May 15, 2019

Buckeyes Get Black Eye in First Round Against Redbubble

Recently The Ohio State University (yes, that one) suffered a loss before the U.S. District Court for the Southern District of Ohio in a home game against visiting Redbubble, Inc. OSU had sued Redbubble for trademark infringement, unfair competition, and other claims due to Redbubble’s alleged use of certain trademark rights owned by OSU, but lost in cross motions for summary judgment.1 The facts of the case provide a good illustration of the kinds of enforcement issues universities have to face as well as the kinds of policing courts may (or may not) expect online platforms to conduct.

OSU is a public university in the Midwest somewhere just south of Michigan. It owns a number of trademarks, including many that are federally registered, such as BUCKEYES, the fearsome mascot of OSU sports teams. It has a few fans (at least one of whom works down the hall from me). In fact, the fans are so supportive of OSU sports that one publication reported that OSU received $17.2M in revenue generated from royalties, licensing, advertisements, and sponsorships during the 2015-2016 athletic academic year. According to the university's website, the school has generated $130M in royalty revenue. This same webpage explains that OSU has launched a “BUY BUCKEYE” awareness campaign seeking to encourage fans to purchase genuine merchandise by educating them about how the revenue generated through licensing is used (eg, scholarships). OSU has a lot to gain from ensuring fans buy genuine OSU-branded products (and a lot to lose by allowing unauthorized uses of its mark to go unaddressed). So it is no small wonder that it took an interest in the unauthorized OSU-branded products sold through Redbubble.

Redbubble is an online marketplace that allows artists to upload and sell their creations. Redbubble does not provide the goods purchased through its marketplace directly. Instead, it provides the means for connecting the artists to the buyers, and the artists to ancillary service providers (eg, manufacturers, shippers, and payment processors). Nevertheless, Redbubble’s marks appear on hang tags attached to the finished products, packaging for the finished products, and the return address provided to customers is Redbubble’s address. Redbubble also cares about the outcome of this case as, in some ways, it goes to the heart of Redbubble’s business model. Moreover, Redbubble has also faced trademark claims in other countries.

OSU sent Redbubble a cease and desist letter alleging trademark infringement because its marks appeared on products sold through Redbubble’s site without OSU’s authorization. The parties argued over whether it was OSU’s obligation to identify infringing products or whether it was Redbubble’s obligation to police its site, but were not able to reach agreement. Instead, OSU filed suit against Redbubble.

Although the court’s opinion does not delve into the terms of use applicable to Redbubble’s website, it is interesting to note that they do make some reference to intellectual property. With respect to trademarks, Redbubble’s website terms of use prohibit users from (among other things) using Redbubble’s trademarks “…in connection with… products or services which are not ours…” The terms of use also provide users with a mechanism for protecting their own rights by reporting “inappropriate content,” which includes infringing content. Users concerned that their intellectual property rights have been infringed may click on a link found next to the product in question and use Redbubble’s notice and takedown procedure.2 The procedure is very similar, if not identical, to the one described in the Digital Millennium Copyright Act, (the “DMCA”) but appears to apply to all types of intellectual property rather than only copyrights. It is not clear whether OSU first sought relief through this notice and takedown procedure, but when Redbubble insisted that OSU provide cites to the allegedly infringing content (which is something requested as part of the current notice and takedown procedure), OSU filed suit instead.

The DMCA provides a safe harbor for online service providers who implement the statutorily prescribed notice and takedown procedure (and who comply with other requirements) in connection with copyright claims. U.S. law does not provide a similar safe harbor for procedures addressing trademark infringement, but Redbubble is not the only online marketplace provider to have instituted a similar procedure for intellectual property claims other than copyright claims. In most notice and takedown procedures implemented by online market sites, the owner of the intellectual property rights must provide notice of the actual infringement to the online operator. Ebay’s VeRO program in particular has garnered some recognition in both commentary and court rulings. It has also arguably been a basis for protecting Ebay against certain types of secondary liability claims in the infringement context. So it is no wonder that other online marketplaces would offer similar types of programs. And perhaps that is also why OSU did not pursue any claims of secondary liability against Redbubble, but instead proceeded only with various direct claims.

These claims did not fare well before the district court (and the court’s opinion did not discuss the notice and takedown procedure). The argument about whether Redbubble should be liable for direct infringement, counterfeiting, unfair competition, and passing off centered around the question of whether Redbubble had used OSU’s marks in commerce, or, as the court framed it, ‘whether Redbubble is a seller.’ The court focused much more on questions about whether Redbubble actually took title to certain goods, whether it bore the risk of loss, stored any inventory, etc. and not so much on whether Redbubble affixed its marks to goods in a way that gave consumers the impression it was the source of such goods. Ultimately, the court concluded that Redbubble was not a seller.

In examining this question, the court compared Redbubble to Amazon, which provides fulfillment services to sellers but was not itself a seller (in the relevant context). The court also compared Redbubble to Café, in which itself would print images provided by users on various products at the users’ request. The court concluded that Redbubble was more like an ‘auction’ house akin to Amazon and less like, which itself manufactured and sold goods. The court gave short shrift to OSU’s arguments that Redbubble advertises the goods offered on its site using OSU’s marks, describing those arguments as too conclusory.

In the end, the district court granted Redbubble’s summary judgment claims and denied OSU’s summary judgment claims. But there is to be a ‘rematch’ of sorts between these teams in the future. OSU has appealed the decision. Its brief is due to the U.S. Sixth Circuit Court of Appeals on June 10, 2019.

1 OSU also asserted publicity rights claims, but this post will focus on the trademark infringement claims in light of the focus of this blog.

2 This procedure appears on Redbubble’s website as of May 11, 2019. It is not clear when this procedure was posted.