Internet marketing

In 2017, a three-person Austin-based production and management company called Exurbia Films assumed rights management for the 1974 cult horror classic The Texas Chainsaw Massacre.

“My job was to take us into Chainsaw 2.0,” says Pat Cassidy, a producer and agent with Exurbia. “The original guys did a great job managing the rights but aren’t from the internet generation. They didn’t have a Facebook.”

Exurbia had an eye to develop the franchise and in 2018 struck deals for a TV series and several movies based on the original film, all in development with Legendary Pictures. It is also developing Texas Chainsaw Massacre graphic novels, barbecue sauce, and experiential products such as escape rooms and haunted houses.

Exurbia’s other job proved far more difficult: administering Chainsaw trademarks and copyrights, including the film’s title, images, and the rights to its iconic villain, Leatherface.

Industry veteran David Imhoff, who has brokered Chainsaw licensing deals on behalf of the film’s writer, Kim Henkel, and others since the 1990s, told Cassidy and another Exurbia agent, Daniel Sahad, to be prepared for a flood of counterfeit items. “It’s a sign you’re popular,” Imhoff says in an interview.

Imhoff pointed Exurbia to ecommerce giants such as Etsy, eBay, and Amazon, where independent merchants hawked unauthorized Chainsaw items. Brands must enforce their trademarks, so Sahad dedicated much of his time to a task that larger agencies usually delegate to legal teams: finding and reporting knockoffs. Exurbia has filed more than 50 notices with eBay, more than 75 with Amazon, and more than 500 with Etsy, asking the sites to remove items that violated Chainsaw trademarks. The sites removed infringing items within a week or so; but if another bogus design appeared, Exurbia had to find it, document it, and file another notice.

Imhoff also alerted Cassidy and Sahad to a less familiar name: an Australian company called Redbubble, where he had filed occasional infringement notices on Chainsaw’s behalf starting in 2013. Over time, the problem grew worse: Sahad sent 649 takedown notices to Redbubble and its subsidiary Teepublic in 2019. The sites removed the items, but new ones appeared.

Then, in August, with Halloween approaching—the Christmas season for horror retail—friends texted Cassidy, telling him they’d seen a wave of new Chainsaw designs for sale online, mainly marketed through Facebook and Instagram ads.

One ad led Cassidy to a website called Dzeetee.com, which he traced to a company he’d never heard of, TeeChip. He traced more ads to other websites selling unlicensed Chainsaw items, also linked to TeeChip. Within weeks, Cassidy says, he’d discovered several similar companies, each supporting dozens, hundreds, sometimes thousands of stores. Posts and ads from Facebook groups linked to these companies were marketing knockoff Chainsaw merch.

Cassidy was stunned. “It was way bigger than we thought,” he says. “These weren’t just 10 sites. There were a thousand of them.” (Cassidy and the author have been friends for 20 years.)

Exurbia had stumbled on what could be roughly described as the “Napster of Things.”

A New, Web-Enabled Industry

Companies like TeeChip are known as print-on-demand shops. They allow users to upload and market designs; when a customer places an order—say, for a T-shirt—the company arranges the printing, often done in-house, and the item is shipped to the customer. The technology gives anyone with an idea and an internet connection the ability to monetize their creativity and start a global merchandising line with no overhead, no inventory, and no risk.

Here’s the rub: The owners of copyrights and trademarks say that by allowing anyone to upload any design, print-on-demand companies make it too easy to infringe on their intellectual property rights. They say print-on-demand shops have siphoned off tens, possibly hundreds, of millions of dollars a year in unauthorized sales, making it next to impossible to exercise control over how their property is used or who profits from it.

The explosive growth of print-on-demand technology is quietly challenging the decades-old laws that govern the use of intellectual property on the internet. A 1998 law called the Digital Millennium Copyright Act (DMCA) shields online platforms from liability for copyright infringement for merely hosting user-uploaded digital content. That means rights holders typically must request platforms remove each item they believe infringes on their intellectual property. Moreover, print-on-demand companies often transform—or help transform—digital files into physical products such as T-shirts and coffee mugs. Some experts say that places them in a legal gray zone. And the DMCA doesn’t apply to trademarks, which cover names, word marks, and other proprietary symbols, such as the Nike swoosh.

Screenshot captured by Exurbia Films of a T-shirt for sale that allegedly infringed on its trademarks for The Texas Chainsaw Massacre.

Courtesy of Exurbia Films

CafePress, which launched in 1999, was among the first print-on-demand operations; the business model spread in the mid-2000s along with the rise of digital printing. Previously, manufacturers would screen-print the same design onto items such as T-shirts, an overhead-intensive approach that usually requires bulk orders to turn a profit. With digital printing, ink is sprayed onto the material itself, allowing one machine to print several different designs in a day, making even one-off production profitable.

The industry quickly generated buzz. Zazzle, a print-on-demand platform, launched its website in 2005; three years later, it was named the year’s best business model by TechCrunch. Redbubble came along in 2006, followed by others such as TeeChip, TeePublic, and SunFrog. Today, those sites are pillars of a multibillion-dollar global industry, with product lines extending from T-shirts and hoodies to underwear, posters, mugs, housewares, backpacks, coozies, wristbands, and even jewelry.

Many print-on-demand companies are fully integrated ecommerce platforms, allowing designers to manage easy-to-use web stores—similar to user pages on Etsy or Amazon. Some platforms, such as GearLaunch, allow designers to operate pages under unique domain names and integrate with popular ecommerce services such as Shopify, while providing marketing and inventory tools, production, delivery, and customer service.

Like many startups, print-on-demand companies tend to coat themselves in munificent techno-marketing clichés. SunFrog is a “community” of artists and customers, where visitors can shop for “creative and custom designs as unique as you are.” Redbubble describes itself as “a global marketplace, with unique, original art offered for sale by awesome, independent artists on high-quality products.”

But the marketing lingo distracts from what some rights holders and intellectual property lawyers believe is a cornerstone of the business model: counterfeit sales. Sites allow users to upload whatever designs they like; on larger sites, uploads can number tens of thousands daily. The sites are under no obligation to review the design unless someone claims the words or image infringe on a copyright or trademark. Each such claim typically involves filing a separate notice. Critics say that fosters rights infringement, both conscious and unwitting.

“The industry has grown so exponentially that, in turn, infringement has exploded,” says Imhoff, the licensing agent. As recently as 2010, he says, “print-on-demand had such a small market share, it wasn’t much of a problem. But it’s grown so fast [that] it’s gotten out of hand.”

Imhoff says internet searches for items such as “Texas Chainsaw Massacre T-shirt” often display designs that infringe on Exurbia’s copyrights and trademarks. That’s turned rights enforcement into “an unending game of whack-a-mole” for rights holders, agents, and consumer product companies, he says.

“It used to be you’d go out and find infringement in one chain store in a local mall, so you’d contact their national buyer and that’d be it,” Imhoff says. “Now there are effectively millions of independent retailers designing merchandise every day.”

There’s big money involved. Redbubble, which debuted on the Australian stock exchange in 2016, told investors in July 2019 that it facilitated transactions totaling more than $328 million in the prior 12 months. The company pegs the global online market for apparel and housewares this year at $280 billion. At SunFrog’s peak, in 2017, it generated $150 million in revenue, according to a court filing. Zazzle told CNBC it projected $250 million in revenue in 2015.

Taking Disputes to Court

Not all those sales reflect infringement, of course. But Scott Burroughs, an arts lawyer in Los Angeles who has represented several independent designers in suits against print-on-demand companies, believes much, if not most, of the content appears to be infringing. Mark Lemley, director of the Stanford Law School Program in Law, Science, and Technology, says Burroughs’ assessment may be accurate but that such estimates are complicated by “overzealous claims by rights holders, particularly on the trademark side.”

As a result, the rise of print-on-demand has also brought a wave of lawsuits by rights holders ranging from independent graphic artists to multinational brands.

The costs to print-on-demand companies can be steep. In 2017, executives at Harley-Davidson noticed more than 100 designs bearing the motorcycle maker’s trademarks—such as its famous Bar & Shield and Willie G. Skull logos—on SunFrog’s website. According to a federal lawsuit in the Eastern District of Wisconsin, Harley sent SunFrog more than 70 complaints of “well over 800” items that infringed on Harley’s trademarks. In April 2018, a judge awarded Harley-Davidson $19.2 million—the company’s largest infringement payout to date—and barred SunFrog from selling merchandise with Harley trademarks. US District judge J. P. Stadtmueller rebuked SunFrog for not doing more to police its site. “SunFrog pleads ignorance while sitting atop a mountain of resources that could be deployed to develop effective technology, review procedures, or training that would help combat infringement,” he wrote.

Illustration: Alex Kiesling

SunFrog founder Josh Kent says the improper Harley items stemmed from “like half a dozen kids in Vietnam” who had uploaded the designs. “They didn’t get a scratch on them.” Kent did not respond to requests for more specific comment on the Harley decision.

A similar case filed in 2016 has landmark potential. That year, California visual artist Greg Young sued Zazzle in US District Court, alleging that Zazzle users uploaded and sold products containing his copyrighted work without permission, a claim Zazzle didn’t deny. The judge found that the DMCA shielded Zazzle from liability for the uploads themselves but said Zazzle could still be sued for damages because of its role in producing and selling the items. Unlike online marketplaces such as Amazon or eBay, the judge wrote, “Zazzle creates the products.”

Zazzle appealed, but in November an appeals court agreed that Zazzle could be held liable, and Young stands to receive more than $500,000. Zazzle did not respond to requests for comment.

That ruling, if it holds, could rattle the industry. Eric Goldman, a professor at the Santa Clara University School of Law, wrote that the decision would allow copyright owners to “treat Zazzle as [their] personal ATM.” In an interview, Goldman says that if courts continue to rule this way, the print-on-demand industry is “doomed. … It’s possible that it can’t survive legal challenges.”

When it comes to copyright, print-on-demand companies’ role in turning digital files into physical products can make a difference in the eyes of the law, says Lemley, of Stanford. If the companies make and sell products directly, he says, they might not receive DMCA protections, “regardless of knowledge and regardless of the reasonable steps they take to take down infringing material when they find out about it.”

But that might not be the case if manufacturing is handled by a third party, allowing print-on-demand sites to claim they are merely marketplaces the way Amazon is. In March 2019, a US District Court in the Southern District of Ohio found Redbubble not liable for selling unlicensed Ohio State University merch. The court agreed that the products, including shirts and stickers, infringed on Ohio State’s trademarks. It found that Redbubble facilitated the sales and contracted the printing and shipping to partners—and the items were delivered in Redbubble-branded packaging. But the court said Redbubble couldn’t be sued because it technically didn’t make or even sell the infringing products. In the eyes of the judge, Redbubble only facilitated sales between users and customers and didn’t function as a “seller.” Ohio State declined to comment on the ruling; arguments on its appeal are scheduled for Thursday.

Corina Davis, Redbubble’s chief legal officer, declines to comment on the Ohio State case specifically, but echoes the court’s reasoning in an interview. “We’re not liable for infringement, period,” she says. “We don’t sell anything. We don’t manufacture anything.”

In a 750-word follow-up email, Davis said that she’s aware some Redbubble users try to use the platform to sell “stolen” intellectual property. The company’s policy, she said, “isn’t just to protect large rights holders, it’s to protect all those independent artists from having someone else make money off their stolen art.” Redbubble says it’s not a seller, though it generally keeps about 80 percent of the revenue from sales on its site.

Goldman, in a blog post, called the Redbubble victory “surprising,” because the company had “significantly contorted” its operations to evade the legal definition of a seller. “Without such contortions,” he wrote, print-on-demand companies would face “an unlimited range of regulation and liability.”

Burroughs, the Los Angeles attorney who represents artists, wrote in an analysis of the ruling that the court’s logic “would indicate that any online company that wanted to engage in wanton infringement could legally sell all of the knockoff products its heart desired so long as it pays third parties to manufacture and ship the product.”

Other print-on-demand companies use a similar model. Thatcher Spring, CEO of GearLaunch, said of Redbubble, “They say they’re brokering preferential relationships with the supply chain, but in reality I think they are encouraging this IP abuse.” But Spring later agreed that GearLaunch also contracts with third-party manufacturers. “Oh, that’s right. We don’t own the production facilities.”

Even if the Ohio State decision stands, it still might wound the industry. As Kent, the SunFrog founder, observes, “If the printers are liable, who would want to print?”

Amazon faces a similar lawsuit regarding its liability for a defective dog leash made by an independent merchant that blinded a customer. That case challenges the underlying principle that saved Redbubble: Can a marketplace, even if it isn’t a “seller,” be held liable for physical products sold through its site? In July, a three-judge panel of the US Third Circuit Court of Appeals ruled that the case could proceed; Amazon appealed to a larger panel of judges, which heard the case last month. These suits could reshape ecommerce and, in turn, the laws of ownership online.

Policing the Platforms

Given the number of users, the volume of uploads, and the variety of intellectual property, even the print-on-demand companies acknowledge that a certain amount of infringement is inevitable. In an email, Davis, Redbubble’s chief legal counsel, called it a “meaningful industry issue.”

Each company takes steps to police its platform, typically by offering a portal where rights holders can file infringement notices; they also advise users about the dangers of posting unlicensed designs. GearLaunch published a blog titled “How Not to Go to Copyright Jail and Still Become Rich.”

GearLaunch and SunFrog say their support the use of image-recognition software to look for potentially infringing designs. But Kent says SunFrog programs its software to recognize only certain designs, because, he says, it’s too expensive to analyze millions of uploads. Plus, he said, “The tech’s just not that good.” Neither company would disclose the size of its compliance team.

Redbubble’s Davis says the company limits daily user uploads “to prevent content uploading at scale.” She says Redbubble’s Marketplace Integrity team—which she described in a phone call as “lean”—is charged in part with “ongoing detection and removal of illegitimate accounts created by bots,” which can create accounts and mass-upload content automatically. That same team, Davis said in an email, also deals with content scraping, signup attacks, and “fraudulent behavior.”

Illustration: Alex Kiesling

Davis says Redbubble chooses not to use standard image-recognition software, though its subsidiary Teepublic does. “I think there’s a misconception” that image-matching software is “a magic fix,” she wrote in an email, citing technological limitations and the volume of images and variations “being created every minute.” (Redbubble’s 2018 investor presentation estimates its 280,000 users uploaded 17.4 million distinct designs that year.) Because software can’t tackle the problem “to the extent we need,” she wrote, Redbubble is testing its own suite of tools, including a program that checks newly uploaded images against its entire image database. Redbubble expects to launch these features later this year.

In an email, an eBay representative says the company uses “sophisticated detection tools, enforcement and strong relationships with brand owners” to police its site. The company says its anti-infringement program for verified owners has 40,000 participants. An Amazon representative cited more than $400 million in investments to fight fraud, including counterfeit, as well as brand-partnership programs designed to reduce infringement. Etsy’s communications office redirected questions to the company’s most recent transparency report, where the company says it disabled access to more than 400,000 listings in 2018, up 71 percent from the prior year. TeeChip says it has invested millions of dollars to help identify infringement, and puts each design through a “rigorous screening process” including text screening and machine-learning-enabled image recognition software.

In another email, Davis outlined other challenges. Rights holders often ask to take down items that are legally protected, such as parody, she says. Some press unreasonable demands: One asked Redbubble to block the search term “man.”

“Not only is it impossible to recognize every copyright or trademark that exists and will exist,” Davis said in an email, but “not all rights holders handle protection of their IP in the same way.” Some want zero tolerance, she said, but others think the designs, even if they infringe, generate more demand. “In some instances,” Davis said, “rights holders have come to us with a takedown notice and then the artist files a counter-notice, and the rights holder comes back and says, ‘Actually, we’re OK with that. Leave it up.’”

The challenges create what Goldman, the Santa Clara professor, calls “impossible expectations” for compliance. “You could task everyone in the world with vetting these designs, and it still wouldn’t be enough,” Goldman says in an interview.

Kent says the complexity and the lawsuits pushed SunFrog away from print-on-demand to “a safer, more predictable space.” The company once described itself as the largest printed T-shirt manufacturer in the US. Now, Kent says SunFrog is pursuing partnerships with known brands, such as Discovery Channel’s Shark Week. “Shark Week isn’t going to infringe on anybody,” he says.

Redbubble, too, listed “content partnerships” as a goal in its 2018 shareholder presentation. Today its partnership program includes 59 brands, mostly from the entertainment industry. Recent additions include items licensed from Universal Studios, including Jaws, Back to the Future, and Shaun of The Dead.

Tracing Products to Their Source

Rights holders say their burden—identifying infringing products and tracking them to their source—is equally demanding. “It’s essentially a full-time job,” said Burroughs, the attorney who represents artists. Imhoff, the Texas Chainsaw licensing agent, says the task is particularly difficult for small to midsize rights holders, such as Exurbia.

Trademark enforcement is especially demanding. Owners of copyrights can enforce their rights as tightly or loosely as they see fit, but rights holders must show they’re regularly enforcing their trademarks. If consumers no longer associate a trademark with a brand, the mark becomes generic. (Escalator, kerosene, videotape, trampoline, and flip phone all lost their trademarks this way.)

Exurbia’s trademarks include the rights to more than 20 word marks and logos for The Texas Chainsaw Massacre and its villain, Leatherface. Last summer, the work of protecting its copyrights and trademarks—repeatedly searching, verifying, documenting, tracking down unknown companies, consulting lawyers, and submitting notices to website operators—stretched the firm’s resources to the point Cassidy brought on three contract workers, upping total staff to eight.

Screenshot captured by Exurbia Films of a t-shirt allegedly infringing on its trademark for the character Leatherface.Courtesy of Exurbia Films

But they hit their limit when Cassidy discovered that many of the new sites selling knockoffs were based overseas and impossible to trace. Copyright infringement in Asia is of course nothing new, but operators based overseas have also set up shop on US-based print-on-demand platforms. Many of the pages and groups Exurbia found pushing social media ads for print-on-demand knockoffs last year traced to operators in Asia.

The first Facebook page Cassidy investigated, Hocus and Pocus and Chill, has 36,000 likes, and per its transparency page has 30 operators located in Vietnam; the group discontinued ads last fall.

Cassidy suspected many of these sellers were operated overseas, because he couldn’t trace them to a parent platform or shipping center. Legal and privacy pages had placeholder text. Takedown notices didn’t go through. Phone calls, emails, and ISP lookups all hit dead ends. Some pages claimed US addresses, but cease-and-desist letters sent via certified mail bounced back marked return-to-sender, suggesting those addresses were fake.

So Cassidy bought some Chainsaw shirts with his debit card, thinking he could pull an address from his bank statement. The items arrived a couple weeks later; his bank statements said most of the companies were located in Vietnam. Other statements presented dead ends. Charges were listed to random companies with US addresses—a Midwestern beer hops supplier, for instance. Cassidy called the companies, but they had no record of the transactions and had no idea what he was talking about. He still hasn’t figured it out.

Seeking a Compromise

In August, an exhausted Sahad reached out to Redbubble asking for information on a brand partnership agreement. On November 4, at Redbubble’s request, Exurbia emailed a brand deck, trademark and copyright information, a copyright ID, and letter of authorization. Exurbia also asked for a report of all takedown notices for infringing Chainsaw items Redbubble had received over the years.

In subsequent calls and emails, Redbubble representatives offered a revenue-sharing agreement. The initial offer, in a document reviewed by WIRED, included 6 percent royalties to Exurbia on fan art and 10 percent on official merchandise. (Imhoff says industry standard is between 12 and 15 percent.) Exurbia was reluctant. “They made money off our intellectual property for years, and they need to make that right,” Cassidy says. “But they weren’t coming forward with their wallet out.”

On December 19, Exurbia submitted 277 new notices to Redbubble and four days later filed 132 with its subsidiary, TeePublic, for T-shirts, posters, and other products. The items were removed. On January 8, Exurbia sent another email, reviewed by WIRED, calling attention to new instances of infringement, which Sahad documented with screenshots, a spreadsheet, and search results from that day. A Redbubble search, for example, had returned 252 results for “Texas Chainsaw Massacre” and 549 for “Leatherface”. A TeePublic search revealed hundreds more items.

On February 18, Redbubble sent Exurbia a report of all Chainsaw takedown notices it had received, and the total sale value of Chainsaw items Sahad had identified in takedown notices since March 2019. Exurbia wouldn’t disclose the sales number, but Cassidy said it was in line with his own estimate.

After WIRED inquired with Redbubble about discussions with Exurbia, Redbubble’s in-house lawyer told Exurbia the company was considering settlement options for the infringing sales. Both sides say negotiations continue. Cassidy is optimistic. “They at least seem to be the only ones making an effort,” he says. “Which we appreciate.”

So, how can this model evolve without shortchanging IP owners or upending an industry with so much to offer? Do we need a new DMCA—and one for trademarks? Will anything change without new laws?

The music industry may provide a hint. Long before Napster, the industry faced a similar crisis with royalties: With so much music played in so many places, how should artists get their due? Licensing groups such as ASCAP stepped in, establishing broad revenue-sharing agreements to broker royalties. Artists pay ASCAP a one-time fee to join, and broadcasters, bars, and nightclubs pay annual flat fees that free them from documenting and reporting every song. The agencies monitor the airwaves and clubs, do the math, and divvy up the money. More recently, services such as iTunes and Spotify supplanted the Wild West file-sharing market, sharing revenue with consenting artists.

For an industry arguably larger and more diverse than the music business, it won’t be simple. Goldman says some rights holders may not want to strike deals; among those willing to join, some may want to retain control over certain designs, the equivalent of the Eagles vetting every cover band that wants to play Hotel California. “If the industry moves that direction,” Goldman said, “it will be far less dynamic and much more expensive than it currently is.”

Redbubble’s Davis says it is “important for marketplaces and retailers, rights holders, artists, etc to all be on the same side of the table.” David Imhoff agrees that the licensing model is an interesting concept, but he worries about quality control. “Brands have to protect their image, their integrity,” he said. “Right now this funnel of content coming in every which way is just unmanageable.”

And that’s where the artists, lawyers, courts, companies, and rights holders seem to align. That in the end, the responsibility seems to fall with the most famously change-averse industry of them all: the federal government.

Updated, 3-24-20, 12pm ET: This article has been updated to clarify that “proactive enforcement” is not a part of a proposed brand partnership agreement between Exurbia and Redbubble.


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