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As Teespring Raises $35 Million, Trademark Issues Persist

The downside of user-generated content.

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Teespring, a three-year-old company that helps anyone manufacture and sell custom T-shirts online, has raised a $35 million investment led by Khosla Ventures. But the company’s mission to turn anyone with a good idea into a clothing entrepreneur has also left it open to a lawsuit alleging trademark infringement. The openness of the Teespring platform, in essence, is also a big risk.

Here’s how Teespring works: People who want to sell shirts on Teespring upload text and a design to the platform. Teespring charges these designers around $8 to $10 per shirt on average to have one of their manufacturing partners make the shirts for the designer. (Teespring will also use some of the investment to open its own plant to handle some manufacturing itself.)

The designer chooses a retail price for the shirt — keeping the difference — and then launches the sale on Teespring and shares a link to the sale page on social networks or through email. A certain number of customers have to reserve a shirt — say, five — for the sale to go live. Once that happens, Teespring captures all the orders and, along with its partner vendors, handles the manufacturing, shipment, customer service and even some online advertising for the campaign. And Teespring CEO Walker Williams says T-shirts are just the beginning, making it clear the company plans to broaden its catalog of products in the future.

“It should be as easy to bring a product to market as having a great idea,” he said in an interview with Re/code. “Everything after that we can automate.”

During the upload process for shirt designs, Teespring asks people to confirm that the design they are choosing doesn’t infringe on another company’s trademark rights or copyright. But that doesn’t mean people are always honest or knowledgeable about related laws. In January, for example, I came across dozens of instances of shirts being sold on the platform that appeared to infringe on the trademarks of professional and collegiate sport teams. Lawyers I consulted at the time agreed many did. In the spring, Ohio State University filed a lawsuit against Teespring for trademark infringement, among other claims. The dispute is ongoing.

Teespring’s Williams said in an interview this week that “we are confident that we can work through it with them and reach a good outcome.” An Ohio State spokesman declined to comment, citing the pending litigation.

On one hand, Williams said, such issues were bound to come up because of all the user-generated content that flows through Teespring. He cited YouTube as another content platform that deals with similar legal issues. At the same, Williams said Teespring takes trademark infringement seriously and has “made enormous strides in that area and we are very confident in where we are today.” Khosla’s Keith Rabois, who is joining the board, also said he trusts that Teespring is putting the right systems in place to quickly deal with trademark issues that arise.

Teespring says it makes it easy for trademark owners to request that a shirt be taken down. And once a Teespring shirt sale gets its first preorder, a member of the company’s three-person approval team checks it for violations, removing problematic shirts (the Dallas Cowboys shirt shown above appeared on Teespring last week, but had been taken down when I visited its sale page on Monday). About two out of every 1,000 campaigns are removed, Teespring said; thousands of new campaigns launch every day. Williams said the approval team will grow to five people by year’s end to keep up with the growth in the number of campaigns hitting the site. Teespring employs 170 people in total.

There’s a lot at stake including, increasingly, the livelihood of Teespring entrepreneurs. The company said hundreds of people now make at least $100,000 a year selling shirts on Teespring. A handful even make $1 million or more, the company said. A few high-profile lawsuits, however, could deal a serious blow to the startup, which has now taken on more than $55 million in investments.

This article originally appeared on Recode.net.

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