In January 2021, Kamille Faye Vinluan-Jularbal visited the online shop Redbubble in search of a sweatshirt with the words “Dadalorian”–a meme-worthy riff on the protagonist of Disney’s “The Mandalorian” television series. The fact that the Mandalorian acts as a father figure to a character affectionately known as “Baby Yoda” makes a shirt like this seems like a slam dunk for any proud papa’s birthday or Father’s Day gift. The only difference in the designs are the letters themselves, the Redbubble design replacing “MAN” with “DA.”

Vinluan-Jularbal was familiar with Redbubble from a prior to this purchase–the month prior she’d also bought a United Nations sweatshirt on the online marketplace. However, she would later come to realize that both were not authentic merchandise, but replicas or knock-offs of designs from Disney and the UN. In a class action lawsuit filed in the Eastern District of California against Redbubble, Vinluan-Jularbal claimed she bought the items because she had an “affinity for the United Nations, and The Mandalorian series” and “would not have knowingly supported counterfeiters and infringers of such intellectual property rights.”

In her suit, Vinluan-Jularbal alleged that Redbubble enabled infringement on its site while knowingly garnering profits from counterfeit products, creating unfair competition with the actual intellectual property owners and licensees.

The case–Kamille Faye Vinluan-Jularbal et al., v. Redbubble Inc., Case No. 2:21-cv-00296, in the U.S. District Court Eastern District of California–is one of many suits against Redbubble, an Australian company that is still in litigation limbo. On the flipside, the company continues to find massive success in its print-on-demand clothing business model.

Founded in 2006, Redbubble lets users and content creators upload designs to its site that can be printed and reproduced on t-shirts, posters, stickers and phone cases. Once uploaded by a user, the design can be bought worldwide by anyone with a credit card. The person who uploaded the design receives a small percentage of the proceeds every time they make a sale on their uploaded design.

According to Vinluan-Jularbal’s suit, Redbubble sends the designs to a manufacturing partner who prints it on a blank product of the buyer’s choice. In addition tobeing a point of sale, Redbubble handles all aspects of the transaction, including packaging and delivery, the class action states. This is where things get murky for the site.

Over the last several years, Redbubble has been sued for trademark and copyright infringement in federal courts on multiple occasions, including suits in its home country of Australia. Yet its record of wins and losses in court have raised questions about the gray areas this company uses to make profit.  In the U.S. there are also judges who have overturned rulings against the company, holding that their role as an intermediary frees them from liability of creating and/or selling counterfeit items. This leads to the question of what responsibility a company like Redbubble owes to its customers when it comes to selling items that aren’t the real deal.

Since it started in ‘06, Redbubble has generated over $100 million in sales. More than 600,000 artists have posted images onto the website–some who created work that could be infringing on other trademarks as part of their creation.

As physical retail stores continue to shutter due to the world’s increased use of online shopping, companies and their distributors have turned to online platforms to boost sales and get their goods in front of a wider audience. In that race, Redbubble has emerged as one of the most successful platforms for independent creators and small businesses to get their designs sold. However, a number of recent cases against the company continue to raise questions about how these new approaches to online sales open up more possibilities for infringement, counterfeiting, and right of publicity violations on registered trademarks.

Bubble vs. Buckeye

Questions over Redbubble liability for trademark infringement stem from the products sold on its site were addressed in March by the Sixth Circuit. Ohio State University (OSU) filed an infringement suit against Redbubble, alleging direct trademark infringement for selling clothing, stickers, phone cases and other assorted goods available on the site that allegedly copied a number of OSU’s registered trademarks, including “OSU” and “O” marks and the college mascot, Brutus Buckeye. OSU, as assignee of football coach Urban Meyer’s right of publicity, also sued Redbubble for violations of the Ohio right of publicity statute based on sale of products that used Coach Meyer’s image.

In a motion for summary judgment, Redbubble argued that the company was not directly liable for trademark infringement because it did not actually “use” the marks that were allegedly infringed for commercial purposes. The company argued that it was the artists, not Redbubble, who were selling infringing products and Redbubble held no actual title to them as an intermediary. In its interpretation for the standard of direct infringement, the district court ruled in favor of Redbubble, holding that the marketplace played the role of “transactional intermediary,” not the seller of the products. Redbubble’s transactions failed to meet the requirements for use in commerce, which is a requirement to prove direct infringement, the court held.

The court compared Redbubble, in its capacity to facilitate transactions, to e-commerce giants like Amazon and eBay and ignored any post-transactional work (including logistics for the manufacture and shipment of goods) that Redbubble performs to cause the products to be created and sold through its marketplace.

However, the Sixth Circuit reversed the district court’s decision, holding that the judge’s interpretation of the Lanham Act test was far too narrow in the case of direct infringement.

“Because Redbubble’s marketplace involves creating Redbubble products and garments that would not have existed but for Redbubble’s enterprise, we find that the district court erred by entering summary judgment for Redbubble under an overly narrow reading of the Lanham Act,” U.S. Circuit Judge John B. Nalbandian wrote.

Instead, the Sixth Circuit held that use in commerce may be found not simply through “sales” of products to which the seller has title, but also in other activities, such as marketing, distribution and advertising (Ohio State University v. Redbubble, Inc., No. 19-3388, 6th Cir. Feb. 25, 2021).

The Sixth Circuit held that the products sold through the Redbubble website were produced only after they were purchased by the site’s consumers. The products were then manufactured by third-party companies which were contracted by Redbubble and shipped by those manufacturers with packaging and tags emblazoned with the Redbubble logo and were listed as “Redbubble Products” and “Redbubble Garments” on the company’s website. Because of these activities, the Sixth Circuit held, Redbubble’s model differed from Amazon and eBay, which only connects sellers with buyers to aid in commerce.

“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,” Judge Nalbandian wrote for the panel, adding that this model differs from Amazon’s marketplace and makes more “use” of the trademark than other non-liable facilitators.

Whether or not Redbubble’s actions will be enough to show direct infringement is still undecided because of the questions surrounding the extent of Redbubble’s involvement in commercial activities. Last spring, the court remanded the case to the district court for reconsideration.

Brandy Melville Bags Big Bucks

In the case of one retailer, Redbubble could not escape fines for its activities. In June, LA-based teen fashion retailer Brandy Melville won a $520,000 judgement against the company  for contributory counterfeiting of two of its trademarks after a federal jury trial. The verdict held Redbubble liable for printing and distributing works listed by its users.

This time, the jury largely sided with Brandy Melville, finding Redbubble at fault for contributory counterfeiting and infringement of the lightning and heart marks in the brand’s logo.

“A visitor to the Redbubble website can find counterfeits of almost every major brand in the world,” Brandy Melville counsel Keith Wesley, of Browne George Ross O’Brien Annaguey & Ellis LLP, wrote in a statement following the ruling. “We are grateful that the jury agreed that the type of trademark counterfeiting that Redbubble has facilitated online for years is unlawful and needs to stop.”

Following the judgement, Redbubble said it was still confident in its legal position and planned to continue defending itself against the claims.

“This is but one step in the overall litigation and a number of possible steps remain before the claim is finally concluded,” the company said in a statement to its investors. “Redbubble believes that certain critical findings were not supported by the evidence offered at trial and will be asking the court for relief from the verdict on that basis.”

Game Over For Atari?

In November, Redbubble was in court yet again in another long-standing suit filed by video game company Atari–but this time, the company leveled up with a very important win for its business model. Two weeks ago, a California federal court rejected Atari’s claims that Redbubble violated intellectual property rights by selling clothing and other goods imprinted with the logo and art from classic video games.

In 2018, Redbubble was sued by New York-based Atari Interactive Inc. for allegedly being “powered by a substantial quantity of counterfeit goods,” including unauthorized t-shirts that infringed on Atari’s classic, A-shaped “Fuji” as well as logos for iconic games like “Pong,” “Asteroids” and “Centipede.”

However, the jury held that Redbubble was not liable for copyright infringement, trademark infringement, or trademark counterfeiting, siding with the company’s argument that it is a  “transactional intermediary” that doesn’t sell, manufacture or advertise Atari-based goods itself, and therefore wasn’t liable for any sales it facilitated which were carried out by the users on its platform.

In a defense motion, Redbubble’s lawyer James Toy said the company relies on IP owners to notify the company of infringing products on its site. It employs a team tasked with conducting manual reviews of images and artistic designs in addition to an automated system to catch fraud, inappropriate content and potential IP infringement uploaded by artists who use the platform.

Despite this effort, Toy argued, the company’s search tool has thousands of keywords and is unable to catch every piece of infringing content. Manual review of the images is subject to human error. Representatives from Redbubble were not immediately available for comment.

The recent win for Redbubble could definitely have an impact for brands experiencing trademark infringement in the online marketplace. Once again, a jury found that Redbubble did not sell infringing products for the purpose of infringement–instead it was the individual designers who were at fault. Redbubble also did not have enough knowledge or control of what third-parties are selling on its platform, the jury found, making it hard to probe the company liable for contributory or vicarious trademark infringement. Whether or not Atari will appeal the verdict remains to be seen. But for now, it appears the gray areas of its business model will continue to keep Redbubble from going bust.

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