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Jury Finds for Online Marketplace over Atari in Trademark Infringement Case – JD Supra

Morgan Lewis
The jury in Atari Interactive Inc. v. Redbubble Inc. returned a verdict in Redbubble’s favor on November 4, 2021, clearing the online marketplace of trademark infringement and related claims. Redbubble is a print-on-demand marketplace that allows artists to upload images that customers can then select for printing onto t-shirts, mugs, and various other items with Redbubble’s tag.
In the case[1], Atari had alleged that Redbubble failed to adequately police its marketplace to remove artist uploads that counterfeited or infringed upon Atari’s trademarks in its logo and other iconic images. As part of its defense, Redbubble presented evidence that Atari had only complained to Redbubble once (in 2011) before bringing suit in 2018, and that when the lawsuit was filed, Redbubble took quick action to remove potentially infringing designs from its site. The jury in this case decided that Redbubble was not liable for any of Atari’s claims. However, Redbubble did lose a similar jury trial to Swiss brand Brandy Melville in July 2021. There, the brand succeeded on its claims that Redbubble was liable for contributory infringement because it failed to take sufficient action after notification of infringing designs on its site.[2]
Online marketplaces offer a platform for merchants to offer products to consumers. Typically, the manufacturer, not the marketplace, is responsible for designing, making, and selling the product, with marketplaces often taking on shipping, returns, credit card processing, and other ancillary services for sellers. Courts have most often found that such activity by the online marketplace does not trigger liability for “using” a disputed trademark under the Lanham Act. As the Sixth Circuit put it recently in another case involving Redbubble, “online marketplaces, like eBay and Amazon, that facilitate sales for independent vendors generally escape Lanham Act liability.”[3]
However, intellectual property owners have alleged that Redbubble does more than typical marketplaces, as it assists customers with design, coordinates manufacturing, and places its own tag on merchandise sold. As the court in the Ohio State case noted, “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. So it’s more than just a passive facilitator.” This active involvement led both the Ohio State and Atari courts to find there were sufficient disputed facts to permit trademark claims against Redbubble to proceed past summary judgment to trial.
Claims such as those brought by Atari and Ohio State are likely to continue against online marketplaces, particularly those that go beyond providing basic ancillary services like product display, shipping, and credit card processing to its vendors. Such online marketplaces will want to have policies in place indicating that sellers should not violate third-party intellectual property, but they will also need to remain vigilant in reacting to demands to remove items from their website.
[1] No. 4:18-cv-03451 (N.D. Cal.)
[2] Y.Y.G.M. SA v. Redbubble Inc., No. 2:19-cv-04618 (N.D. Cal.).
[3] Ohio State Univ. v. Redbubble Inc., 989 F.3d 435 (6th Cir. 2021).
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