Argument for Revisiting Contributory Infringement and Circuit Split

Brandy Melville has asked the Supreme Court to review the 9th Circuit’s decision in its dispute with Redbubble. Scott Hervey and Jamie Lincenberg discuss this case on this episode of The Briefing.

Watch this episode on the Weintraub YouTube channel here.

Show Notes:

Jamie:
This past summer, we analyzed the willful blindness doctrine, which was highlighted by the 9th Circuit’s decision in the case of Redbubble, Inc. Versus Y.Y.G.M. doing business as Brandy Melville. The 9th Circuit in that case refused to hold Redbubble liable for contributory infringement because Redbubble didn’t know, or have reason to know of specific incidents of infringement by its users. The matter seems settled, but Brandy Melville has asked the Supreme Court now to review the 9th Circuit’s decision, which now causes a circuit split. I’m Jamie Lincenberg of Weintraub Tobin. We’re going to talk about this update in the Brandy Melville Redbubble dispute on this installment of The Briefing.

Scott:
I’m Scott Hervey of Weintraub Tobin. Jamie, welcome back to The Briefing.

Jamie:
Thank you, Scott. It’s great to be here again.

Scott:
So before we dive into Brandy Melville’s petition for assert to the Supreme Court, can you take us back through the history of the case?

Jamie:
So this dispute began in 2018 when Brandy Melville, the popular clothing retailer, brought a trademark infringement suit against Redbubble, an online marketplace that allows independent artists to upload their own designs for on-demand printing on various items of merchandise. Brandy Melville had found products on Redbubble’s website that infringed their company’s trademarks.

Scott:
Initially, the district court had found Redbubble liable for both willful contributory counterfeiting of the marks and contributory infringement. Then, on appeal, the 9th Circuit appellate panel overturned much of the lower court’s findings, holding that a party is liable for contributory infringement when it continues to supply its products to one whom it knows or has reason to know is engaging in trademark infringement. And a party only meets this standard if it is willfully blind to infringement. In short, willful blindness requires the defendant to have knowledge of specific infringers. General knowledge of infringement on the platform is not enough.

Jamie:
This decision for the first time defined the 9th Circuit’s legal standard for contributory liability, and it really heightened the hurdle for brand owners to establish contributory infringement. Now, six months later, Brandy Melville argues that the appellate court was wrong in its holding and has asked the Supreme Court to review the 9th Circus decision that liability for user-submitted trademark infringement only stands when there’s specific knowledge of the infringement.

Scott:
Brandy Melville argues in its petition for rid of Cert. That the 9th Circuit has adopted an erroneously narrow view of such liability and points to the Second Circuit and the 10th Circuit, where once a defendant knows or has reason to know that it is assisting in trademark infringement, it has a legal duty to take reasonable steps to stop it? The attorneys for Brandy Melville argue that the 9th Circuit’s decision has no basis in background principles of common law and effectively flips the burden of ensuring compliance with the law from the defendants to the plaintiffs. In its writ for Cert. Brandy Melville argues that the issue is whether the defendant must know or have reason to know to trigger such liability. In particular, is contributory trademark liability limited solely to a defendant’s knowledge of and failure to redress specific instances of infringement or infringers, as the 9th Circuit holds? Or does it extend to a defendant’s knowledge that it is assisting infringement of the plaintiff’s trademark and fails to take reasonable steps to stop such assistance as the Second and 10th Circuit holds in.

Jamie:
Support of Brandy Melville’s argument during oral arguments last year, an attorney for Brandy Melville said that even after the lawsuits were filed, Redbubble continued to sell infringing products on its website and required companies to notify it of the infringement in order to take down the products, and it kept certain features up on the website that allowed sellers to sell infringing products in the future. The attorney compared Redbubble’s conduct with infringing products to that of an exterminator who shows up to a house and kills insects once, but not the eggs. Then, three months later, of course, all the insects are back. The justices haven’t considered the standard for contributory trademark infringement under the Lanham Act since 1982. Given the rapid growth of the Internet and e-commerce in recent years, the petition states that it’s really time that the Supreme Court revisits this issue. I would personally have to agree that this is an issue that deserves attention given the landscape of today’s commerce marketplace, and especially in light of this Circuit split.

Scott:
Yeah, I think I may have to agree with you. So, let’s take a look at this alleged circuit split. So in Omega versus Canal LLC, this is a case where, and this is a case cited by Randy Meldville in their petition. This is a case where the Second Circuit held a landlord liable for contributory trademark infringement for leasing space to businesses that sold counterfeit Omega watches. The Omega court rejected Canal’s argument that the district court erred by not instructing the jury that Omega had to prove that Canal continued to lease space to a specific identified vendor that it knew or should have known was selling counterfeit omega goods. Brandy Melville contends that the 9th Circuit’s holding that contributory infringement occurs when a defendant continues to supply its product to a specific party whom it knows or has reason to know is engaging in trademark infringement conflicts with the Second Circuit’s holding in Omega.

Jamie:
Scott, do you think that the Supreme Court will take this case, and if so, where do you think this all ends?

Scott:
Well, circuit splits are ripe for review, and this does seem to be an interesting one. I do agree that requiring knowledge of specific infringers as a condition of willful blindness would require the mark owner to take a whack-a-mole type of approach to trademark enforcement. Where a defendant is aware of consistent infringement on its platform or in its facilities, it seems reasonable to require some degree of affirmative policing in order not to be willfully blind. So Omega is based on the second Circuit case of Tiffany versus eBay. In that case, the Second Circuit found eBay not liable for contributory infringement based on private sellers using the eBay platform to sell counterfeit Tiffany products. In that case, the court noted eBay had promptly removed listings that the plaintiff identified as selling counterfeit goods and that eBay had also formed a team to identify and remove such listings proactively.

Jamie:
Right? It seems that the proactive efforts taken by eBay after it became generally aware of infringement activities on its platform was key in finding that eBay was not willfully blind. Based on language in the petition for Cert, it seems that Redbubble did not have a counterfeit investigations team like eBay did. Let’s see if the court takes up the petition. Otherwise, we may see a lot of forum shopping in the future.

Scott:
I agree with you, Jamie. If the Supreme Court does not take this case, the petition for Cert, we definitely will see a lot of form shopping. Jamie, thanks for bringing this case to our attention.

Jamie:
Thank you for listening to this episode of The Briefing. We hope you enjoyed the episode. If you did, please remember to subscribe, leave us a review and share this episode with your friends and your colleagues. If you have any questions about the topics that we covered today, please leave us a comment. Samuel.