces, including Amazon and eBay, that publish third-party listings could be in legal trouble. Yet, the court says they aren’t (echoing Amazon’s uncited Ohio Supreme Court win in Stiner v. Amazon holding that Amazon wasn’t a seller for products liability purposes). But do we really understand why the difference in legal treatment? The court implies that Redbubble sells goods that don’t exist until ordered and the packages come slathered with Redbubble branding. The latter point is fixable, and note that Fulfillment by Amazon orders also come in Amazon boxes, so is that really a key distinction?

In any case, the court says Redbubble’s non-passivity is enough to reverse the district court’s summary judgment ruling. However, the court doesn’t have enough facts to decide what should happen next. The court explains:

Although Redbubble utilizes a third-party to manufacture goods sold on its site, the degree of control and involvement exercised by Redbubble over the manufacturing, quality control, and delivery of goods to consumers is relevant to an assessment of whether the offending goods can fairly be tied to Redbubble for the purpose of liability. The record below lacks sufficient development of the facts to affirmatively decide this issue….

The factual gaps on this issue include: “facts regarding the precise nature of Redbubble’s contractual relationships with third-party manufacturers and shippers”; “the precise degree to which Redbubble is involved in” selecting and imprinting trademark-infringing designs upon its products; “details as to Redbubble’s involvement in the process for returning goods”; “detail[s] on how Redbubble characterizes its own services”; and facts about “defenses to liability[,] such as possible fair use defenses or defenses that confusion is not likely.”

Note that the court sidesteps secondary trademark liability, but it sure sets up that issue when it says that “the creator or manufacturer of the offending goods” is liable. If Redbubble’s contract manufacturers are on the legal hook, then (1) they probably need to exit those contracts, and (2) isn’t Redbubble potentially exposed to contributory infringement for its manufacturers’ direct infringement? If either happens, then Redbubble bursts. (Sorry).

Publicity Rights

The court says the parties agree that someone violated Urban Meyer’s personality rights (apparently assigned to OSU) by selling items on Redbubble. But who? Was it Redbubble’s vendors, or Redbubble, or both?

Like the trademark analysis, the court says that Redbubble is involved in the final products delivered to end users, apparently because they refer to those goods as “Redbubble Products”:

Redbubble classifies goods bought on its platform as “Redbubble products” designed by “independent artists.” These products are sometimes adorned with Redbubble images and Redbubble marketing materials. Unlike Amazon’s model described in Almeida, which resembled a conduit between buyers and booksellers, Redbubble integrates itself in the product. In other words, Redbubble interweaves its brand with the products it sells…

Even though Redbubble didn’t design or upload images of products bearing Meyer’s likeness, the record shows how Redbubble’s marketplace allows customers to buy a “Redbubble product” or a “Redbubble garment.” And that differs from other companies that our sister circuits have described as passive facilitators in online marketplaces. So the cases Redbubble cites to avoid right-of-publicity liability don’t apply.

In addition, Redbubble might be liable anyways because it’s marketing the allegedly misappropriative goods:

Redbubble operates its online marketplace; at a minimum, such operation advertises the products made by vendors and directs consumers to purchase those products. And Redbubble admits that it markets those products to consumers

The publicity rights ruling looks worse for Redbubble than the trademark ruling. Even if Redbubble disassociated its brand from the final products delivered to buyers, the court suggests that simply hosting the users’ product listings could be enough to create publicity rights liability. That rule also would seemingly apply to all online marketplaces, including Amazon and eBay. It also raises an obvious Section 230 issue. In the 9th Circuit, per Perfect 10 v. ccBill, online marketplaces aren’t liable for publicity rights violations caused by their sellers (unless the Homeaway case has categorically ended Section 230 protection for all online marketplaces post-transaction–a possibility). The court doesn’t discuss Section 230, or acknowledge that Section 230 may be a key reason why we don’t see more publicity rights cases against online marketplaces.

Case citation: The Ohio State University v. Redbubble, Inc., 2021 WL 728348 (6th Cir. Feb. 25, 2021)

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BONUS COVERAGE #1: Atari Interactive Inc. v. Redbubble, Inc., 2021 WL 706790 (N.D. Cal. Jan. 28, 2021). There is a lot going on in this opinion! In the end, I think the plaintiffs would view this ruling as a win, but the opinion does contain language that other defendants will find helpful.

The court’s characterization of Redbubble’s activities: “Redbubble undertakes at least four of the five steps necessary to complete a sales transaction: the artist uploads the art, but Redbubble manages the order, coordinates the creation of the goods, arranges for delivery, and handles all customer service issues, returns, and refunds.”

Direct Trademark Infringement. The court disagreed with the district court ruling in the Ohio State case (the one that the Sixth Circuit just overturned as discussed above), saying that Redbubble could be the product seller because, among other things, “the customer forms a contract with Redbubble, not the artist. Redbubble designs the order process to create the impression that it itself offers the goods for sale….the products themselves arrive in Redbubble packaging with a Redbubble tag to reinforce that they are Redbubble’s products.” Nevertheless, the court says Redbubble might be a “transaction intermediary” instead of the seller. Thus, the court denies summary judgment to both parties.

Vicarious Trademark Infringement. “Courts have found vicarious infringement where a party exerts significant control over the infringing activity.” This sounds like the court is conflating the vicarious copyright infringement standard…? No summary judgment to either side.

Contributory Trademark Infringement. “contributory infringement could occur when a service provider fails to take reasonable steps to prevent infringement while having general knowledge that such infringement is taking place.” (That’s a pretty expansive articulation of the doctrine). The court says Redbubble proactively screens for infringements based on content owner notices; including doing best-guess searches when the owners don’t specify specific infringing items. “Given that use of trademarked content is difficult to detect without input from the trademark owners, Atari fails to show that Redbubble’s process is unreasonable.” This application of law-to-facts seems to pose a barrier to all trademark owners.

“Atari argues that Redbubble could do more, such as disabling search terms on its website based on trademarked names. Redbubble convincingly responds that many of the excluded search results would actually constitute fair use.” However, the court denies summary judgment because it remains unresolved if Redbubble did enough to terminate repeat infringers.

Direct Copyright Infringement. “Redbubble’s only ‘act’ – providing a system where artists can upload their designs for display on a picture of a product – does not subject it to direct liability because Redbubble does not select the content, exercise control beyond the general operation of its website, or instigate the display….Even though each step is performed automatically by a computer, the acts remain volitional because Redbubble designed its software to accomplish those tasks and for its own financial benefit. Moreover, Redbubble exercises control over every aspect of the sale, from manufacturing to shipping and returns, and thus holds the best position to prevent infringement. Accordingly, since Redbubble actively instigates and exercises control over the sales on its website, a reasonable jury could find that Redbubble is liable for direct infringement of Atari’s copyright distribution rights.” A good example of the possible incoherence of the “volition” doctrine.

DMCA Safe Harbor. “The images on its website are not stored ‘at the direction of the user’ because Redbubble actively participates in modifying the files uploaded by users to display the designs on Redbubble-selected physical products.”

Contributory Copyright Infringement. “Regardless of the precise standard for knowledge required, Atari fails to satisfy it here. Atari provides no evidence that Redbubble knew of ‘specific infringing material’ and failed to act. Redbubble introduces evidence that it promptly removed any allegedly infringing listings identified by Atari upon receiving notice. Although Atari claims that additional infringing listings remain on Redbubble’s website, there is no evidence that Atari notified Redbubble of those listings.”

Vicarious Copyright Infringement. “search terms for particular brands would presumably find infringing content because, as in Napster, artists would tag the infringing content to enable users to find it. However, the keywords would also find a variety of non-copyrighted or fair use content that happened to be tagged with the brand….finding infringement would be like ‘searching for a needle in a haystack’ (where Redbubble lacks knowledge of needles’ appearance).” I love that metaphor!

Willfulness. “Nor did Redbubble act with reckless disregard, since it promptly removed infringing listings and began to police for Atari’s content.”

* * *

BONUS COVERAGE #2: Sid Avery & Associates Inc v. Pixels.com Inc., 2021 WL 736258 (C.D. Cal. Feb. 24, 2021).

I blogged this case in October. The plaintiff claimed that users uploaded copyrighted photos to Pixels.com for print-on-demand. The case proceeded to a bench trial, and the court issued its ruling on the trial. First, this court says the plaintiff didn’t adequately show that Pixels.com engaged in volitional conduct (cite to VHT v. Zillow and Perfect 10 v. Giganews):

Pixels does not select the images to be uploaded to its websites, Contributors do. Pixels does not direct what is bought, created, or sold. Rather, Pixels controls only the code which facilitates transactions between vendors, Contributors, and buyers, not what images are uploaded onto its service. Pixels explicitly prohibits infringing content and has implemented a system to remove infringement and infringing Contributors as quickly as possible. Indeed, Pixels has promptly removed images that MPTV alleged to be infringing during this action.

Pixels.com sounds a lot like Redbubble, no? Indeed, like Redbubble, Pixels.com subcontracted the on-demand manufacturing, so the legal results should be the same. Yet, it looks like this ruling is inconsistent with the Redbubble ruling above.

Second, the court says Pixels.com qualifies for the DMCA safe harbor’s limits on damages, and it didn’t have disqualifying right/ability to control its users’ infringement:

Pixels did not exert substantial influence on its Contributors’ sales activities. While over 700,000 Contributors have uploaded over 25 million images to the Pixels websites, Pixels does not encourage or incentivize the uploading of any particular content. Contributors can upload whatever images they choose—barring images that incite violence, promote racism, or contain pornographic material—if they represent and warrant to Pixels that they own the rights in the uploaded images. If a Contributor represents and warrants that he or she has rights in the images uploaded to Pixels, those images instantly appear on the website. Pixels does not alter any uploaded images, nor is it involved with describing or classifying the images on its website. The Contributor is responsible for describing or classifying their images….

The fact that Pixels processes payments, transmits order information to manufacturers, or updates its code to set minimum pricing or add new items, shows only that it controls its operations as a service provider, not the infringing activity. Pixels does not encourage the final pricing or product selection set by Contributors, nor is it substantially involved with any individual sale. While Pixels is in contract with the manufacturers who produce the goods sold, Pixels has no control over the employees, materials, prices, or products that manufacturers make or how they are labeled or shipped. Rather, Pixels’ only involvement in a sales transaction occurs when a Pixels employee inspects a print for pixilation or cropping issues. That employee spends only seconds inspecting “a zoomed-in, very high-resolution view of the top left corner, the top right corner, the bottom left corner, and bottom right corner of the image that was ordered.”

In a footnote, the court says that it doesn’t need to consider the direct financial benefit prong of the DMCA 512(c) safe harbor because (citing Tur v. YouTube) “a provider’s receipt of a financial benefit is only implicated where the provider also ‘has the right and ability to control the infringing activity.” That’s not how I teach the prima facie DMCA 512(c) safe harbor defense in my Internet Law course!

IP Lawsuits Against Print-on-Demand Vendors Continue to Vex the Courts–OSU v. Redbubble & More

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