Print-on-Demand Services Face More Legal Woes–Canvasfish v. Pixels

March 5, 2024 · by Eric Goldman · in Copyright, Derivative Liability, E-Commerce, Publicity/Privacy Rights, Trademark

In the ongoing legal battles over print-on-demand services, RedBubble and (more recently) Printify have sometimes achieved favorable results by disaggregating all of the functions and acting solely as a marketing agent for the disaggregated vendors. These defense-favorable outcomes may work in the short term; but they leave open the potential liability of the contracting vendors (which may drive them out of the industry, leaving the marketing agent with no one to outsource to) and as well as the marketing agent’s possible secondary liability exposure for the vendors’ activities. That story is still being written.

Meanwhile, more vertically integrated print-on-demand services face a difficult legal environment. This post covers an opinion where the court assumes such vertical integration based on the pleadings (it remains to be seen if that’s actually the case). Based on that assumption, the opinion offers no good news for the defense.

The print-on-demand service at issue is Pixels, who has appeared on this blog before. The plaintiff paints fish, has a trademark in his name, “DeYoung,” and has registered copyrights. The plaintiff claims that Pixels’ users upload infringing images and refer to them by the trademark DeYoung.

Trademark Infringement.

The court wades into the ever-fraught question of what constitutes trademark “use”:

On one end are companies like eBay and Amazon which facilitate sales for independent vendors and are typically not considered “users.” [cites to Tiffany v. eBay and Multi-Time Machine v. Amazon, neither of which I believe turned on the TM use question]. On the other end are brick and mortar stores that sell trademark-infringing items directly to consumers, regardless of whether the stores design or manufacture those items. [Cite to Ohio State v. Redbubble and others]….just because a seller is an online service does not mean they automatically escape liability….

Lanham Act liability is more likely to apply to a print-on-demand website to the degree it holds itself – and not the third-party designers – out as the creator of the products in question. If the service controls the printing, manufacturing, and shipping of the products and delivers those products bearing the service’s own labels and tags rather than those of the designer, then it is identifying the goods as its own.

The plaintiff’s allegations indicate that Pixels exercises sufficient control to qualify as a trademark “user,” so the trademark claim survives:

Canvasfish alleges that Pixels “is actively involved in nearly every aspect of its users’ sales, providing the art, advertising, payment processor, manufacturing, printing, warehousing, and shipping for each product sold through its Websites and Mobile App.” Indeed, Canvasfish alleges that Pixels has more control over the goods it sells than Redbubble, which the court in Ohio State noted “never t[ook] title to any products shown on its website… [and] d[id] not…manufacture, or handle th[ose] products.” Much like Redbubble, Pixels also has a hand in advertising infringing work, allowing users to search for DeYoung artwork and providing a link to view “all Derek DeYoung products,” despite the fact that many of those products originated from unlicensed third parties. In addition, the prints that Canvasfish purchased came in a box bearing a “FineArtAmerica” label.

In the Sid Avery lawsuit, Pixels ultimately won at trial that it was not sufficiently vertically integrated for copyright purposes, so we’ll see if the judge’s tone changes on summary judgment.

Trademark Counterfeiting.

The court says that Pixels could be “counterfeiting” the Canvasfish online store (?) and by offering counterfeit goods in Pixels’ store:

Canvasfish presents a plausible case that the goods Pixels sold bearing the DEYOUNG mark were counterfeits. True, Pixels does not operate a DeYoung online retail store, nor does it offer original paintings. However, it does sell, manufacture, and print the same type of goods that are directly covered by Canvasfish’s registered service mark….

Canvasfish has a registered mark for an online store that sells prints, boat wraps, phone cases, drinkware and various other products bearing DeYoung’s artwork and registered mark. Pixels sells the exact same products – prints, phone cases, drinkware, and stickers. It also sells a similar type of product – various other items bearing DeYoung’s artwork and mark including beach towels, pillows, tapestries, puzzles, and pouches. When a consumer buys a product off of Pixels’ website bearing a DEYOUNG mark, they may well think they are buying an official DeYoung product. Therefore, Pixels’ use of the DEYOUNG mark could cause confusion in the general public over whether the goods are genuine Canvasfish products or knockoffs.

The counterfeiting analysis doesn’t change regardless of whether Pixels includes the plaintiff’s trademark in its URL.

However, Pixels isn’t counterfeiting the plaintiff’s mark for “paintings”: “no reasonable consumer purchasing a print or product displaying DeYoung artwork from Pixels’ website would be confused over whether they were purchasing an original DeYoung painting.” The outcome might have been different if the mark’s class had extended to “artwork” or “artistic images,” not just “paintings.”

To establish counterfeiting, the plaintiff must also show Pixels’ scienter, which the court equates to “willful blindness.” UGH. Whether the standard is willful blindness or constructive knowledge, the plaintiff’s allegations are sufficient:

It is alleged that Pixels knew that products which infringed Canvasfish’s trademarks were being offered for sale by users of its website as early as September 2022. Even if it took action to remove those particular offending products, it did not stop either those users or others from uploading DeYoung trademarked images. Indeed, there appears to be a pattern of ignoring the trademarks of the goods offered on its websites, as multiple well-known brands of products are being offered by third-party users for sale, apparently without license. The Court finds that these allegations are sufficient to show that Pixels plausibly knew or was willfully blind to sales of counterfeit products bearing the DEYOUNG mark on its websites.

The court seems to be saying that Pixels acquired the affirmative obligation to police all instances of vendor infringement after Pixels got knowledge “that products which infringed Canvasfish’s trademarks were being offered for sale.” Failing that policing burden, Pixels becomes a direct counterfeiter. Wild. If so, every trademark owner could send a super-notice takedown right that applies to all instances of its trademark, not just specifically identified items. That differs from the Tiffany case, which generally requires trademark owners to identify specifically infringing items. I’m not sure if the court intended such a broad principle.

DMCA Safe Harbor.

The court says Pixels’ 512(c) defense isn’t apparent on the face of the plaintiff’s complaint.

Publicity Rights.

Among other things, Pixels argued that Section 230 applied to the publicity rights claim. The court says 230 is an “awkward fit” because Pixels allegedly “benefits from printing and shipping the finished products to consumers and charging them money for that service.” While there’s no reason Section 230 couldn’t apply to digital items sold by the defendant, I don’t see how 230 can apply equally to offline physical items. The court also implicitly sidesteps the possibility that 230 doesn’t apply to publicity rights claims outside the Ninth Circuit because other courts have characterized the claims as “intellectual property” claims.

Implications.

Other than the narrow interpretation of the “painting” trademark, the court made all of the inferences in favor of the plaintiff over Pixels. That surely reflects the procedural stats. Pixels sought a motion to dismiss, so the court assumed the plaintiff’s facts were true. It likely also reflects the consequences of the narrative over Pixels’ alleged vertical integration. If a print-on-demand service can’t fit into a narrow safe haven as a marketing agent (and even then, we’re still trying to determine if there is, in fact, any safe haven at all), then the resulting opinions look U-G-L-Y–especially the crazy-broad approach to counterfeiting and the vitiation of the “intent” scienter. However, after losing the preliminary rulings, Pixels turned around its prior Sid Avery case in a shocking trial win. Will it make magic again in this case on further proceedings?

Case Citation: Canvasfish.com, LLC v. Pixels.com, LLC, 2024 WL 885356 (W.D. Mich. March 1, 2024)

Print-on-Demand Services Face More Legal Woes–Canvasfish v. Pixels

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