H-D U.S.A., LLC v. SunFrog, LLC
H-D U.S.A., LLC v. SunFrog, LLC
Opinion of the Court
This is a trademark infringement case brought by Plaintiffs, collectively referred to as "Harley-Davidson," against Defendants, collectively referred to as "SunFrog." SunFrog runs an online marketplace where third-party sellers can upload designs and logos onto clothing, hats, mugs, or other items and sell them. SunFrog prints and ships the purchased items. Some of those items bore Harley-Davidson logos and word trademarks, and Plaintiffs filed this lawsuit as a result.
1. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b) provides for dismissal of complaints which fail to state a viable claim for relief. Fed. R. Civ. P. 12(b)(6). To state a claim, a complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In other words, the complaint must give "fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly ,
2. RELEVANT FACTS
The facts as pleaded can be briefly summarized. Harley-Davidson is, of course, a world-famous motorcycle manufacturer, and its word trademarks and logos are well known. Harley-Davidson prints those logos and marks on merchandise it sells alongside its automotive products. Those logos and word marks have appeared on goods sold on SunFrog's website, including clothing and other items. These are counterfeits, as none of them is sponsored by or affiliated with Harley-Davidson.
Users of SunFrog's website create and sell these counterfeit goods either by uploading their own designs featuring Harley-Davidson's marks and logos onto blank versions of the goods in question (supplied by SunFrog), or by selecting an infringing design created by another user which is stored in the SunFrog art database. SunFrog users are largely anonymous, as they are identified on the website only by self-made account names or numerical codes that do not reveal the user's identity. Once a buyer actually purchases one of the user's infringing designs, SunFrog prints the item using an automated printer and then ships it. SunFrog also keeps the majority of the profit from the sales.
SunFrog advertises these products on the Internet and through social media outlets. Further, it encourages users to track sales using its sales-tracking tools and to advertise their goods on social media. SunFrog persists in promoting and selling these goods despite receiving numerous takedown requests and other notifications from Harley-Davidson that infringement is occurring. Indeed, "[f]rom at least as early as October 2016 to the present, H-D has submitted more than 70 complaints to SunFrog that: (a) notified SunFrog of H-D's rights in the H-D Marks, and (b) reported and objected to more than 800 Infringing Products that have been advertised, promoted, offered, and/or sold on SunFrog's Website in violation of H-D's rights." (Docket # 1 ¶ 68). Moreover, even when SunFrog would try to control infringement by users, its attempts were halfhearted: it would take a long time for infringing designs to be taken down in response to requests for the same, those same designs would crop up again soon after because there was no system in place to curb infringement at the design stage, and repeat infringers would pop up again and again with few or no repercussions.
Harley-Davidson claims that "SunFrog is thus not a passive participant in the business conducted by sellers on and through SunFrog's Website." Id. ¶ 64. According to Harley-Davidson, "[t]his is not a situation where SunFrog's only role is to *1058provide sellers with access to an online marketplace to sell their products and everything is done by the sellers. Rather, SunFrog is an active partner of the sellers and directly involved in the sellers' business in many ways, all for SunFrog's financial gain[.]" Id.
The complaint recites claims for: (1) trademark counterfeiting under
3. ANALYSIS
SunFrog does not contest that its users' conduct constitutes infringement of Harley-Davidson's intellectual property rights. Rather, its motion focuses on why it should not be responsible for this rampant infringement. First, says SunFrog, it does not itself create infringing designs. (Docket # 28 at 6). Second, it cannot be expected to review the millions of designs presently on its website and the thousands more added each day.
SunFrog raises four grounds for dismissal, none of which has merit. First, it claims that Harley-Davidson has not alleged facts that plausibly support their seven claims for relief.
*1059Second, SunFrog contends that, as a mere printer of goods bearing Harley-Davidson's marks, it has not used the marks in commerce as required to sustain a claim under federal or Wisconsin trademark law. Id. at 8-9. As the Court observed in its ruling on Harley-Davidson's motion for preliminary injunction, SunFrog cites no case that colorably supports its position. H-D U.S.A., LLC v. SunFrog, LLC , Case No. 17-CV-711-JPS,
As it explained in its earlier decision, the Court is not convinced, and the reason for this is related to another of SunFrog's arguments: that it cannot be liable for monetary damages because it is an "innocent infringer" as provided in
Where an infringer or violator is engaged solely in the business of printing the mark or violating matter for others and establishes that he or she was an innocent infringer or innocent violator, the owner of the right infringed or person bringing the action under *1060section 1125(a) of this title shall be entitled as against such infringer or violator only to an injunction against future printing.
This conclusion dovetails into SunFrog's argument that it should be protected from monetary damages on the trademark claims as an innocent infringer. (Docket # 28 at 11-13). Here, SunFrog's point seems to be that because its automated printers print goods at users' requests, without any involvement from SunFrog employees directly, it is not aware of infringement until such activity is brought to its attention later. Id. at 12.
This argument flies in the face of the facts alleged. Harley-Davidson has asserted that SunFrog knows that its users infringe others' intellectual property rights, that it promotes this infringement throughout Internet advertising, that it facilitates the infringement by printing and shipping the goods, and that it does this to generate profit from the sales. It thus appears that SunFrog does far more than a mere on-demand printer. See K & N Eng'g, Inc. v. Bulat ,
Drawing inferences from the facts in Harley-Davidson's favor, it is easily said that whatever the size or scope of SunFrog's business, it can be charged with knowing what goods come off of printers that it owns and operates. If the statute's reference to "innocence" means, as SunFrog contends, that only knowing or reckless infringement is actionable, Harley-Davidson's allegations suffice. See World Wrestling Fed'n, Inc. v. Posters, Inc. , No.
Put differently, SunFrog equates itself with a vending machine, producing products *1061at a customer's order without oversight. (Docket # 28 at 13). But the point of this case is that SunFrog in fact operates like a self-aware vending machine, with the ongoing ability to monitor the products its users order (and that it creates) and to know that those products are infringing. This is enough to pass the pleading phase. The Court will not dismiss any of Harley-Davidson's claims for monetary damages.
Finally, SunFrog claims that it is protected from Harley-Davidson's copyright claim by the safe-harbor provisions of the Digital Millennium Copyright Act ("DMCA"),
by 'referring or linking users to an online location containing infringing material' if it meets certain conditions-it doesn't know the material is infringing, it isn't aware of facts that would make the infringement apparent, upon learning such facts it acts expeditiously to remove or disable access to the infringing material, it doesn't receive a financial benefit directly attributable to the infringing activity,17 U.S.C. § 512 (d), and it terminates repeat infringers.
Flava Works, Inc. v. Gunter ,
This argument does not suffice to warrant dismissal of the copyright claim. The DMCA safe-harbor provisions represent an affirmative defense to be pleaded and proved by SunFrog. Mavrix Photographs, LLC v. LiveJournal, Inc. ,
SunFrog has not met its burden to establish that Harley-Davidson pled itself out of court on the DMCA safe harbor defense. Indeed, Harley-Davidson's allegations, liberally construed as required by the standard of review, refute each element of that defense. On the face of Harley-Davidson's complaint, it appears that SunFrog actually knows that its users create and that it prints and sells infringing *1062material. SunFrog continues to permit this to occur because it is profitable. Further, SunFrog drags its feet in responding to takedown notices, and its takedown efforts have little lasting effect.
Finally, and perhaps most importantly, SunFrog has the ability to control the infringing activity. Because SunFrog indisputably receives a direct financial benefit from that activity, it must demonstrate that it does not have the right or ability to control the infringing activity to fall within the safe harbor.
This case is thus unlike Hendrickson v.eBay, Inc. ,
[u]nlike a traditional auction house, eBay is not actively involved in the listing, bidding, sale and delivery of any item offered for sale on its website. eBay's evidence shows that it does not have any control over the allegedly infringing items-the pirated films. The evidence also shows that eBay never has possession of, or opportunity to inspect, such items because such items are only in the possession of the seller. When auctions end, eBay's system automatically sends an email to the high bidder and the seller identifying each other as such. After that, all arrangements to consummate the transaction are made directly between the buyer and seller. eBay has no involvement in the final exchange and generally has no knowledge whether a sale is actually completed (i.e., whether payment exchanges hands and the goods are delivered). If an item is sold, it passes directly from the seller to the buyer without eBay's involvement. eBay makes money through the collection of an "insertion fee" for each listing and a "final value fee" based on a percentage of the highest bid amount at the end of the auction.
4. CONCLUSION
For the reasons stated above, the Court finds that SunFrog's motion to dismiss is wholly without merit. As such, it will be denied.
Accordingly, *1063IT IS ORDERED that Defendant's motion to dismiss (Docket # 27) be and the same is hereby DENIED .
The Court has enjoined SunFrog from any further infringement pending final resolution in this matter. See H-D U.S.A., LLC v. SunFrog, LLC , Case No. 17-CV-711-JPS,
Only in its reply did SunFrog find it prudent to mount some specific attacks against Harley-Davidson's claims. See (Docket # 37 at 2-14). Those arguments are extensive and rely in large measure on a seminal case from the Second Circuit, Tiffany (NJ) Inc. v. eBay, Inc. ,
Additionally, SunFrog's contention that Harley-Davidson's claims are premised on speculation is, in the main, just a repackaging of its other arguments pertaining to use in commerce, innocent printers, and the like. Those matters are discussed further herein, so the Court need not separately address them here. Moreover, to the extent SunFrog wants to raise its own facts to defeat Harley-Davidson's, that must await summary judgment. See Kubiak ,
Finally, for reasons similar to those given below in relation to Hendrickson v.eBay, Inc. ,
Harley-Davidson, relying on a more recent case from the Fifth Circuit, says that the standard for assessing innocence should not be actual malice but the objective reasonableness of the accused infringer's actions. (Docket # 34 at 15); Dial One of the Mid-S., Inc. v. BellSouth Telecomm., Inc. ,
This sort of argument seems to encapsulate SunFrog's whole approach to this case: that its business model cannot be sustained if it is required to monitor and control infringement in the way Harley-Davidson requests. Certainly, the measures Harley-Davidson seeks to impose may detract from SunFrog's bottom line. But the Court cannot tarry over such concerns, as its task is to determine whether SunFrog has infringed others' intellectual property rights. Whether SunFrog can practically and profitably adapt its business model to avoid infringement is a matter entirely committed to SunFrog. See Ohio State Univ. v. Skreened Ltd. ,
Reference
- Full Case Name
- H-D U.S.A., LLC and Harley-Davidson Motor Company Group, LLC v. SUNFROG, LLC d/b/a SunFrog Shirts and John Does
- Cited By
- 1 case
- Status
- Published