remedies

A notice and take down / moderation scheme for trade marks

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

The Full Federal Court has allowed Redbubble’s appeal from the remedies granted for its eleven infringements of five Hells Angels’ registered trade marks. In doing so, the majority instituted a kind of monitoring and notice and take down system as a “safe harbour” against trade mark infringement. In addition, the Court raised questions about how use of a trade mark on a website overseas may, or may not, constitute infringing conduct in Australia.

Some background

Redbubble operates a website at www.redbubble.com. Creators can upload images to the website. Other users can browse the website, select one or more of these images for application to merchandise such as t-shirts and coffee mugs. Once the orders have been placed, Redbubble contracts for the merchandise to be manufactured and shipped to the purchaser. Redbubble provides the payment processing service, it also provides the fulfilment functions including communications such as order confirmation and invoices with the purchaser. Redbubble’s trade marks were on the communications, the goods ordered and the packaging.

The servers for Redbubble’s website, however, are located in the USA and the day to day management is carried out there.

The Hells Angels had successfully sued Redbubble in 2019 for infringement of the registered trade marks in issue.

In this round, in two decisions,[1] Greenwood J at first instance had found Redbubble infringed the Hells Angels registered trade marks by 11 transactions. The 11 transactions were trap purchases by Hells Angels Australia’s trade mark officer.

His Honour went on to order declarations of infringement, damages of $8,250 and additional damages of $70,000. His Honour also ordered an injunction in general terms – for example:

Redbubble is restrained whether by itself, its officers, servants or agents or otherwise howsoever, from using the sign being the device described in Declaration 2 …, or any sign substantially identical with, or deceptively similar to, a sign consisting of the device, on the website operated by Redbubble in relation to trade in goods to which the sign can be applied, where such goods are goods in respect of which Trade Mark No. 526530, Trade Mark No. 723463 and Trade Mark No. 1257993 is registered.

On appeal, Redbubble did not challenge the infringement findings but sought to set aside the remedies.

The injunction

At the time of the judgment, creators were uploading to the website some 90,000 new images each day.

To address the risks of infringement, Redbubble adopted a two-pronged strategy.[2] First, it implemented a Notice and Take down / counter-notice scheme.

Secondly, it adopted what it called a Proactive Moderation Policy. This involved co-operating with rights holders to build up a stock of Reference Content, which it then used to monitor uploads and remove content assessed as too similar. Redbubble had extended the moderation policy to include some rights even without input from the rights owner. As part of this, Redbubble had been developing a software tool, RB Protect, with image matching and optical character recognition capabilities. This tool was limited to identifying identical images and had not yet developed to the point where it could do so in real time.[3]

At the time of the trial, Redbubble was conducting proactive moderation for some 477 rights holders (up from 200 in 2017). It had proactively moderated about two million artworks since January 2017 and terminated over one million uploader accounts.

On appeal, the Full Federal Court split 3:2 on the injunction issue.

All five judges were agreed that the injunctions ordered by Greenwood J were in error because they were not limited to restraining use of the trade marks as a trade marks; i.e., as badges of origin (see e.g Perram and Downes JJ at [213] – [214]).

There was a disagreement whether it was right to describe a trade mark owner who had proved infringement as having a prima facie right to a final injunction, or generally having such a right. Perram and Downes JJ would not have ordered any injunction. Nicholas, Burley and Rofe JJ ordered an injunction but, as noted above, instituted a “safe harbour” scheme based on Redbubble’s moderation policies.

Perram and Downes JJ

Perram and Downes JJ were concerned that describing a final injunction as a prima facie entitlement risked enlarging the trade mark owner’s rights beyond its statutory entitlement under s 20. Their Honours recognised that a final injunction was generally appropriate but emphasised the remedy, albeit statutory, nonetheless retained its equitable nature and was discretionary.

At [224], their Honours considered a good working rule was that an injunction may be refused if:

(a) the injury to the plaintiff’s legal rights is small;

(b) the injury is one which is capable of being estimated in money;

(c) the injury is one which can be adequately compensated by a small money payment; and

(d) it would be oppressive to the defendant to grant the injunction.

Adopting Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 at 322–323 and an article by Burley J and Angus Lang in (2018) 12 Journal of Equity 132 at 137–142.

The working rule was significant in this case. First, the evidence demonstrated that the only way Redbubble could comply with the usual form of injunction was to cease operating. Thus at [225] complying with the injunction would not just be inconvenient but grossly disproportionate to the right protected.

The remedy was grossly disproportionate because the Hells Angels had not demonstrated any loss and was not likely to suffer loss of any kind. At [226], Perram and Downes JJ explained:

We do not accept therefore that it would be correct to grant an injunction which could only be obeyed by Redbubble ceasing to trade. The shuttering of Redbubble’s business at the instance of a party which has suffered and is likely to suffer no loss of any kind falls within the working rule. If Hells Angels had demonstrated some actual or apprehended loss then the question would be much more difficult. Such a case might be presented by the owner of a trade mark which had a reputation for the exclusive nature of the products to which it was affixed (although there might be many other circumstances generating similar problems). For such a trader, even the intermittent appearance of its marks on Redbubble’s website for short periods of time could cause real harm to that goodwill and this could be so even without any sales. ….

In the “somewhat unusual circumstances of this case”, therefore, their Honours considered it was not appropriate to grant an injunction at all.

Nicholas, Burley and Rofe JJ

While agreeing that the award of a final injunction is discretionary, at [248] Nicholas, Burley and Rofe JJ considered at [248] that describing the right holder as having prima facie entitlement to a permanent injunction is both unexceptional and correct. Their Honours explained at [245]:

But generally speaking, unless the court is persuaded that there is no significant risk of further infringement occurring, or unless there exists some other discretionary reason for refusing the remedy, a final injunction will usually be granted against a party that is found to have infringed.

Further, at [249], their Honours agreed with Perram and Downes JJ that it is not necessary for the right owner to prove it will suffer irreparable harm or that damages will not be an adequate remedy.

It is also not necessary for the trade mark owner to prove that it is more probable than not that the infringer will commit further infringing acts. A final injunction might still be granted even if the Court considers the risk of repetition is “slight” or “negligible”.

In this case, there was admittedly a significant risk of repeat infringements. Indeed, the case itself involved repeat infringements.

Like Perram and Downes JJ, Nicholas, Burley and Rofe JJ considered a general injunction was not appropriate. The risk of repitition, however, meant an injunction was appropriate. Accordingly, at [251] their Honours limited its effects by specifying that the general injunction would not be breached by compliance with the moderation policies. Therefore, the general injunction was qualified:

3 The Appellant will not be in breach of orders 1 or 2 (the general injunction) if:

(a) it maintains a system involving the surveillance of its website at www.redbubble.com (the Website) and the removal of images that might infringe the marks referred to in orders 1 and 2 above which is no less rigorous than that which it had in place as at 24 August 2022 and is referred to in the affidavit of Mr Joel Barrett of that date as “Proactive Moderation”; and

(b) within seven days of an image to which orders 1 or 2 above refers being identified on the Website by the Appellants or its servants or agents, the Appellant removes the image from the Website.

4 Notwithstanding Order 3, the Appellant will be in breach of order 1 or order 2 if, on the First Respondent or the Second Respondent or both of them becoming aware of an image to which such order refers being available on the Website, and notifying the Appellant of the image by sending an email to legal@redbubble.com (or such other email address as notified by Appellant in writing from time to time):

(a) with the subject field ‘Hells Angels Complaint’;

(b) identifying the image by reference to the location of the image on the Website in the form http://www.redbubble.com/people/[username] /works/[work number and name]; and

(c) stating that the First Respondent and/or the Second Respondent considers that the image would breach Order 1, Order 2 or both,

the Appellant fails to remove the image or images from the Website within seven days of such email.

Perram and Downes JJ had considered such a limitation inappropriate as it required Redbubble to comply with its existing policies and, further, would be seen as giving the Court’s imprimatur to those policies.

Nicholas, Burely and Rofe JJ countered that the Order did not require Redbubble to maintain any surveillance system but would reduce the burden and risks of the usual form of injunction and was similar to the “site blocking” orders under the Copyright Act 1968. In addition, their Honours considered the making of the injunction in this form did not preclude a general injunction alone or different remedies in different cases. At [254]:

What injunctive relief (if any) should be granted at the suit of a different applicant who establishes that its rights have been infringed by Redbubble will depend on the right infringed (eg. copyright or trade mark), the circumstances of the infringement and the evidence, including any evidence of the surveillance and moderation policies and practices followed by Redbubble at the time any such proceeding is heard.

Concluding comments

Review of the discussion about use as a trade mark on websites outside Australia and damages will have to await another occasion.

The judicial acceptance of a notice and take down / moderation scheme for trade mark infringement is a significant development as such a scheme has been implemented in Australia only by statutory intervention in the Copyright Act 1968. The development does have echoes of a similar development in the United Kingdom (albeit in a different regulatory regime).[4]

It is important, however, to keep in mind that the Full Federal Court was very conscious of the limited impact of the infringements in this particular case and the Hells Angels’ very limited attack on Redbubble’s argument that it was not feasible yet to develop a system which did more than detect exact image matches as discussed by Perram and Downes JJ at [147] and [161] – [162].

Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2024] FCAFC 15 (Perram, Nicholas, Burley, Rofe and Downes JJ)

  1. The Hells Angels discovered several new transactions after the initial hearing on liability had been heard and successfully applied to re-open the trial to address transactions 8 to 11.  ?
  2. The strategy had not saved it from injunctions in the 2019 proceeding.  ?
  3. Greenwood J’s remedies decision at [90] – [107]; [104] cataloguing a history of 8 notifications or infringements by the Hells Angels since 2014.  ?
  4. Cartier International AG v British Sky Broadcasting Limited [2016] EWCA Civ 658 and the Supreme Court’s decision on who bears the costs of compliance: Cartier International AG v British Telecommunications Plc [2018] UKSC 28.  ?

A notice and take down / moderation scheme for trade marks Read More »

No damages for unjustified threats

Leave a Comment / Patents / / / , , , , , ,

Following on from the Full Court’s warnings in Australian Mud Company v Coretell, Dowsett J has now dismissed Morellini’s claim for damages for unjustified threats. This is a short point, but it bears notice as people often come to me thinking it is enough to show there has been an unjustified threat – it isn’t, if you want monetary compensation.

Mizzi and Morellini are both in North Queensland and came up with machines for planting sugar cane. Mizzi patented his. Dowsett J found that Morellini’s machine did not infringe Mizzi’s patent and Mizzi had made unjustified threats of patent infringement. On appeal, the Full Court also ruled that Mizzi’s patent was invalid for false suggestion.

There was no dispute that Mizzi had made unjustified threats. On 5 April 2010, it had caused to be published in the Canegrower trade magazine a notice about its pending patent and an article by “Invention Pathways” about the consequences “[i]f the patent owner decides to pursue his rights ….” Then in June 2011, Mr Mizzi made oral threats to a Mr Girgenti about the use of a Morellini machine.

The problems for Morellini were essentially two fold. First, much of the evidence about people’s reluctance to deal with Morellini related to things which happened before the threats were made or in circumstances where Dowsett J could not attribute them to the actual threats as opposed to just rumours circulating in the industry:

There is no direct evidence that anybody declined to deal with Mr Morellini as a result of the threats. It seems that even before the newspaper article on 5 April 2010, there was a degree of reluctance concerning any such dealings. That reluctance cannot have been attributable to the threats. Mr Morellini has not demonstrated that any adverse effect resulted from either of the threats.

Secondly, Dowsett J accepted that damages could be available for lost sales opportunities and delayed sales, if they could be linked to the threats. However, Morellini did not provide detailed evidence about how he would have exploited his machine commercially and why he had not been exploiting it “in more recent times”. That is, Dowsett J wanted to know what was Morellini’s plan (if he had one) for exploiting his machine commercially and why he had not been doing so.

Mizzi Family Holdings Pty Ltd v Morellini (No 3) [2017] FCA 870

No damages for unjustified threats Read More »

Now for the PLAYGO word mark

Leave a Comment / Enforcement / / / , , , , , , , , ,

Moshinsky J has now extended the declarations and injunctions in the Playgro v Playgo proceedings to include the PLAYGO word mark, but refused orders to recall infringing products and for delivery up.

The previous decision concerned the use of the PLAYGO device. This device appeared prominently on the top and the four sides of the product packaging. In small print (6 point or 8 point) on the bottom of the packaging, the following legend was printed:

Screen Shot 2016-05-11 at 12.28.21 PM

Moshinsky J has now ruled that PLAYGO in the first line of that “notice” also infringed, but not the other occurrences of PLAYGO in the company names.

The respondents argued that the PLAYGO device placed prominently on the top and sides of the packaging was clearly the trade mark and would be understood by the consumers to be the trade mark. This “notice” was just a legend referring to that device. Consumers would never even see it, unless they picked the package up and looked at its underside. His Honour said at [17]:

In the present case, the word, ‘PLAYGO’ was immediately followed by the letters, ‘TM’ in superscript and the words “is a trademark of”. These are strong indicators that the word, ‘PLAYGO’ is being used as a trade mark, that is, as a ‘badge of origin’ to distinguish the respondents’ playthings from playthings made by others. While the nature and purpose of the use of the word must be considered in the context of the packaging as a whole, which includes the Playgo Device Mark on the front and sides of the box, the fact that the Playgo Device Mark is used as a trade mark does not diminish the fact, in this case, that the word, ‘PLAYGO’ in the small print is also being used as a trade mark. This case may be contrasted with cases where a word which is arguably descriptive is used in small print on the packaging and it is concluded that, in the context of the packaging as a whole, including the use of a prominent brand elsewhere on the packet, the word is not being used as a trade mark: compare, for example, Nature’s Blend Pty Ltd v Nestle Australia Ltd (2010) 86 IPR 1 at [22], [37]-[40] per Sundberg J; Nature’s Blend Pty Ltd v Nestlé Australia Ltd (2010) 87 IPR 464 at [42], [48] per Stone, Gordon and McKerracher JJ. In the present case, the word, ‘PLAYGO’ is not descriptive and the presence of the superscript letters, ‘TM’ and the words “is a trademark of” indicate use as a trade mark.

Even if the word PLAYGO in the first line of the “notice” could be seen as a legend, it would be sufficient that one of the impressions a consumer could take away from the use was that it was used as a trade mark and that was the case here.

Bearing in mind that Playgo was outside Australia (in China) and supplied its products there to retailers who imported them into Australia for sale, the injunctions Moshinsky J ordered were against supplying for sale in Australia playthings under or by reference to the PLAYGO device or in packaging bearing both the PLAYGO device and the word PLAYGO in small print on the packaging (other than as part of a company name).

The words “under or by reference to” were preferred to “use as a trade mark” as, while the latter expression is the term used in the Act, it was liable to debate and uncertainty about its scope. The use of PLAYGO in the company names was not enjoined as it was not trade mark use. In addition, his Honour was not prepared to enjoin wider uses of PLAYGO where the trial had concerned only the limited use in small print on the bottom of the packaging.

Moshinsky J refused to order Playgo to recall all unsold goods. Playgo had stopped supplying goods with the trade mark in November 2014. His Honour considered it unlikely that stocks would still be held by retailers. Even if there were, there was no evidence that Playgo had any right to require the retailers to return the products. (That of course does not mean that retailers who sell would not infringe.)

The order for delivery up was also refused. This was because any goods in Playgo’s possession or control were in China – where it was located and operated – and could be sold to places other than Australia where there might not be an infringement.

Playgro Pty Ltd v Playgo Art & Craft Manufactory Limited (No 2) [2016] FCA 478

Now for the PLAYGO word mark Read More »

3 stripes v 4 stripes: the remedies

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

4 stripes 3 stripes now the remedies

Following the decision a couple of months back that 3 of 12 Pacific Brands’s shoes had infringed adidas’ 3-stripes trade mark, Robertson J has now:

  1. made a declaration that Pacific Brands infringed;
  2. granted an injunction permanently restraining Pacific Brands from making or selling etc. 2 of the 3 shoes found to infringe;[1]
  3. awarded $20,000 damages; and
  4. ordered Pacific Brands to pay 30% of adidas’ costs.

The amount of damages was resolved between the parties. There are a couple of points of interest in the terms of the injunction and the costs order.

First, in relation to the injunction, adidas had sought an injunction which restrained Pacific Brands both in relation to the specific shoes found to infringe and also “from otherwise infringing” the 3-stripes trade mark. Robertson J refused this wider injunction. The practical reality of 9 styles either abandoned or found not to infringe served a telling warning against the injunction sought:

because, as these proceedings have shown, such an order would lack sufficient clarity and definition and the Court should not make an order in relation to conduct where a person would not readily know whether or not its proposed conduct breached the order. What is the appropriate relief must depend on the facts and on the underlying dispute and I do not derive much assistance from the form of relief granted in trade mark cases which concerned primarily words because infringements by words are generally clearer than by designs.[2]

His Honour also refused to include one of the 3 infringing styles in the order because the shoe had been taken off the market 7 years earlier and there was no sufficient risk of its reintroduction. While the other 2 infringing shoes had been taken off the market in 2009, an injunction was warranted. First, no unconditional undertaking had been given in relation to them. Secondly, while a broad undertaking had been given, his Honour considered the sale of these 2 styles after that undertaking was in place breached it. His Honour also considered that the evidence that Pacific Brands’ Global Trading division – the “division” which had sold the shoes – had been closed down was not “sufficiently cogent” to persuade him that there was no sufficient further risk of infringement.

Thirdly, the terms of the injunction extend also to authorising, directing or procuring other to make or sell the infringing shoes.

On the costs question, Robertson J considered the “old” rules which included an automatic one third reduction to the costs where less than $100,000 was recovered were applicable as the action started before the new, 2011, rules came into force. However, his Honour exercised his discretion not to apply that rule. The Federal Court was an appropriate forum to have brought the action in and damages were not the primary relief being sought. The costs were reduced, however, to reflect the degree of adidas’ success, particularly bearing in mind it had pursued 12 styles of shoe as part of an overall strategy to obtain broad injunctive relief. The little weight accorded to the survey having regard to the substantial amount of evidence it involved, in the face of Pacific Brands’ objections, was also a factor in the reduction of costs.

Adidas AG v Pacific Brands Footwear Pty Ltd (No 4) [2013] FCA 1335

  1. The terms of the injunction were:  ?

    The respondent, whether by its servants, agents or otherwise, be permanently restrained from:

    (a) manufacturing, procuring the manufacture of, importing, purchasing, selling, offering to sell, supplying, offering to supply or distributing footwear in the form depicted in any of Exhibits K or L in these proceedings, being the footwear depicted in Annexures B and C to these Orders;
    (b) authorising, directing or procuring any other company or person to engage in any of the conduct restrained by sub-paragraph (a).

  2. This may be contrasted with the typical injunction in a patent case that thou shalt not infringe the patent; leaving the infringer to run the gauntlet.  ?

3 stripes v 4 stripes: the remedies Read More »

How much to pay for an infringement

2 Comments / Copyright / / / , , , , , , , , , , ,

Over at the Fortnightly Review, Ass. Pro. David Brennan takes issue with the economists who argued that Larrikin should not have been paid any damages for the Kookaburra infringements.

The economists’ argument seems to have been that Larrikin didn’t lose any sales as a result of Men at Works’ infringements and so suffered no loss.

Damages under s 115(2) of the Copyright Act are compensatory: that is, they are calculated to compensate the copyright owner for the loss suffered as a result of the infringement. One way to measure that may be the profit the copyright owner lost on sales which typically applies where the copyright owner and the infringer are competing in the same market. One problem with this is that the figure for lost sales must be discounted to reflect infringements by the infringer which would never have been sales made by the copyright owner. So for example in Autodesk v Cheung, the infringer gave the pirate copies away for free while the copyright owner’s genuine software programs sold for hundreds of dollars.

Another measure often used is the licence fee approach, particularly applicable where the owner exploits the copyright by licensing. So, Autodesk wanted the licence fees it would have been paid as if Cheung had taken out a distribution agreement like its other distributors. Wilcox J was not prepared to order damages at a reasonable royalty level because, as is typically the case, there was no way Autodesk would have licensed Cheung or, for that matter, that Cheung would have paid for a licence from Autodesk. In that situation, Wilcox J felt that the basis for a reasonable royalty — the price a hypothetical willing (but not overly anxious) licensor and a hypothetical willing (but not overly anxious) licensee would have struck — could not apply.

While some courts at first instance have been willing to use a ‘reasonable royalty’ as a basis, Wilcox J’s concerns have been endorsed by Black CJ and Jacobson J in Aristocrat.

It is interesting to contrast this approach with the way the courts in the UK have dealt with it. Relying on some “old” patent cases (including a House of Lords decision), the Court of Appeal in Blayney (trading as Aardvark Jewellery) v Clogau St David’s Gold Mines was willing to use a “notional royalty” as the measure of the damages. The foundation of this approach was a rejection of the idea that the only loss suffered by the copyright owner was lost profits. Thus, in Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, Lord Shaw expressed the principle:

wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, of price or hire. If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: “Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.

and applied it in the context of patent infringement:

If with regard to the general trade which was done, or would have been done by the Respondents within their ordinary range of trade, damages be assessed, these ought, of course, to enter the account and to stand. But in addition there remains that class of business which the Respondents would not have done; and in such cases it appears to me that the correct and full measure is only reached by adding that a patentee is also entitled, on the principle of price or hire, to a royalty for the unauthorised sale or use of every one of the infringing machines in a market which the infringer, if left to himself, might not have reached. Otherwise, that property which consists in the monopoly of the patented articles granted to the patentee has been invaded, and indeed abstracted, and the law, when appealed to, would be standing by and allowing the invader or abstractor to go free. In such cases a royalty is an excellent key to unlock the difficulty, and I am in entire accord with the principle laid down by Lord Moulton in Meters Ld. v Metropolitan Gas Meters Ld. (28 R.P.C. 163). Each of the infringements was an actionable wrong, and although it may have been committed in a range of business or of territory which the patentee might not have reached, he is entitled to hire or royalty in respect of each unauthorised use of his property. Otherwise, the remedy might fall unjustly short of the wrong.

The Meters case was referred to by Wilcox J, but it does not seem that Watson, Laidlaw was cited to his Honour.

Now, of course, the 19th century considerations of a horse owner and “borrower” seem “quaint” in the age of Gogle and P2P torrents. But is the principle really so different?

It appears that the third member of the Court in Aristocrat, Rares J, may well have been willing to adopt the Watson, Laidlaw approach, but the evidence failed to provide a basis for any “judicial” estimate.

How much to pay for an infringement Read More »

Scroll to Top