Last Month In An LA Court I Witnessed The Future Of A World Without Section 230; It Was A Mess

Trademark

from the couldn't-you-have-done-more dept

Disclosure: I was an expert witness for RedBubble in this case (and another case) and submitted some reports regarding this case much earlier in the process, though I did not testify at this trial. I had nothing to do with this trial other than attending it as an interested observer, concerned about litigation involving content moderation. As you can see, however, my opinions on this remain identical to my opinions on content moderation going back basically forever…

There’s been a lot of talk lately about “repealing” or “reforming” Section 230. We’ve explained at great lengthy why this would be a mistake and would lead to a ton of frivolous litigation. Section 230 co-author Senator Ron Wyden has referred to this as creating a situation where website operators would face “death by ten thousand duck-bites.” Professor Eric Goldman has explained the procedural benefits of Section 230 in that it helps get rid of these cases more quickly. And while some (including myself) have pointed out that the 1st Amendment would still protect most claims, without the procedural benefits of Section 230, we’d still see a ridiculous number of nuisance lawsuits in which companies would have to defend each and every content moderation decision. This would be made significantly worse if the law changes in a manner proposed by folks like law professor Danielle Citron, to require websites to show that their content moderation practices are “reasonable,” which would require expensive litigation to determine.

The thing is: we have an area where we can actually see this in practice. There is something of a loophole within Section 230: trademark law. From the beginning, Section 230(e)(2) has excluded intellectual property law. For copyright, that gap was filled (not particularly well) by the notice-and-takedown provisions of the DMCA Section 512. But trademark has no official intermediary protections in US law. Experts like Mark Lemley have long advocated for harmonizing the various intermediary laws so that they’re all consistent. Many people had thought that perhaps the courts had settled the issue with regards to trademark in the infamous Tiffany case against eBay, in which the courts said that eBay shouldn’t be expected to be perfect, and as long as it has some sort of program to deal with counterfeits, then it is no longer liable for counterfeits on its site.

However, last summer, a federal judge in LA effectively re-opened the issue in a case brought by the holding company that controls the “Brandy Melville” clothing brand against print-on-demand website RedBubble. Brandy Melville argued that RedBubble was violating its trademarks (and copyrights) in printing some of its designs, and while the judge did toss out much of the case, he allowed a few parts to move forward to a jury trial. The judge said that the Tiffany v. eBay rule didn’t necessarily apply — since that was a case of users selling physical products, whereas with RedBubble, the company would take designs uploaded by users, and pass them on to various print shops for the actual printing. So the open question, in theory, was whether or not that deeper involvement opened itself up to contributory liability (the judge correctly dismissed the claims about direct infringement). There were a few other oddities about the judge’s ruling as Eric Goldman noted at the time:

However, the Ohio State ruling didn?t address contributory trademark infringement, and this court sends that issue to the jury. Unlike Tiffany v. eBay, which involved legitimate used resales of Tiffany items, the court says ?Redbubble is not burdened by the need to parse valid uses of Brandy Melville?s trademarks from invalid ones, as Brandy Melville has made clear to Redbubble that there are no legitimate sales of Brandy Melville products through its site. As such, all uses of Brandy Melville?s marks that appear on Redbubble?s website are presumptively infringing.? I doubt the court means this statement so baldly, as it disregards parodies, nominative uses, and other legitimate activities. Similarly, the plaintiff complained that RedBubble hasn?t disabled internal consumer keyword searches for its trademarks, but that doesn?t seem like a right exclusive to the trademark owner in light of MTM v. Amazon.

In practice, however, pretty much the entire trial revolved around whether or not RedBubble “did enough” in its content moderation. Over and over again, the lawyers for Brandy Melville kept trying to insist that any failures by RedBubble’s content moderation was proof that it did not do enough. Indeed, in the closing arguments, even after it had been pointed out that RedBubble spent millions of dollars per year on its content moderation efforts, and had removed every example that Brandy Melville’s lawyers had sent them within a day or two, the lawyer straight up asked the jury “don’t you think RedBubble could have done more?”

There were a number of other oddities that came out during the trial. The trial was explicitly about just three specific trademark designs that Brandy Melville held — two of which never actually appear on the front of t-shirts or other products (the company said it only used them on clothing hang tags and on store signs), and one that the company registered just weeks before suing. Incredibly, Brandy Melville put on the stand a manager of some of their stores who admitted two incredible things: (1) that she was unable to tell which products on RedBubble were legitimate and which were infringing (so how the hell could they expect RedBubble to just know?!?) and (2) that in many years of working and managing Brandy Melville stores, she could not recall a single time that anyone ever brought in a RedBubble product to “return” it. That latter point really stuck with me because it highlighted the near total lack of confusion, which is a key point in trademark infringement. There needs to be confusion.

Another oddity: Brandy Melville kept focusing on the fact that RedBubble refused to block all tags that included “Brandy Melville” or any search results on “Brandy Melville.” But as Goldman noted above (and the judge seemed to miss), that’s not a right that trademark law gives a trademark holder. RedBubble pointed out that it actually used the tagging system as part of its content moderation efforts — and that letting users tag stuff “Brandy Melville” made it easier for its content moderation team to find and review those items to see if they infringed. Also, while it only came up exceptionally briefly, one of the products that was on RedBubble’s site was a t-shirt that read: “Fuck Brandy Melville,” which is clearly commentary/parody — and not something anyone would assume came from Brandy Melville itself. Brandy Melville cannot abuse trademark law to say any and all use of the term must be blocked. That’s not how trademark law works.

For its part, RedBubble spent plenty of time describing the extreme lengths it goes to try to prevent infringing works on its site, including making use of various technologies, having a large team of human reviewers, and working closely with lots of brands to better understand what is and what is not infringing. But, again, the plaintiff’s focused on “is it enough.”

And, because they kept focusing on a very few examples where Brandy Melville logos or other designs were found on RedBubble, that was proof that, no, the company did not do enough. And… the jury bought it. At the end of the three day trial, the jury said that RedBubble was liable as a contributory infringer, including not just for trademark infringing, but for counterfeiting. This was particularly bizarre because for there to be counterfeiting, there needs to be an actual copying of a product sold by the trademark holder. And, as already noted, two out of the three designs were never actually used on the front of products by Brandy Melville, and as for the third design (the “LA Lightning” mark — which, seems like it may have its own trademark issues, considering it was yanked from an independent professional basketball team), they never seemed to show exact copies of it on any RedBubble products either. Instead, somewhat bizarrely, Brandy Melville focused on very distinct and different variations on the logo that appeared on RedBubble products — including a clear parody one for University of Florida students. And the counterfeiting issue was key to Brandy Melville’s case, because it would allow them to ask for statutory damages, running up into multiple millions of dollars.

And this is a clear issue with litigation around content moderation: the jury was primed over and over again to believe that any mistake makes the company liable. Brandy Melville’s lawyers just kept showing designs that mention Brandy Melville or looked similar to Brandy Melville (frequently for products that Brandy Melville had no trademark over) and then just kept harping on the fact that Brandy Melville didn’t approve any of this, and clearly RedBubble was a “counterfeiting” site. In the end, the jury awarded $520,000 to Brandy Melville ($300k “counterfeiting” for the “Brandy Melville” mark, $200k for “counterfeiting” the LA Lightning mark, and then $20k for trademark infringement.)

At the close of the case, RedBubble immediately sought a judgment as a matter of law to effectively try to take the case out of the jury’s hands (arguing that Brandy Melville failed to present enough evidence and the judge could rule on the matter directly without needing the factual deliberation of the jury). This week the judge did in fact rule that the $300k for contributory counterfeiting on the Brandy Melville mark was improper, bouncing the award down to $220,000.

As the judge noted, the fact that RedBubble’s products were not the same as anything Brandy Melville made regarding those logos, meant that there couldn’t be a legitimate counterfeiting claim for that mark:

Here, Plaintiff failed to present evidence of products that bore a spurious Brandy Melville Heart Mark and were offered for sale on Redbubble.com that were remotely similar to products that Plaintiff offered for sale, let alone “stich-for-stitch copies” of Plaintiff’s products. The Court therefore concludes that the evidence presented at trial permits only one reasonable conclusion–Plaintiff failed to establish that Redbubble is liable for contributory counterfeiting of the Brandy Melville Heart Mark.

The end result is way below the many millions of dollars Brandy Melville was seeking, though even the small amount it got seems ridiculous based on an understanding of what actually happened.

But, there’s a larger point here: this case was an unfortunate alternate reality universe view of what will happen without Section 230 or if we moved to a Citron-style “reasonable” standard. You’d get a ton of litigation in which everyone was just going back and forth arguing over what the “right” level of content moderation is, and arguing that any mistakes were evidence that “not enough” was being done by the companies. That’s a disaster scenario, one in which any simple mistake (even where there’s perhaps strong evidence that no mistake was actually made) is subject to the whims of a jury (or a judge) and an expensive, time-consuming trial. I recognize that law professors might not care that much about all of this wasteful litigation, but in the real world it matters a ton. This kind of thing can, and will, kill off smaller companies, even if they can succeed in court. And that doesn’t help anyone, except possibly some trial lawyers who can threaten and shake down tons of websites.

Filed Under: content moderation, counterfeiting, intermediary liability, jury trials, print on demand, section 230, trademark
Companies: brandy melville, redbubble