Gaylord company, SunFrog Shirts, fined $19.2 million for trademark infringement
In April 2018, SunFrog Shirts lost a major trademark infringement case lagainst Harley-Davidson, costing the Gaylord-based online merchandiser a total of $19.2 million in damages. This is a discouraging day for SunFrog and the entire print-on-demand industry, Josh Kent, SunFrog founder, said in a statement to the Herald Times. Kent said he would not comment substantively on the case because there are still some ongoing legal procedures, but he hopes SunFrog and Harley can come to a mutually beneficial resolution.
Legal troubles began brewing for SunFrog, 1782 O'Rourke Blvd., about a year ago after Harley-Davidson representatives reached out to SunFrog to suggest it stop selling shirts bearing registered Harley-Davidson logos. Then, in May 2017, Harley-Davidson filed a suit in the U.S. District Court for the Eastern District of Wisconsin, according to court documents.
In a statement to the Herald Times, Michael Pflughoeft, spokesman for Harley-Davidson, said the company takes great pride in the quality of its merchandising products, and that it is legally required to exercise control over the use of their trademarks and brand, which he said is one of the company's most valuable assets. By reproducing a number of registered Harley-Davidson trademarks on a variety of products, SunFrog violated our trademark, unfairly profiting from the goodwill and reputation from our brand and our years of promotion, he said. In addition, this violation could cause confusion among customers that SunFrog is somehow affiliated with or endorsed by Harley-Davidson. We make every effort to ensure consumers are not confused by the source of merchandise bearing our trademarks.
SunFrog's business model allows people to design their own T-shirts, hoodies and mugs. Those designs can then be included in the company's All Art Online Database, which allows other customers to use those designs on their products. After its founding in 2013, SunFrog's business has taken off, becoming one of the largest printed T-shirt distributors in the world, offering millions of designs and supplying hundreds of jobs to Gaylord, according to previous Herald Times stories. But court documents suggest that rapid expansion helped contribute to the subsequent legal issues it faced. SunFrog's business model has been hugely successful, Judge Joseph Stadtmueller stated the final court ruling, issued April 12. It has grown from making a million dollars in its first year to making over $150 million in 2017. It has become the largest maker of printed T-shirts in the country and one of the most popular websites in the world. According to court documents, SunFrog's website contained more than 100 infringing Harley-Davidson designs in May 2017, including the company's Bar & Shield Logo, Willie G. Skull Logo and Number 1 Logo. Even after a preliminary injunction in Harley-Davidson's favor, 93 of those designs were still available in June.
SunFrog's executives did try to develop and implement policies and structures to try to combat the infringement, but those efforts apparently could not keep up with the rate at which the designs were being reproduced, according to court documents.
And, according to Stadtmueller's ruling, those efforts did not absolve the company from its role in the counterfeiting. He said, even though the company did not create any of its own designs, SunFrog still had a physical hand in printing them, and profited off them.
Further, the company continued to advertise the products on social media and often waited several days to take the products off its website, even after Harley-Davidson sent direct links to SunFrog showing the infringing products on its site.
The judge also said Harley-Davidson had no obligation to wait until SunFrog outgrew its growing pains before pursuing legal action.
SunFrog seems to have developed a business that facilitated blatant infringement of others' intellectual property rights on the misguided notion that it was immune to liability as a service provider' that offered a notice-and-takedown procedure, Stadtmueller ruled. The ruling, although potentially devastating, is not necessarily as strict as it could have been. Under different circumstances, the court could have issued a ruling requiring $2 million per mark per type of counterfeit good, a figure that would have meant $128 million in total damages, which Stadtmueller noted would likely instantaneously shutter the business. He said this strict of a ruling was not necessary, and set the figure at $300,000 per mark per type of counterfeit good. Still, additional damages have to be determined for instances of infringement that were not deemed under the legal definition of counterfeit, and those associated with copyright rather than trademark infringement.
SunFrog also has other similar lawsuits against it making its way through the court system. Plaintiffs in those suits include Motley Crue, Coldplay and Ohio State University, although federal court records list 15 total cases involving the company, with 6 already having been resolved.
SunFrog was created to help people express their individuality through print-on-demand products, Kent said. The past five years have been explosive for online digital media and brought many new challenges to industries that are involved with online content. It has been, and continues to be our goal, to pioneer the print-on-demand industry while maintaining the responsibility of our platform's users. He said the company has made several changes, including the appointment of Aaron Singler as CEO in January. Aaron has a clear understanding of the industry and a passion of SunFrog's mission, Kent said. He has a clear vision for what the SunFrog community can be. Already, he has put a renewed focus on the quality and integrity of the art community and you will continue to see his changes implemented over the coming months.