Trademark Law: Online Retailers and Secondary Liability - Klein Moynihan Turco LLP

Trademark Law: Online Retailers and Secondary Liability

In the recent Ohio State University v. Redbubble trademark law proceeding, the Sixth Circuit Court of Appeals considered whether online retailers are liable for trademark infringement arising from products that they sell on their sites. The lower court entered summary judgment in favor of Redbubble, an Australian online retailer, and against Ohio State University (OSU). The court held that Redbubble did not “‘use’ OSU’s trademarked images in operating its business model under the Lanham Act because it only acted as a ‘transactional intermediary’ between buyers, sellers, manufacturers, and shippers.” On February 25, 2021, the Sixth Circuit Court of Appeals reversed and remanded the case back to the lower court, ruling that online retailers that are more than “mere facilitators,” such as Redbubble was here, may be subject to secondary trademark infringement. 

Secondary Liability in E-commerce

Pursuant to federal trademark law (“Lanham Act”), there are two types of secondary trademark infringement: Contributory Trademark Infringement and Vicarious Trademark Infringement.

Contributory Trademark Infringement. Online platforms can be held “contributorily liable for trademark infringement if they: (1) intentionally induce another to infringe a trademark, or (2) continue to supply a product knowing or having reason to know that the recipient is using the product to engage in trademark infringement.” Online retailers (manufacturers and distributors) are “contributorily responsible for any harm done as a result of the deceit.” In the Ohio State University v. Redbubble trademark law proceeding, OSU failed to raise the issue of contributory liability and, therefore, the court did not consider whether Redbubble was guilty on this theory of liability.

Vicarious Trademark Infringement. Retailers can be held vicariously liable for trademark infringement where “the defendant and the infringer have an actual or apparent partnership, have authority to bind one another in transactions, or exercise joint ownership or control over the infringing product.” In assessing whether vicarious liability exists, courts must determine whether a retailer is a “mere facilitator” or “direct seller.” In determining whether an online retailer is a “mere facilitator” or “direct seller,” Sixth Circuit Court of Appeals considered “the degree to which the party represents itself, rather than a third-party vendor, as the seller, or somehow identifies the goods as its own.” In other words, courts consider the level of involvement and control such retailers have over the infringing goods that are featured for sale in their respective marketplaces. 

Online marketplaces that merely facilitate sales for independent vendors (e.g., Amazon) have generally avoided vicarious liability for trademark infringement. In contrast, marketplaces that design and manufacture infringing goods are often held liable for vicarious trademark infringement. 

Products ordered through Redbubble “come into being only when ordered through Redbubble, and are delivered in Redbubble packaging with Redbubble tags.” According to the Sixth Circuit, because Redbubble “brings trademark-infringing products into being” and does not simply sell third-party products, it is likely more than a mere facilitator and, as such, the site may be found secondarily liable for trademark law infringement. We will wait to see whether the lower court rules in favor of OSU when the case is remanded back to it for reconsideration.

If you are interested in learning more about this topic or require assistance in connection with registering a trademark, please e-mail us at: info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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