Amazon pulls further ahead of possible competitors in TM secondary liability wars

Ohio State Univ. v. Redbubble, Inc., No. 19-3388 (6th Cir. Feb. 25, 2021)

“Because Amazon’s marketplace operates as a neutral intermediary between consumers and third-party vendors, courts have typically not found it liable for trademark-infringing goods sold through its platform.” But Redbubble wasn’t entitled to the same treatment.  “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.” The description:

Independent artists, not employed by Redbubble, upload images onto Redbubble’s interface. Consumers then scroll through those uploaded images and place an order for a customized item.

Once a consumer places a purchase on its website, Redbubble automatically contacts the artist and arranges the manufacturing and shipping of the product with independent third parties. So Redbubble never takes title to any product shown on its website. And Redbubble does not design, manufacture, or handle these products. But the shipped packages bear its logo, and Redbubble handles customer service duties such as returns.

Aside from managing the website, Redbubble plays a larger role in overseeing and executing sales made on its marketplace. For example, Redbubble helps market products listed on its website. And it markets those goods as Redbubble products to consumers; for instance, it provides instructions on how to care for “Redbubble garments.” When customers receive goods from Redbubble’s marketplace, they often arrive in Redbubble packaging and contain Redbubble tags. And if there are excess goods, Redbubble has the right to dispose of those items.

Some of Redbubble’s artists uploaded trademark-infringing images. When OSU sent Redbubble a C&D, Redbubble asked it to “specifically identify each infringing design.” OSU sent Redbubble a letter containing photos of nine offending items, but Redbubble told OSU that pictures, asking for URLs or other identifying information. There was apparently no reply, and Redbubble didn’t remove the offending products from its website. OSU sued for Lanham Act violations and a violation of Ohio’s ROP for use of the persona of a former employee who had transferred his rights to OSU.

The district court found that Redbubble did not “use” OSU’s trademarked images in operating its business model under the Lanham Act because it only acted as a “transactional intermediary” between buyers, sellers, manufacturers, and shippers.

OSU didn’t preserve a theory of vicarious liability, so the court considered only direct liability. (OSU claimed not to have known about Redbubble’s relationship with third-party vendors, but it could have amended the complaint once it learned more.)

Fortunately for OSU, the court of appeals held that the Lanham Act extends direct liability beyond manufacturers, sellers, and those “who apply infringing marks to sales displays or other related advertising materials.” eBay and Amazon are not subject to direct liability, and neither are sellers of domain names, but there’s a line to be drawn.

“[O]ne key distinction between a direct seller who “uses” a trademark under the Act and a mere facilitator of sales who does not is the degree to which the party represents itself, rather than a third-party vendor, as the seller, or somehow identifies the goods as its own. A retailer who sells products directly to a customer at a brick-and-mortar store is indisputably a seller to whom the Lanham Act applies. An online marketplace like eBay that clearly indicates to consumers that they are purchasing goods from third-party sellers is not. … Here, although the record is sparse, 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.

Use of a third party to manufacture goods sold on the site, and the degree of control and involvement exercised by Redbubble over the manufacturing, quality control, and delivery of goods to consumers, were relevant to “whether the offending goods can fairly be tied to Redbubble for the purpose of liability.” The record needed further development. Still, “it appears that Redbubble brings trademark-offending products into being by working with third-party sellers to create new Redbubble products, not to sell the artists’ products.” That’s more than just being a passive facilitator. Plus, it calls the goods “Redbubble products” and “Redbubble garments,” so it goes beyond Amazon.

As for the ROP claims, the question was whether Redbubble used “any aspect” of the ex-employee’s persona for a “commercial purpose.”  While Amazon doesn’t make editorial choices about book covers [note judicial factfinding that seems both untethered to any record and somewhat improbable as a blanket statement], Redbubble is different. “Redbubble interweaves its brand with the products it sells.” Plus, the text of Ohio’s ROP statute prohibits using a persona in connection with a product, advertising a product, or soliciting the purchase of a product. “That broad language expands liability beyond directly selling trademark-infringing goods.” So even if Redbubble was passive, the ROP would apply. [And also it seems that cases letting Amazon off the hook wouldn’t apply to Ohio ROP claims either. More First Amendment conflicts coming!]

Record development was required because it wasn’t clear that OSU could win. It wasn’t clear what “Redbubble products” and “Redbubble garments” really meant. Redbubble never takes title. Factual gaps: “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.”