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Harley-Davidson v. SunFrog: The Case That Rewired Platform Liability Without a Single New Law

  • 3 hours ago
  • 6 min read

Introduction : A U.S. District Court in Wisconsin last ordered a company based in Michigan to pay $19.2 million to Harley-Davidson in April of 2018. At first glance, it sounds like a counterfeiting tale: a print-on-demand site ended up allowing people to print Bar & Shield logos on hoodies and mugs, and they were discovered. The interesting aspect of H-D U.S.A., LLC v. SunFrog, LLC is that it is not the size of the check itself. But the court came to this conclusion under a framework of law that predates the internet by decades, and which Congress hasn't adapted to. The actual story is that gap.


The question that decided the case


There have always been two types of defendants in trademark law. On the other side are the platforms that simply facilitate a transaction - eBay, the third party market place on Amazon, and classified ad sites. The courts give protection to these intermediaries unless they were “specifically informed of a listed infringer and knew or should have known that it was infringing.” Inwood Laboratories v. Ives Laboratories (1982) was applied to a marketplace directly in Tiffany v. eBay (2010), where eBay was able to avoid the contributory liability by failing to know or reasonably expect that counterfeits were being listed somewhere else on its platform.


Defendants on the other side are manufacturers and sellers of the infringing product. That higher knowledge standard they don't get; they're straight on the hook the second the products go into commerce.


SunFrog attempted the first. It said it was just infrastructure: the devices were owned by users who uploaded the designs; users could be seen wearing a Harley logo on their shirts; and SunFrog was just the pipe through which the transaction went. A court rejected a statement that SunFrog simply hosted listings, but also printed the shirts, fulfilled the orders, ran the marketing tools sellers would use to promote the shirts, and kept the bulk of the sale. Judge J.P. Stadtmueller found that the operational involvement was dispositive: If the company makes the goods and profits from the sale of them, it sells them, not rents out space on a shelf. Hence, SunFrog lost the case on a more strenuous direct-infringement doctrine rather than a less stringent contributory doctrine, and hence, that case is referenced today more for the distinction between what buckets courts fall into than the amount of damages.


No statute changed; The doctrine moved instead


What didn't get done as a result of this verdict: no amendment to the Lanham Act, no new federal "platform liability" statute, no specific print-on-demand commerce statute. The SHOP SAFE Act, which would establish concrete obligations for e-commerce platforms with respect to counterfeit products, has been reintroduced in each of the last five Congresses since 2020, but has failed to pass each time it has been introduced. The vacuum SunFrog ran in is structurally identical to the vacuum platforms run by today.


Case law that stretched out an old test into a business model that no one had thought of in Inwood's time filled that void. The best illustration of that trend is found in Ohio State University v. Redbubble (6th Cir.). 2021). The difference between Redbubble and SunFrog should matter: Redbubble doesn't do any printing; it's a third-party printing company that's responsible for the printing. SUNFROG implies that it should have left Redbubble firmly in the "intermediary" band. The 6th Circuit Court of Appeals, however, found otherwise. Since items were sold using Redbubble's names, packaged in Redbubble packaging, and were not products until Redbubble's system created an order, direct trademark liability could be imposed even if it wasn't Redbubble that actually manufactured anything. Whether the appellate court overturned a summary judgment that treated Redbubble like Amazon or eBay is not obvious.


When you compare the two rulings, it's clear the trend is shifting from "did you make it" to "how much control and branding did you have over its creation and sale". That is a test that is really different in some ways, and much wider than the one that Tiffany v. eBay set for a pure marketplace, and it was only by judicial interpretation, not by legislation. A lot of big platforms operate like that; what makes platforms pause here is that the test is still in constant development, case by case, and there is no statute under which to halt.


What this actually exposes


Taken together, these cases tell a less "platforms are now accountable" narrative and more "what the liability rule requires for businesses is a complex, fact-intensive investigation that differs from circuit to circuit, and is not even settled in trademark, let alone in sync with copyright or counterfeiting statutes. The general counsel of a platform has no recourse to a painless statutory test and check boxes. They need to guess what the judge will say about "control", packaging, branding, how fast it will be available to sellers, and what marketing tools they will be given, etc etc, and for a smaller platform, this isn't the cheap and easy process it is for a company with SunFrog's eventual war chest.


That uncertainty collapses in two directions that are fair to mention. The brand owners have a genuine tool in hand: no longer do they have to demonstrate any particular awareness of each infringing listing if they can demonstrate that the platform was more like the manufacturer than the landlord. But the same expansion results in an increase in the cost of operating any print-on-demand or user-generated commerce business, and that's where the primary toll of the expansion is experienced, on business models with no revenue to cover a multimillion-dollar judgment or Redbubble's legal team to fight off a circuit split. A doctrine-based case-by-case approach to whatever case is litigated doesn't always result in the standard necessary for a functioning market; it will result in whatever standard the latest fact pattern litigated happens to be.


The case doesn't address a timing issue, either. SunFrog was founded in 2018 before the advent of generative AI, which makes it easy to generate virtually any design that avoids keyword and image-match filters designed to block older types of infringements. The "how much control did the platform exert" test was not designed for these volumes or this form of evasion, nor does it tell a platform how much control it should exercise as detection becomes more difficult and content becomes less expensive.


The actual takeaway


The lesson is not, "just abide by IP law or pay $19 million," but it's true that it's not analytic. The more useful read of this is that when legislators don't act to write a rule for a new business model, courts will write one anyway (using whatever doctrine is at their fingertips), and that rule will be pushed outwards until something makes lawmakers take notice (SunFrog's printing business model vs Redbubble's brand and fulfillment control). Until the SHOP SAFE Act or something similar becomes law, in this space, platform liability is not a static legal concept; it's a moving target that is established by the last circuit to decide the issue, and that's a bizarre way to regulate an entire sector that's built on user uploads and on-demand manufacturing.


Author: Maitraiy Soni, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.


References


Cases


  • H-D U.S.A., LLC v. SunFrog, LLC, 311 F. Supp. 3d 1000 (E.D. Wis. 2018).

  • The Ohio State University v. Redbubble, Inc., 989 F.3d 435 (6th Cir. 2021).

  • Tiffany (NJ), Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010).

  • Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982).


Legislation


  1. SHOP SAFE Act of 2023, S. 2934, 118th Cong. (2023), https://www.congress.gov/bill/118th-congress/senate-bill/2934/all-info.

  2. SHOP SAFE Act of 2024, H.R. 8684, 118th Cong. (2024), https://www.congress.gov/bill/118th-congress/house-bill/8684.

  3. House Judiciary Committee Democrats, SHOP SAFE Act of 2021: Section-by-Section Summary, https://democrats-judiciary.house.gov/sites/evo-subsites/democrats-judiciary.house.gov/files/migrated/UploadedFiles/SHOP_SAFE_2021_-_Section-by-Section.pdf.

  4. Leagle, H-D U.S.A., LLC v. SunFrog, LLC, 311 F. Supp. 3d 1000 (E.D. Wis. 2018), https://www.leagle.com/decision/infdco20180413f82.

  5. World IP Review, Harley-Davidson Secures Biggest-Ever TM Infringement Win (Apr. 19, 2018), https://www.worldipreview.com/news/harley-davidson-secures-biggest-ever-tm-infringement-win-15789.

  6. Powersports Business, Harley-Davidson Scores Its Largest-Ever Trademark Win (Apr. 19, 2018), https://powersportsbusiness.com/top-stories/2018/04/19/harley-davidson-scores-its-largest-ever-trademark-win/

  7. Record-Eagle, Harley-Davidson Wins Judgment Against SunFrog (Apr. 20, 2018), https://www.record-eagle.com/news/business/harley-davidson-wins-judgment-against-sunfrog/article_f2e3a991-02b8-53cc-a6af-a2ab86b77125.html.

  8. Above the Law, What Harley Davidson's $19.2M Throttling of SunFrog REALLY Means... And It's Not the Money (Apr. 23, 2018), https://abovethelaw.com/2018/04/what-harley-davidsons-19-2m-throttling-of-sunfrog-really-means-and-its-not-the-money/.

  9. RideApart, Harley Wins Biggest-Ever Trademark Infringement Case (Apr. 19, 2018), https://www.rideapart.com/news/244806/harley-wins-biggest-ever-trademark-infringement-case/.

  10. Legal Patent, Harley-Davidson Wins Against T-Shirt Distributor: $19 Million in Damages (May 17, 2018), https://legal-patent.com/international-intellectual-property/harley-davidson-wins-t-shirt-distributor-19-million-damages/.

  11. Cislo & Thomas LLP, Harley-Davidson Wins $19.2 Million in Statutory Damages (May 15, 2018), https://cisloandthomas.com/harley-davidson-wins-19-2-million-in-statutory-damages/.

  12. Trademark Doctor, Enforcing Your Trademarks: Harley-Davidson Does It Right (June 22, 2018), https://trademarkdoctor.net/federal-trademarks/enforcing-your-trademarks-harley-davidson-does-it-right/.

  13. Justia, The Ohio State University v. Redbubble, Inc., No. 19-3388 (6th Cir. 2021), https://law.justia.com/cases/federal/appellate-courts/ca6/19-3388/19-3388-2021-02-25.html.

  14. International Trademark Association, INTA's Position on OSU v. Redbubble Prevails at the Sixth Circuit (Mar. 3, 2021), https://www.inta.org/sixth-circuit-decides-osu-v-redbubble/.

  15. Frantz Ward LLP, Did The Ohio State University Just Burst Redbubble?, https://www.frantzward.com/did-the-ohio-state-university-just-burst-redbubble/.

  16. Malloy & Malloy, P.L., Ohio State University v. Redbubble, Inc.: A Potential Sigh of Relief for Trademark Owners (Apr. 5, 2021), https://malloylaw.com/ohio-state-university-v-redbubble-inc-a-potential-sigh-of-relief-for-trademark-owners/.

  17. Fross Zelnick, U.S. Court of Appeals for the Sixth Circuit: Redbubble Could Be Liable for Direct Infringement Arising From "Print-on-Demand" Service, https://www.frosszelnick.com/u-s-court-of-appeals-for-the-sixth-circuit-redbubble-could-be-liable-for-direct-infringement-arising-from-print-on-demand-service/.

  18. Lexology, US Appeals Court Finds Redbubble Online Marketplace Potentially Directly Infringing (Mar. 19, 2021), https://www.lexology.com/library/detail.aspx?g=e4e8c110-9575-4f6a-9f5f-3a5d53f867c0.

  19. CaseMine, Redbubble Liability Under the Lanham Act and Ohio's Right-of-Publicity: A New Legal Precedent, https://www.casemine.com/commentary/us/redbubble-liability-under-the-lanham-act-and-ohio's-right-of-publicity:-a-new-legal-precedent/view.

  20. Quimbee, Ohio State University v. Redbubble, 989 F.3d 435 (2021): Case Brief Summary, https://www.quimbee.com/cases/ohio-state-university-v-redbubble.

  21. Studicata, Ohio State Univ. v. Redbubble, Inc., https://studicata.com/case-briefs/case/ohio-state-univ-v-redbubble-inc/.


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