Online marketplaces like Etsy,
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
What's the Issue in a Snapshot?
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
The Case:
The dispute between these two companies began in 2018, when
The trial court jury found
Both parties appealed different aspects of the case, and in
Understanding the New Standard for Contributory Infringement
The Ninth Circuit clarified that a plaintiff must establish specific knowledge of trademark infringement to hold a defendant liable for contributory 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.
What Does this Mean for Your Online Marketplace Business?
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
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:
-
Add a button or mechanism that allows users to report infringement;
- Maintain and check the contact email address on your website so you stay informed about any reports of infringement;
- Reasonably investigate and act on reports of infringement; and
- Ensure your website's terms and conditions include language that requires infringement to be reported.
Conclusion
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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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