authorised user

Hells Angels v Redbubble

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Redbubble’s online market place has survived the Hells Angels’ copyright infringement claims, but did infringe their registered trade marks. The reasoning, however, leaves questions hanging over Redbubble’s business model.

Redbubble provides an online market place. Artists can upload their artwork and potential buyers can browse the site to purchase the artwork or merchandise such as t-shirts and coffee cups emblazoned with the artwork. If a purchase is made for, say, a t-shirt with a particular artwork printed on it, Redbubble’s system arranges for the order to be placed with a fulfiller and ultimately shipped in packaging which bears a Redbubble trade mark.

The claims in this case related to uploaded images of a Hell’s Angels membership card featuring a helmeted death’s head in profile:

and registered trade marks featuring versions of the death’s head: Trade Marks Nos 526530,723291, 723463, 1257992 and 1257993.

At 552 paragraphs long, this post is going to be a high level overview only.

Copyright

A key feature in the case is that Hells Angels Motorcycle Corporation (Australia) Pty Ltd is not the owner of the copyright or the registered trade marks. It contended it was the exclusive licensee in Australia of those rights; the exclusive licences having been granted by Hells Angels Motorcycle Corporation, a US corporation.

The Hells Angels lost the claim of copyright infringement. They did so, however, because they could not prove Hells Angels USA was the owner of the copyright. As a result, Hells Angels Motorcycle Corporation (Australia) Pty Ltd could not be the exclusive licensee.

Reaching this conclusion required Greenwood J to explore, amongst other things, the notion of publication and whether the supply of membership cards was supply of copies of the work to the public. And the non-applicability of the US “work for hire” doctrine in ownership disputes under Australian law.

Redbubble is still in trouble.

First, if the applicants had been able to prove title to the copyright, Redbubble would have infringed.

Contrary to Hells Angels’ arguments, Redbubble was not liable for infringement by uploading the images. That was done by the artists in question. In the examples in question, the acts involved uploading images to websites outside Australia. For example, Example 1 was uploaded by an individual in Virginia in the USA. So the uploaders themselves were not liable as their actions did not involve any act done in Australia. At [428] – [429], Greenwood J ruled that, even though the images were made available online to the public in Australia, the artists (uploaders) did not infringe because they did no act in Australia.

…. the act of the artist in uploading the image to the website and thus making the work available online to the public must be an act “done” (that is, an exercise of the exclusive right), “in Australia” and therefore, none of the artists in the examples in suit can be regarded as a “primary infringer” in the territorial sense contemplated by s 36(1) because the relevant act was not done “in Australia”.

His Honour found, however, that Redbubble would be liable for communicating the images to the public in Australia as it was the person who was responsible for determining the content of the communication for the purposes of s 22(6) when a potential customer in Australia viewed the image on the website. Redbubble’s business model was crucial here. At [435], his Honour explained:

The business model as described by Mr Hosking and its working operation as described by Mr Kovalev makes it plain that Redbubble is not in the nature of an ISP linking a user to remote websites. It is not an intermediary providing a transmission service between particular participants. It owns, operates, manages and controls the website and conducts a transactional enterprise in which it facilitates the uploading of images, the interrogation of those images in Australia, relevantly, by users, with a view to enabling sales to consumers of articles bearing the relevant images. It has a detailed business model in which it derives revenue from each transaction and controls every step of the transactional engagement between an artist and a buyer. It confirms the sale. It facilitates payment. It organises a fulfiller to apply the work to the relevant goods. It facilitates delivery of the goods to the buyer. It generates email responses which not only confirm the order but track every step of the transaction. It affixes its own trade marks to the goods. It says that it does not directly do that but there is no doubt that an essential part of its business model is ensuring that fulfillers affix the Redbubble trade marks to the goods. The labels bearing the trade marks are on the goods as delivered to each buyer. Although I will address the trade mark case shortly, the reference to Redbubble’s trade marks, in this context, is simply to note another feature of the extent of Redbubble’s engagement in and association with each transaction. It is Redbubble’s business. But for the Redbubble website, the transactions would not occur. The artworks would not be available online to consumers in Australia to consider and appraise with a view to purchasing a product bearing the artwork. The entire focus of the business model is to enable works to be made available online so that consumers can pick and choose amongst the works so as to have them applied to goods. It would be difficult to imagine a more directly engaged participant than one deploying the business model adopted by Redbubble. Although Redbubble describes itself as the “agent” of the artist (presumably as principal), the relationship is not, in truth, a relationship of agent and principal. Redbubble acts as an “independent contractor” to “facilitate the transaction” as the Redbubble User Agreement and Appendix A to the Services Agreement makes plain: [245] and [246] of these reasons. The artist, in truth, is not the “seller” in the classic sense in which that term might be understood because Redbubble is the supplier as the facilitator of all of the essential elements of the transaction with the consumer in an analogous way to that discussed in:  International Harvester Company of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Company [1958] HCA 16;  (1958) 100 CLR 644 at 653; Heidelberg Graphics Equipment Ltd v Andrew Knox & Associates Pty Ltd (1994) ATPR 41326 at 42, 31011, notwithstanding that the nature of the technology is different to the forms of distribution arrangement in those cases.


His Honour would, if necessary, have also found Redbubble liable for authorising the conduct if it had been infringing.

Trade Marks

Secondly, Greenwood J found Redbubble liable for infringement of the Hells Angels’ registered trade marks on works such as t-shirt designs featuring the death’s head logo.

The crux of this finding came back to Redbubble’s business model. Greenwood J accepted that the artist who uploaded the image was using the trade mark as a trade mark. Unlike the copyright test, there was no requirement that the artist be in Australia. However, so was Redbubble.

At [460] – [461], his Honour explained:

As to Redbubble, that company is “in the business” of facilitating the supply of products bearing the uploaded image of Ms Troen (in this example) or, put another way, Redbubble is in the business of facilitating the supply of clothing bearing, put simply, the registered trade marks of HAMC US (in this example). Redbubble is not the “seller” of artwork. However, it is the supplier, in the sense that it is responsible for all of the transactional supplyside elements of a transaction for the supply of goods bearing the applied works. (emphasis supplied)


Redbubble has created a business model designed to enable users, in Australia (and, for that matter users in all jurisdictions in which the website is accessible), to find images through the website comprised of, in this example, Ms Troen’s image made up of the identified trade marks of HAMC US. Redbubble enables images containing the relevant trade marks to be presented to buyers of particular goods (nominated by the artists from the website categories of those goods to which the work can be applied) expressly for the purpose of facilitating the supply of goods (clothing, in this example) to which the marks are applied. It does so by and through the functions and protocols of the website engaged by Mr Hansen (and other potential viewers of the image), in Australia.

His Honour elaborated on why Redbubble’s conduct attracted liability at [462] – [469]. While this and two other examples infringed, his Honour found that, on the particular facts, Example 2 was not infringing use.

Greenwood J’s reasons also include an extended consideration of whether Hells Angels Australia was an authorised user; ultimately concluding it was.

Greenwood J, however, rejected Hells Angels’ claims that use of “Hells Angels” as search terms, or key words, within the Redbubble site was infringing. At [542] explaining:

542. …. However, I am not satisfied that this use, in itself, is use of the word marks as a trade mark, at this point in the functionality of the website. I take that view because I am not satisfied that using the term as a search term to find a relevant image is use of the term as a “badge of origin” of Redbubble. It is, undoubtedly, a use which is designed, quite deliberately, to lead a consumer by the “search nose” to images, marks, devices, livery and badging somehow or other connected with the Hells Angels Motorcycle Club.

….

544. … use of the word marks … as a search term is a search step along the way to use of the image and thus the registered trade marks, as trade marks but use of the word marks at the point of searching is not, in itself, in my view, use as a trade mark. (original emphasis)

It appears that, at the stage of entering the search term, it is not being used to identify things offered under the aegis of the Hells Angels, but just to locate things about the Hells Angels in some way.

This is the second ruling at first instance where Redbubble has been found to infringe.

While Redbubble’s business model does leave it exposed along the lines indicated above. It is worth noting that Greenwood J awarded only nominal damages of $5,000 in respect of two of the three infringements. His Honour did not allow even nominal damages in respect of the third infringement, Example 4, as it was online for a short period, viewed only 11 times and no sales resulted.

Greenwood J expressly rejected any claim for exemplary damages. His Honour does not go into reasons. Perhaps, Redbubble’s business model did protect it. The evidence was clear, for example, that Redbubble had a policy relating to infringement claims and implemented it promptly.

Hells Angels Motorcycle Corporation (Australia) Pty Limited v Redbubble Limited  [2019] FCA 355

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When can an authorised user sue

Leave a Comment / Trade marks / / / , , , , , , , ,

Following on from my earlier post about the Trade Marks Act 1995 and repackaged goods, it is worth noting that there was also a dispute about the power of an authorised user to bring proceedings under s 26(1)(b) of the Act.

Amongst other things, section s 26(1)(b) provides:

Powers of authorised user of registered trade mark

(1) Subject to any agreement between the registered owner of a registered trade mark and an authorised user of the trade mark, the authorised user may do any of the following:

….

(b) the authorised user may (subject to subsection (2)) bring an action for infringement of the trade mark:

   (i) at any time, with the consent of the registered owner; or

  (ii) during the prescribed period, if the registered owner refuses to bring such an action on a particular occasion during the prescribed period; or

  (iii) after the end of the prescribed period, if the registered owner has failed to bring such an action during the prescribed period;

Scandinavian Tobacco Group Eersel, as the owner of the registered trade marks, had brought the proceeding, but it was joined as an applicant by its local distributor as an authorised user. Trojan argued that the authorised user had no standing to sue in this case. This was not an argument about whether the local distributor was an authorised user. Rather, it was whether or not the formal requirements of s 26(1)(b) had been met.

Allsop CJ confirmed that s 26(1)(b) allowed an authorised user to bring proceedings for trade mark infringement concurrently with the trade mark owner. It was not necessary for the authorised user to call on the registered owner to bring proceedings and then wait 60 days for the owner to fail to take any action.

The power of an authorised user under the Act to bring proceedings is subject to any agreement with the registered owner to the contrary. In that connection Cl 8 of the relevant distribution agreement is in fairly typical terms:

Nothing in this Agreement shall be interpreted or otherwise construed as giving the Distributor any rights to any of the Supplier Trade Marks. The Distributor shall inform the Supplier of any Infringements of the Supplier Trade Marks of which the Distributor becomes aware. Prosecutions for infringements shall be at the Supplier’s discretion and cost, but the Distributor shall offer all reasonable assistance. Any damages received shall be credited to the Supplier.

Allsop CJ considered this did not exclude the authorised user’s powers under s 26(1)(b) but, if it did, his Honour would have inferred the registered owner had given consent in the circumstances of this case: both the registered owner and the authorised user had issued the proceedings as joint applicants.

The question of the local distributor’s standing as an authorised user to bring proceedings is not necessarily an arid debate in cases where the right owner is also an applicant. It might have affected how much damages could be recovered for any infringement by Trojan.

There are of course a number of ways damages could be calculated (assuming damages and not an account of profits were pursued). One way of calculating such damages is the amount of profits that would have been made on sales lost as a result of the infringing activity. If s 123 had not provided Trojan with a defence and the applicants had pursued damages for lost sales, the quantum as measured by any profits lost by reason of the (hypothetical) infringement would probably include the local distributor’s “lost” profits only if it was an authorised user and entitled to join in the proceeding. If STG, as the owner of the registered trade marks, was the only applicant, its damages would probably have been limited only to the profits it lost on sales to its distributor and probably would not include profits on sales “lost” by the distributor.[1]

Scandinavian Tobacco Group Eersel BV v Trojan Trading Company Pty Ltd [2015] FCA 1086[2]

  1. The qualification “probably” is necessary in light of the Full Court’s decision in a copyright case: Insight SRC IP Holdings Pty Ltd v Australian Council for Educational Research Ltd [2013] FCAFC 62  ?
  2. STG’s appeal from the principal decision was heard by the Full Court on 25 November.  ?

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