Last week the U.S. Ninth Circuit adopted a standard for contributory trademark infringement liability, “a novel question” before the appellate court.
In Y.Y.G.M. SA v. Redbubble, Inc., No. 21-56150, 2023 WL 4697350 (9th Cir. July 24, 2023), the plaintiff, doing business as Brandy Melville, sold various clothing and home goods on Redbubble’s e-commerce site. In 2018, Brandy Melville notified Redbubble of listings which allegedly infringed on its registered trademarks. Redbubble removed those listings and asked Brandy Melville to notify it of any additional listings it wanted removed.
After finding more infringing listings, Brandy Melville sued Redbubble a year later. Following dismissal of several theories at summary judgment, the parties went to trial on Brandy Melville’s contributory trademark infringement and counterfeiting claims. A jury found Redbubble liable for willful counterfeiting and contributory infringement of two marks, the Heart and Lightning Marks. After the verdict, the district court granted a motion by Redbubble for judgment as a matter of law as to the Heart Mark, setting aside the jury verdict. The district court let the verdict stand as to the Lightning Mark, which Redbubble appealed.
Citing the Supreme Court’s longstanding precedent in Inwood Lab’ys, Inc. v. Ives Lab’ys, Inc., 456 U.S. 844, 854 (1982), the Ninth Circuit recognized that a party that “intentionally induces another to infringe a trademark” or who “continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement” is “contributorially responsible for any harm done as a result of the deceit.” Turning to its own precedent, the Ninth Circuit held that a defendant meets the “knows or has reason to know” standard if it is willfully blind to the infringement. Redbubble, 2023 WL 4697350 at *3 (citing Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 265 (9th Cir. 1996)). This means that the defendant must have taken “active steps” to avoid acquiring knowledge of the infringement. Id.
Turning to precedent from sister circuits, the court recognized the Second Circuit’s holding in Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 107 (2d Cir. 2010) that a service provider must have “more than a general knowledge or reason to know that its service is being used to sell counterfeit goods[.]” In Tiffany, eBay was not liable for contributory trademark infringement because Tiffany failed to identify any particular sellers who were offering counterfeit goods on the defendant’s platform. The Ninth Circuit recognized similar precedent from the Fourth and Tenth Circuits.
In Redbubble, the Ninth Circuit similarly held that a defendant must 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…is not enough to show willful blindness…We hold that willful blindness for contributory trademark reliability requires the defendant to have specific knowledge of infringers or instances of infringement.” Redbubble, 2023 WL 4697350 at *8. The case was remanded for reconsideration of Redbubble’s motion for judgment as a matter of law under this standard.
The Ninth’s Circuit’s Redbubble decision, which can be read here, also discusses Brandy Melville’s appeal of Redbubble’s successful motion for judgment as a matter of law, as well as the district court’s denial of a permanent injunction and pretrial interest.
Key Takeaway
Brands that discover infringing listings or counterfeit products on an online platform should emphasize pursuing relief directly from the seller of the infringing goods. In order to pursue a contributory infringement or counterfeiting claim against the platform, brands should provide in their cease-and-desist letter, at a minimum, the exact product names, exact listing numbers (for example, ASINs), full screenshots of the offending listings, and ideally, the result of any test orders producing such infringing items.
Federal courts continue to set high notice standards for holding platforms responsible for infringing sales and counterfeit goods.
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Chilivis Grubman advises clients on trademark and brand protection matters, including establishing robust anti-counterfeiting practices.