Online marketplaces like Etsy, Zazzle, and Redbubble thrive by becoming the primary destination for numerous smaller and emerging brands. However, these platforms can also turn into a breeding ground for copycats, resembling the “wild west,” where opportunists exploit the creative and trademarked assets of both well-known and budding fashion labels.
Fashion brands looking to enforce their intellectual property can look to online marketplaces under a theory of contributory infringement. In the wake of a recent decision from the Ninth Circuit Court of Appeals, these marketplaces can breathe a little bit easier. As explained below, the Ninth Circuit narrowed the legal framework necessary to establish contributory infringement for online marketplaces in Brandy Melville (Y.Y.G.M. SA) v. Redbubble, Inc., No. 21-56150 (9th Cir. 2023). While the Y.Y.G.M. decision does not totally shield marketplaces from contributory liability, the hurdle for brand owners to establish contributory infringement has been heightened.
Consider the scenario where you, an online shopper, want to buy a sweatshirt printed with a famous brand’s logo. So, you go to a website like Etsy where you upload a custom design, and the seller will make you a custom sweatshirt with that design. If you purchase that sweatshirt with the “Coca Cola” logo, for example, the resulting “Coca Cola” sweatshirt will infringe upon that company’s intellectual property rights, assuming the relevant parties do not have Coca Cola’s permission.
The case between Brandy Melville and Redbubble addresses this scenario and the following question: is the online marketplace also liable for infringement when a user purchases an infringing design through its site? This concept, where one person directly infringes and another person facilitates the sale of infringing goods, is called contributory infringement.
Brandy Melville is an Italian fashion company. Like most companies today, Brandy Melville holds multiple trademarks to protect its intellectual property, including its well-known Brandy Melville Heart logo and “LA” stylized lightning bolts. Redbubble is an online marketplace that allows independent artists to upload their designs for on-demand printing on various items.
The dispute between these two companies began in 2018, when Brandy Melville found products on Redbubble’s website that infringed the Brandy Melville trademarks. Redbubble promptly removed these products, explaining that the artists who sell goods on its platform designed the infringing products and posted them for sale on the Redbubble website, without Redbubble’s knowledge. After Brandy Melville found more infringing products on the Redbubble website, it sued the company alleging trademark infringement.
The trial court jury found Redbubble liable for contributory counterfeiting and infringement of the Brandy Melville Heart and LA Lightning marks, as well as other unregistered trademarks.
Both parties appealed different aspects of the case, and in August 2023, the Ninth Circuit issued a significant decision that – for the first time – defined that circuit’s legal standard for contributory liability.
The Ninth Circuit clarified that a plaintiff must establish specific knowledge of trademark infringement to hold a defendant liable for contributory infringement. Brandy Melville argued that Redbubble was “willfully blind” to the infringement because Brandy Melville had already alerted Redbubble to infringement in the past. Brandy Melville contended that this “willful blindness” should be sufficient to establish contributory liability for infringement.
The court explained that “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.” The court held that general knowledge of infringement on the defendant’s platform is not enough to show willful blindness. Instead, the court held that specific knowledge of infringement is required to hold a company contributorily liable.
The court explained that efforts to root out infringement could support a finding of no liability, even if the defendant was not fully successful in stopping infringement. In the context of online marketplaces, the decision specifically noted that removing infringing listings and taking action against repeat infringers would likely be sufficient to show that a large online marketplace was not willfully blind.
This case makes clear that specific knowledge of infringement is required for contributory trademark liability. If you operate an online business that either allows others to sell custom designs through your platform, like Redbubble, or allows end users to upload custom designs for on-demand printing, this decision offers some positive news.
To protect your business, you should consider the following guidelines to minimize the risk of being found “willfully blind” and, thus, contributorily liable for infringement:
The Brandy Melville case guides fashion brands, providing direction on what is needed to establish liability when online marketplaces offer third-party infringing merchandise. Although this case narrows the legal framework for brand owners looking to hold online marketplaces liable for contributory infringement, it does not totally shield marketplaces. The court’s reasoning makes clear that there are several factors to consider in determining whether a marketplace was “willfully blind” to the alleged infringement. If you have questions about asserting your intellectual property or defending your business against counterfeiting and infringement claims, reach out to a member of our team.