Atari Interactive, Inc. v. Printify, Inc.

Background

Atari Interactive, Inc. brought a trademark-infringement action against Printify, Inc., its founder Janis Berdigans, and John Does 1-10. Atari alleged that Printify facilitated the sale of merchandise bearing allegedly infringing Atari marks. The opinion identifies claims for direct trademark infringement, contributory trademark infringement, trademark dilution, false designation of origin, and unfair competition under New York law.

Printify operates a print-on-demand service. Merchants use Printify’s software to select products and add designs, then generally link their Printify accounts to outside sales channels such as Etsy, Shopify, or eBay. When a customer places an order, Printify routes it to a third-party printer, which makes and ships the product. Printify does not review designs before shipment, does not take possession of the products, does not hold inventory, and generally does not identify itself on the product or packaging. Printify’s intellectual-property policy prohibits infringement, and after this lawsuit was filed, Printify searched for and removed potentially infringing products from its own database.

Atari first obtained an ex parte temporary restraining order. The parties later agreed to modify that order to remove asset-freeze provisions. Atari then moved for a preliminary injunction, which is a temporary court order issued before the case is finally resolved.

Legal standard

To obtain a preliminary injunction, Atari had to show a likelihood of success on the merits, a likelihood of irreparable harm without the injunction, that the balance of hardships favored Atari, and that an injunction would not harm the public interest. Atari relied on its likelihood of success rather than the alternative standard involving serious questions suitable for litigation and a strongly favorable balance of hardships.

Direct trademark infringement

The court focused on whether Printify “used” Atari’s marks as a seller under the federal trademark statute or merely facilitated transactions for independent merchants. The evidence showed some involvement by Printify: it supplied design software, provided access to images through the Shutterstock library, monitored printer quality, and performed some customer-support functions. But Printify did not design, manufacture, print, or ship the products, and most products were sold through merchant-controlled websites rather than Printify-operated websites.

The court concluded that Atari had not shown a likelihood of proving that Printify was a seller or manufacturer rather than a passive facilitator. The court considered the absence of Printify packaging or branding, Printify’s lack of inventory and possession of the merchandise, and its fee-based payment structure. The court therefore found that Atari had not shown a likelihood of success on its direct-infringement claim against Printify.

Contributory trademark infringement

Contributory trademark infringement can arise when a defendant intentionally induces infringement or continues supplying services to someone the defendant knows or has reason to know is infringing. The court found no evidence that Printify intentionally induced anyone to infringe Atari’s marks.

As to the second theory, the court found that Printify took concrete steps after receiving notice of particular potentially infringing products. It searched the URLs Atari identified, reviewed nearly 60,000 product sales associated with those merchants, removed 37 products it identified as potentially infringing, and searched its database for terms such as “Atari.” Once removed from Printify’s database, a product could no longer be ordered through Printify. The court explained that Printify could not control merchant websites or prevent merchants from using another fulfillment provider. Atari therefore did not show a likelihood of success on its contributory-infringement claim.

Other claims and claims against Berdigans

The court rejected Atari’s argument that it was likely to succeed on trademark dilution. Atari’s assertions about blurring and tarnishment were general and conclusory, it did not analyze the applicable factors for blurring, and the record contained no evidence that the goods were actually inferior in quality. The court also noted that Atari had not shown that Printify was acting as a seller.

The court held that Atari’s false-designation-of-origin and New York unfair-competition claims depended on standards overlapping with direct trademark infringement. Because Atari had not shown a likelihood of success on direct infringement, it had not shown a likelihood of success on those claims either.

As to Berdigans, the court stated that a corporate officer may be personally liable when the officer is the active and conscious force behind the company’s infringement. The court found Atari’s allegations about Berdigans conclusory and noted that Atari identified no specific actions showing his active involvement. The court therefore found no likelihood of success on the claims against him.

Irreparable harm

The court also found that Atari had not shown likely irreparable harm. Because Atari had not shown a likelihood of success, it was not entitled to a presumption of irreparable harm under the Trademark Modernization Act. Atari relied on alleged damage to goodwill, brand confidence, reputation, exclusivity, and future sales, but the court found that its supporting evidence consisted of conclusory statements. The record contained no evidence that the allegedly infringing goods were inferior to Atari’s products or that consumers had been confused about the source of their purchases.

Disposition

The court concluded that Atari had shown neither a likelihood of success on the merits nor likely irreparable harm without an injunction. Judge Sidney H. Stein denied Atari’s motion for a preliminary injunction.