Turning a blind eye to trademark infringement

In a recent case of first impression in the Ninth Circuit Court of Appeal, Y.Y.G.M. SA v. Redbubble, Inc., 75 F.4th 995, 1000–1001 (9th Cir. 2023) (Redbubble), the appeal court held that actual knowledge is required for establishing willful blindness as a basis for determining contributory trademark infringement.

By way of background, contributory trademark infringement is implicated in situations where someone “intentionally induces another to infringe a trademark” or who “continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement.” Inwood Lab’ys, Inc. v. Ives Lab’ys, Inc., 456 U.S. 844, 854 (1982). The question before the Ninth Circuit in Redbubble was the requirements of “knows or has reason to know.”

Previously, the Ninth Circuit had held that in general establishing “knows or has reason to know” required a showing of (1) “subjective belief that infringement was likely occurring” and (2) deliberate actions to avoid learning about the infringement. In Redbubble, defendant argued that willful blindness should require actual knowledge of specific infringers or instances of infringement. Plaintiff disagreed, arguing that specific knowledge was not a requirement because defendants have a duty to take reasonable corrective action once they are on general notice of infringing activities.

In analyzing the issue before it, the Redbubble panel looked to the analogous situation in copyright context, where it had held that contributory infringement does require actual knowledge of specific infringers or instances of infringement. In that regard, the panel noted a previous Ninth Circuit decision holding that the defendant lacked specific knowledge, despite receiving notices of “150-page-long lists of titles” that the plaintiff had copyrighted, explaining that these notices were insufficient because they did not “identify which of these titles were infringed, who infringed them, or when the infringement occurred.” The court explained that in the context of copyright law, indifference to the risk of copyright infringement was not enough to establish contributory infringement. The Ninth Circuit panel then reasoned that since “trademark infringement liability is more narrowly circumscribed than copyright infringement,” the standard for contributory trademark infringement would be at least as demanding. Redbubble, 75 F.4th at 1000–1001.

In addition to looking at its own precedent in the area of copyright law, the panel additionally pointed to decisions of other circuit courts in the trademark context, and noted that those decisions had also held that actual knowledge of an infringer or of instances of infringement was a requirement for a determination of willful blindness to establish contributory trademark infringement. As an example, the panel cited a second circuit decision involving counterfeit Tiffany jewelry being sold on eBay, which had held that establishing contributory trademark infringement based on willful blindness required specific knowledge of present or future infringement and that general knowledge of such was not enough. Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 107 (2d Cir. 2010).

The Ninth Circuit panel then cited to a Fourth Circuit Court of Appeal decision that had reached a similar conclusion, holding that even general knowledge that a certain percentage of purchasers of a product or service were engaging in infringing activities was insufficient to establish contributory trademark infringement. Rather, the Fourth Circuit decision held that plaintiff needed to confirm specific instances of actual infringement by supply of the product or service to ‘identified individuals’ that plaintiff knows or has reason to know are engaging in trademark infringement. Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 163 (4th Cir. 2012).

Another circuit court decision cited by the Redbubble panel, was from the Tenth Circuit, 1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1235 (10th Cir. 2013); a case that concerned Google’s AdWords program, which allowed advertisers to bid on keywords that, when entered into Google’s search engine, returned the advertiser’s sponsored links. Plaintiff 1-800 Contacts, who owned the mark “1800CONTACTS,” sued defendant Lens.com after it discovered that Google searches for its own mark resulted in paid ads for defendant’s websites. During discovery, plaintiff learned that although Lens.com itself did not bid on 1-800 Contracts’ service mark, two of its affiliates had bid on the keyword and that Lens.com was aware of at least one of them. The Tenth Circuit, ruling in the context of a motion for summary judgment, concluded that a jury could find that Lens.com knew that at least one of its affiliates was using 1-800’s service mark in its ads yet did not make reasonable efforts to halt the affiliate’s practice.

Referring to the Third, Fourth and Tenth Circuit decisions, the Redbubble panel noted that Common to these cases is that willful blindness requires the defendant to be aware of specific instances of infringement or specific infringers and that without such knowledge, the defendant need not search for infringement. In that regard, general knowledge of infringement on the defendant’s platform – even of the plaintiff’s trademarks – was not enough to establish willful blindness. The panel thus held that willful blindness for contributory trademark liability required the defendant to have specific knowledge of infringers or instances of infringement.

Conversely, the Redbubble panel pointed out that once a defendant knows about specific instances of infringement, “bona fide efforts to root out infringement” could “support a verdict finding no liability, even if the defendant was not fully successful in stopping infringement.” 75 F.4th 995, 1001-1003. The duty to try to stop infringement does not kick in, however, until the defendant has that specific knowledge. And, again, that duty only covers specific instances of infringement the defendant knows or has reason to know about.

Of interest to practitioners who may have clients potentially facing this issue, the Redbubble panel also addressed the question of what would constitute bona fide efforts to stop known infringement sufficient to avoid a finding of contributory infringement. The panel explained that such determination will vary based on the context. As an example, the panel cited a decision where the court had found contributory infringement in a situation where defendant, the owner and operator of a flea market, had actual knowledge that the infringing activity was occurring and knew of particular vendors that were infringing, and yet failed to deny access to offending vendors or take other reasonable measures. The Redbubble panel pointed out that under such circumstances, removing infringing listings and taking appropriate action against repeat infringers in response to specific notices may well be sufficient to show that a large online marketplace was not willfully blind. See, Rebdubble, 75 F.4th at 1001–1003.

Conclusion:

The Redbubble decision is significant in that it clarifies a major issue facing potential trademark defendants, namely situations where they are generally aware that their customers, affiliates or others may be infringing the protected mark, and yet, they don’t investigate to affirm such infringement. Prior to Redbubble, such general knowledge, coupled with failure to act was enough to establish contributory trademark infringement. The Redbubble decision limits the reach of contributory infringement, by requiring actual knowledge of infringers or infringing activity.