Atari Interactive, Inc. v. Redbubble, Inc.

• Decision Date: 28 January 2021
• Docket Number: Case No. 18-cv-03451-JST
• Citation: 515 F.Supp.3d 1089
• Court: U.S. District Court — Northern District of California
• Parties: ATARI INTERACTIVE, INC., Plaintiff, v. REDBUBBLE, INC., Defendant.

515 F.Supp.3d 1089

ATARI INTERACTIVE, INC., Plaintiff,

v.REDBUBBLE, INC., Defendant.

Case No. 18-cv-03451-JST

United States District Court, N.D. California.

Signed January 28, 2021

Keith Joseph Wesley, Matthew Lawrence Venezia, Eric Carl Lauritsen, Milin Chun, Browne George Ross O'Brien Annaguey & Ellis LLP, Los Angeles, CA, for Plaintiff.

Kenneth Brian Wilson, Coastside Legal, Half Moon Bay, CA, Joshua Michael Masur, Zuber Lawler LLP, Redwood City, CA, Zachary Stephens Davidson, Zuber Lawler & Del Duca LLP, Los Angeles, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S AND DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT; ORDER SETTING CASE MANAGEMENT CONFERENCE

Re: ECF Nos. 73, 75

JON S. TIGAR, United States District Judge

Before the Court are the parties' cross-motions for summary judgment. ECF Nos. 73, 75. The Court will grant the motions in part and deny them in part.

I. BACKGROUND

A. The Parties

Plaintiff Atari Interactive, Inc. ("Atari") is an early video game company. ECF No. 64-69 ¶ 15. "The Atari brand is one of the most iconic brands in video game history and has been and remains well-known throughout the public at large." Id. ¶ 16. Beginning in the 1970s, Atari created a series of popular arcade video games, including Pong, Asteroids, and Breakout. Id. ¶ 23. These games continue to have "retro" appeal to users, who build fan sites, play the Flash versions of these games, and follow Atari on Twitter. ECF No. 64-71 ¶ 27. Atari capitalizes on this good will by licensing official merchandise, including apparel, toys, games, drinkware, stickers, decals, and replica arcade cabinets. Id. ¶ 29. Atari has also released a "greatest hits" collection for Nintendo DS that packages its early games. ECF No. 64-6 ¶ 8.

Defendant Redbubble, Inc. provides a "global online marketplace[ ] where independent artists upload their designs and creative works for sale on a range of products." ECF No. 80-1. The products on which the artists' designs are printed include apparel, stationery, housewares, bags, stickers, and wall art. ECF No. 64-28. In promotional materials, Redbubble explains its business model as "personalized on-demand retail." ECF No. 68 (Exhibit B). In traditional retail, customers buy from batch-manufactured goods that are stockpiled with the retailer. Id. But in personalized on-demand retail, the customer chooses and customizes the good before it is made. Id. Print-on-demand (a "first wave" of this model) relies on batch-manufactured goods that the buyer customizes through design. Id. Redbubble purports to take this evolution a step further by having the manufacturer hold only raw goods, so that the physical product can be customized through its physical form as well as through the design placed upon it. Id.

B. Redbubble's Marketplace

Redbubble's online marketplace works as follows: first, an artist uploads her art to Redbubble and selects, from a list predetermined by Redbubble, the products on which the art may be sold (e.g. , t-shirts, mugs, etc.). ECF No. 78 ¶¶ 4-5. Redbubble assures the artist that "a lot of effort goes into finding awesome [physical] products that will do justice to your work." ECF No. 64-26 at 23. Redbubble and the artist together set the retail price: Redbubble sets a "base price" that covers its fee and manufacturing costs, while the artist selects the "creator margin" she will receive from the sale. The retail price is the sum of these figures. Id. at 24; ECF No. 64-52 at 8. During the upload, the artist can choose to provide additional information for the listing, including a title, description, and keywords. ECF No. 78 ¶ 6.

A visitor to Redbubble's website can then project the uploaded art onto stock photos of different physical products to show the final products available for purchase. ECF No. 78 ¶ 9. The product listings include a title¹ with the words "Designed by [artist]." See ECF No. 64-79 ("Designed by KalebFishStore"). Below the photos is a list of "features" for the physical product drafted by Redbubble, such as that it is "ethically sourced" and has a "Slim fit, but if that's not your thing, order a size up." See id. ; ECF No. 64-58.² The artist's description – if the artist has provided one – appears after additional photos under the artist's name. See ECF No. 80-7 at 3. A link to "View [Artist's] Store" appears below that. Id.

When a customer purchases a product, Redbubble processes the payment and then shows a confirmation page stating, "We're on it!" ECF No. 64-72 ¶¶ 2-5; ECF No. 64-77. Redbubble's web site then informs the customer that the product will be "made and shipped" and provides an estimated delivery date. See ECF No. 64-77. The page encourages the customer to give "kudos to the artists" by telling them "what you love about their designs," but directs them to contact Redbubble for customer service and any shipping issues. See id.

ECF No. 64-77.

Redbubble then forwards the order to a preselected third-party manufacturer (called a "fulfiller") who creates the final product based on the customer's specifications. ECF No. 79 ¶ 2; ECF No. 64-26 at 43:22-44:6. Redbubble chooses its fulfillers based on quality standards, proximity to the customer, and product type. See ECF No. 68; ECF No. 78 ¶ 12. None of the artist, customer, and fulfiller interact with each other; all communicate exclusively with Redbubble. ECF No. 64-26 at 49:23-50:15. However, Redbubble claims to lack express agreements with its fulfillers. Id. at 98:11-25. "They are neither affiliates of Redbubble nor staffed by Redbubble." ECF No. 79 ¶ 4.

Once the fulfiller creates the goods, Redbubble provides it with the customer's shipping instructions – "standard" or "express" – and the fulfiller sends the goods directly to the consumer using one of the two companies with which Redbubble has shipping agreements. ECF No. 64-26 at 44:10-45:22. The customer then receives an email notification that the product has shipped, which encourages the buyer to "meet the artist" and states that "[a] portion of your purchase goes directly to this creative," but otherwise again directs them to contact Redbubble to check order progress, return or exchange an item, or determine the delivery date. ECF No. 64-74 at 4.

The final product arrives at the consumer in Redbubble packaging, with a Redbubble tag, and with a return addressee of "An Artist on Redbubble." ECF No. 64-76. The tag states that the product is "[c]reated just for you by an independent artist and carefully printed by happy people in matching socks," but once again directs the customer to Redbubble's website to address any issues. Id. at 8; ECF No. 64-26 at 63:18-64:5. If the goods are damaged along the way, Redbubble takes responsibility to arrange a replacement. ECF No. 80-3 at 6. But Redbubble's replacement policy applies only to physical goods – Redbubble takes no responsibility for the "quality of the content (including but not limited to misspelled words, grammatical errors, formatting, design or overall appearance). Id. Redbubble handles all returns and refunds; the artist is not involved with the customer care. ECF No. 64-26 at 56:2-6.

ECF No. 64-76

In short, and as shown in the chart below, Redbubble undertakes at least four of the five steps necessary to complete a sales transaction: the artist uploads the art, but Redbubble manages the order, coordinates the creation of the goods, arranges for delivery, and handles all customer service issues, returns, and refunds. ECF No. 64-26 at 24.

C. The Dispute

Some time before the filing of the complaint, Atari noticed that Redbubble carries its trademarked and copyrighted designs. Atari located 114 Atari marks, 18 Pong marks, and 61 copyrighted designs in Redbubble's marketplace. ECF No. 64-30. Atari claims that this reflects a broader pattern of widespread infringement on Redbubble's website. ECF No. 73 at 11:5-12:23. Atari did not, however, notify Redbubble of these infringing products before filing the complaint.

See ECF No. 80 ¶ 26.

Once the complaint was filed, Redbubble immediately removed the listings identified in Atari's complaint. ECF No. 80-5. Redbubble also began to proactively police for Atari-related designs. ECF No. 80 ¶ 27. Redbubble claims that this practice is consistent with its usual policy: while Redbubble does not proactively identify infringing content, it removes infringing listings upon receiving notice, and also works with content owners to proactively screen for their content. Id. ¶¶ 7-11; ECF No. 64-54. The parties dispute the success of these efforts, Atari's experts having identified over 4,000 "repeat offenders," including some artists that were reported for infringement six or more times before being suspended. ECF No. 64-67 ¶¶ 35-36.

II. JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. § 1331.

III. LEGAL STANDARD

Summary judgment is proper when a "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is genuine only if there is sufficient evidence "such that a reasonable jury could return a verdict for the nonmoving party," and a fact is material only if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When deciding a motion for summary judgment, the court must draw "all justifiable inferences" in the nonmoving party's favor and may not weigh evidence or make credibility determinations. Id. at 255, 106 S.Ct. 2505.

Where the party moving for summary judgment would bear the burden of proof at trial, that party "has the initial burden of establishing the absence of a genuine issue of fact on each issue material to its case." C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc. , 213 F.3d 474, 480 (9th Cir. 2000). Where the party moving for summary judgment would not bear the burden of proof at trial, that party "must either produce evidence negating an essential element of the...