Ninth Circuit Highlights the Messy Law of Contributory Trademark Infringement Online–YYGM v. RedBubble

July 25, 2023 · by Eric Goldman · in Copyright, Derivative Liability, E-Commerce, Trademark

Redbubble provides an online marketplace for print-on-demand items. Unlike other print-on-demand vendors, Redbubble outsources everything but the marketing and payment processing functions. Third-party user-merchants upload the images; third-party contract manufacturers and other vendors make and ship the ordered items. This Tom Sawyer approach to e-commerce may or may not deflect Redbubble’s legal liability, a question that is being actively litigated.

YYGM owns the Brandy Melville Heart and LA Lightning trademarks. It sued Redbubble for trademark violations. The court dismissed all claims on summary judgment except contributory trademark infringement and counterfeiting. The jury found Redbubble willfully contributorily counterfeited and committed contributory trademark infringement. However, after the trial, the judge reversed one of the contributory counterfeiting claims. The judge also denied YYGM a permanent injunction, attorneys’ fees, and prejudgment interest. The Ninth Circuit overturns much of the lower court’s resolution.

Contributory Infringement and “Willful Blindness.” YYGM argued that Redbubble was willfully blind to users’ infringement. The panel reaffirms the Luvdarts’ definition of willful blindness from the copyright context (cleaned up):

Willful blindness requires (1) subjective belief that infringement was likely occurring and (2) deliberate actions to avoid learning about the infringement….the defendant must have taken active steps to avoid acquiring knowledge.

This panel emphasizes the narrowness of willful blindness:

willful blindness requires the defendant to be aware of specific instances of infringement or specific infringers. Without that knowledge, the defendant need not search for infringement. General knowledge of infringement on the defendant’s platform—even of the plaintiff’s trademarks—is not enough to show willful blindness.

This sounds favorable to the defense because it implies that rightsowners must send takedown notices to defendants. However, on further reflection, the panel’s standard isn’t as helpful as it seems:

this specificity qualifier only extends to willful blindness. Rightsowners may be able to argue contributory infringement other ways.
the required notice of “specific instances of infringement” isn’t detailed. Compare the elements of a DMCA copyright takedown notice in 512(c)(3), which thwarts a lot of copyright owner bluster and misdirection. Under the YYGM standard, could a rightsowner send a notice claiming that a specific product is always infringing and thereby put the burden on the defendant to find and prevent every instance of that product on the site?
similarly, the court says that the rightsowner can put the defendant on notice of “specific infringers.” This implies that rightsowners can force defendants to remove vendors for alleged infringement, instead of just removing their infringing items. The DMCA also directs services to remove repeat infringers, but only in accordance with their standard policy, whereas the YYGM standard implies a 1-strike rule to avoid future infringements by the identified alleged infringers.

To further limit the willful blindness doctrine, the panel says (cleaned up) “bona fide efforts to root out infringement could support a verdict finding no liability, even if the defendant was not fully successful in stopping infringement.” That’s also great, but the “bona fide” qualifier is a fact question that seemingly can’t be resolved before summary judgment or even trial. The panel reinforces the fact-based nature of the standard, saying “What constitutes bona fide efforts will vary based on the context.”

In the context of online marketplaces, the panel adds “Removing infringing listings and taking appropriate action against repeat infringers in response to specific notices may well be sufficient to show that a large online marketplace was not willfully blind.” Might be, maybe not…sounds like a jury question.

The YYGM panel also discussed online marketplace willful blindness in a non-precedential companion ruling, Atari Interactive, Inc., v. Redbubble, Inc., No. 21-17062 (9th Cir. July 24, 2023): “Most of the evidence Atari relies on to show that Redbubble was willfully blind is evidence of general infringement on Redbubble’s website, not specific instances of users infringing Atari’s marks…. Atari’s remaining evidence shows that when it notified Redbubble of specific infringing listings, Redbubble removed them. As a large online marketplace, Redbubble’s response was reasonable. At a minimum, the evidence does not show that Redbubble ‘took active steps to avoid acquiring knowledge.'”

These rulings show how the “willful blindness” doctrine is pushing courts to characterize defendants’ impermissible scienter about infringement in ever-more-tendentious terms. Arguably, they collapse willful blindness back into “notice-and-takedown” principles, which suggests that the doctrine adds nothing to the jurisprudence. If so, time to retire it outright and save everyone the litigation expense and drama. But if the willful blindness doctrine is not coextensive with “notice-and-takedown,” then exactly what facts will demonstrate willful blindness other than a disregarded takedown notice? The phrase “angels dancing on the head of a pin” comes to mind.

This ruling also highlights how defendants would benefit from a statute specifying what constitutes a legally effective trademark takedown notice. The panel sidesteps this question, and it will take years/decades to answer the question through common law development.

The panel’s ruling potentially undercuts the jury’s willfulness determination, so that gets vacated for reconsideration too.

Contributory Counterfeiting. The district court held that counterfeiting could only occur among similar products. This panel disagrees, saying that “confusion could have resulted because the products on Redbubble’s website bearing the Heart Mark are the kinds of trademarked goods Brandy Melville sells.” Though the panel anchors its discussion in consumer confusion, the discussion started sounding like dilution when the panel says (cleaned up) “a strong and distinctive trademark may have acquired great fame on its own, to the point that its mere presence confuses, even on different products.” Will the counterfeiting doctrine merge into the dilution doctrine?

Permanent Injunction. The lower court held that YYGM’s one-year enforcement delay negated a permanent injunction. The court says the delayed enforcement is relevant but not dispositive. I’ve noted before how injunctions are extremely problematic for print-on-demand vendors. See, e.g., this post.

Prejudgment Interest. The panel holds that if a trademark owner elects statutory damages, it’s not entitled to prejudgment interest.

Case citation: Y.Y.G.M. SA v. Redbubble, Inc., 2023 WL 4697350 (9th Cir. July 24, 2023)

MAY 2024 UPDATE: On remand, the court says Redbubble had willful blindness when “Plaintiff presented evidence that Defendant allocated relatively little resources towards content moderation, and as a result, screened only a third of all products for infringement, despite recognizing that numerous products likely infringed various copyrights and trademarks….the jury could have reasonably concluded that Defendant failed to make bona fide efforts, and thus could be held contributorily liable.” The district court slightly carved back the permanent injunction:

The jury found Defendant liable for contributory counterfeiting and contributory infringement based on evidence that Defendant knew, should have known, or was willfully blind to the existence of infringing products but failed to make sufficient efforts to root out the infringement. There was no finding that Defendant knew or should have known about every product that was uploaded on its site, or that Defendant may otherwise be held liable for every infringing product regardless of its knowledge. Yet, Plaintiff’s proposed injunction requires Defendant to refrain from “permitting the reference” of Plaintiff’s trademarks “on any products … that are the same or confusingly similar” to Plaintiff’s products, without any mention of Defendant’s knowledge of those products. This language (or lack thereof) would make Defendant strictly liable for all future acts of infringement by users of its website, going far beyond the redressable harms that Plaintiff demonstrated at trial. In this manner, the terms are impermissibly overbroad.

All told, this reinforces that the 9th Circuit’s ruling was a net loss for defendants. Redbubble will be stuck with an unmanageable injunction and liability for willful blindness counterfeiting. That is not a recipe for long-term success. Y.Y.G.M. SA v. Redbubble Inc., 2024 WL 2107382 (C.D. Cal. April 11, 2024).

Ninth Circuit Highlights the Messy Law of Contributory Trademark Infringement Online–YYGM v. RedBubble

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