When is trade mark use on an overseas website an infringement in Australia
Last week reviewed the notice and take down / moderation procedure the majority of the Full Federal Court adopted to limit the injunction against Redbubble’s trade mark infringement. In the course of allowing Redbubble’s appeal, the Full Federal Court also unanimously flagged significant questions about when the use of a trade mark on a website overseas may constitute trade mark infringement in Australia.
On these matters, Perram and Downes JJ delivered the main reasons and Nicholas, Burley and Rofe JJ agreed.
Some more facts
You will recall, Redbubble operates a website to which creators can upload their designs and customers can then buy merchandise to which the customers have chosen to have the designs applied. Once a customer has placed an order, Redbubble undertakes the fulfilment function including having the products manufactured and delivered to the customer branded with Redbubble’s trade marks.
Redbubble’s servers (at least in this case) are in the United States.
This part of the appeal concerned the second part of the trial – transactions 8 to 11. In the case of these “transactions”, Hells Angels’ trade marks officer in Australia merely viewed the trade mark infringing images on Redbubble’s website; he did not even make a trap purchase. There was no evidence that anyone else in Australia ever viewed the images or bought them.
Did this infringe?
The short answer is “yes”. But it is how the Full Federal Court got there that will require careful consideration in the future.
At first instance
The starting proposition is that for trade mark infringement in Australia there must be unauthorised use of the trade mark (or a substantially identical or deceptively similar sign) as a trade mark – i.e. as a badge of origin.[1]
Way back in 2005, Merkel J had concluded in Ward v Brodie the fact that a website was accessible from Australia was not sufficient to establish use; it was necessary to show that the website was directed at or targeted Australia.[2]
At first instance in this case, Greenwood J having found that the trap purchases (transactions ##1 to 7) infringed also found that transactions ##8 to 11 infringed even without a purchase. In doing so, his Honour applied the proposition that he had propounded in his 2019 ruling (which also involved trap purchases) at [469]:
The capacity to engage, in Australia, through the website, as Mr Hansen did, constitutes use in Australia by Redbubble. [3]
The appeal
Redbubble had not disputed that proposition at trial. It did seek to raise it as Ground 1 of its appeal. As it had not sought to argue the ground at first instance, however, this would have required leave and ultimately it did not press it.
So, it was unnecessary for the Full Federal Court to deal with the issue. At [48], however, their Honours placed a question over the correctness of Greenwood J’s proposition. Perram and Downes JJ said:
For the reasons which follow, to the extent that [469] of the 2019 judgment deals with the situation disclosed by Examples 8 to 11, we would reserve the correctness of that statement for a case where it is directly raised.
In the following paragraphs, their Honours identified at least three issues which would need to be addressed.
Why is a trap ‘viewing’ not an authorised use
The first issue was why a trap viewing was not a direct infringement.
Here, Perram and Downes JJ considered the trap purchases in Ward v Brodie had not been infringing because (now repealed) s 123(1) of the Trade Marks Act had provided it was not an infringement to use a trade mark in relation to goods to which the trade mark had been applied by or with the consent of the trade mark owner.
With the repeal of that provision, however, that proposition could no longer be applied. Further, at [50] their Honours questioned whether the replacement provision, s 122A,[4] “could be pressed into service” instead. Although their Honours expressed no concluded view at this stage.
However, Perram and Downes JJ at [51] questioned Merkel J’s conclusion in Ward v Brodie that a trap purchase was not authorised use under s 8(1). As a consequence, their Honours considered it would also be arguable that at least some of the trap viewer’s actions in viewing the images (i.e. requesting Redbubble to serve the images to the trap viewer) might also be authorised use and so fall within the defence provided by s 122(1)(e).
Noting once again that these matters had not been argued and so did not need to be decided, at [52] Perram and Downes JJ considered whether authorised use could in fact be made out could be “highly dependent on the particular facts”.
The reason for this warning lay in the different nature of some of the trap “views”. Mr Hansen, the Hells Angels’ trade mark officer had navigated to the Redbubble website and specifically requested the image displayed in transaction #8. The Redbubble website, however, included a carousel feature. So that, when image #8 was displayed the website automatically presented to him other images (##9 and 11) which Redbubble recommended to him.
The geographical reach of s 120(1)
The second issue the Full Federal Court raised was the geographical reach of infringement under the Australian Act. That is, there must be use as a trade mark in Australia. The Act does not reach acts outside Australia (if they do not involve trade mark use in Australia).
Is viewing an overseas website from Australia enough
Thirdly, Perram and Downes JJ at [57] considered it is open to question whether a website overseas which is merely viewed by people from Australia (other than a trap “viewer”) without purchase would constitute use as a trade mark in Australia. Their Honours noted that the previous decisions (apart from Greenwood J’s decision under appeal) including Christian v Nestlé involved an actual trade in Australia.
Noting that Moorgate Tobacco v Philip Morris established a threshold requirement for trade mark use that there “be an actual trade or offer to trade in the goods in Australia”, their Honours explained at [62]:
The question of whether mere overseas projection without a local trade in the goods can amount to trade mark use in Australia is, in our view, a question of considerable difficulty. It is made potentially more complex in this case because although the website is hosted from servers in the United States there is no doubt that Redbubble conducts business in Australia. The difficulty is that that business does not appear to have involved, in the case of Examples 8 to 11, any more than projection into the Australian market without any consequent trade in goods bearing the marks. An important question is whether the necessary geographical nexus for use of a trade mark in Australia can be established by the mere fact that the trader is engaged in trade in Australia albeit not in relation to the infringing trade mark. The answers to these questions are not self-evident. (emphasis supplied)
At [63], Perram and Downes JJ concluded:
On the current state of the authorities, we regard the matter as undetermined. At no point in either of the trial judge’s decisions does his Honour traverse these issues. We would therefore not read [469] of the 2019 judgment as resolving them.
Perhaps the issue that concerned their Honours is that, in the bricks and mortar world, Yanx established that consumers in Australia who bought “Yanx” cigarettes in the USA and imported them into Australia for their own personal use did not use the Yanx trade mark as a trade mark. The transaction was completed in the USA and the goods, when imported for the consumers’ own personal use, was no longer in the course of trade.
On the other side of the ledger, however, Deane J said in Moorgate at 433 –434:
The cases establish that it is not necessary that there be an actual dealing in goods bearing the trade mark before there can be a local use of the mark as a trade mark. It may suffice that imported goods which have not actually reached Australia have been offered for sale in Australia under the mark (Re The Registered Trade Mark “Yanx”; Ex parte Amalgamated Tobacco Corporation Ltd., at pp 204–205) or that the mark has been used in an advertisement of the goods in the course of trade (The Shell Co. of Australia v. Esso Standard Oil (Australia) Ltd., at p 422). In such cases however, it is possible to identify an actual trade or offer to trade in the goods bearing the mark or an existing intention to offer or supply goods bearing the mark in trade. In the present case, there was not, at any relevant time, any actual trade or offer to trade in goods bearing the mark in Australia or any existing intention to offer or supply such goods in trade. There was no local use of the mark as a trade mark at all; there were merely preliminary discussions and negotiations about whether the mark would be so used.
One might think that a website which was directed at, or targeting, Australians was making an offer to trade here or had an existing intention to offer and supply here, even if there is no actual sale. At least arguably, that does not seem very different, if at all, to advertisements in magazines circulating in Australia with the aim of soliciting custom. Moreover, (and this may require evidence in a particular case), if one clicks on the “Buy Now” or “Purchase” button on most websites, the whole transaction is automated and does not involve a volitional decision by the website operator whether or not to complete the transaction.
So why did Redbubble infringe
At the risk of simplifying the arguments very significantly, Redbubble’s argument was a kind of de minimis argument that the infringing images were not available to consumers in the ordinary course of trade.
This argument had two main strands to it. One strand was that the Hells Angels had been able to identify the accused images only through a prolonged period totalling some 4.5 hours over approximately 7 hours – typing in “Hells Angels” and filtering for “Newest”. Redbubble contended this was not the behaviour exhibited by ordinary consumers who, for example, spent on average spent less than four minutes on the site. The other strand was the claimed short period of time the images were available on the website.
Perram and Downes JJ did not think the primary judge had erred in rejecting Redbubble’s argument. Their Honours further pointed out that, if Redbubble had wanted to prove that an image was unlikely to be found, it should have provided evidence of what a search would have revealed at the relevant time. The carousel function also contradicted the argument.
Putting aside the factual problems, their Honours considered there was a more general objection to Redbubble’s argument. This was not a case of a consumer using a general search engine like Google or Bing and having to filter results. Rather, it was a case involving a search of a specific website with specific functionality designed to facilitate locating desired iterms. Having noted the search function and the catalogue Redbubble provided were central components of its business model, their Honours at [81] rejected the argument:
one must distinguish between, on the one hand, the difficulties a consumer may encounter in finding what they are searching for on a website explicitly designed for the purpose of helping them do so and, on the other, the idea that such difficulties entail that the website is not engaged in the ordinary course of its trade. We do not think that the fact that it might be difficult to locate goods bearing infringing trade marks in a poorly laid out store can mean that the goods are not being offered for sale in the ordinary course of the trader’s business. We do not think any different principle applies to a website of the present kind.
Some other matters
Patches and badges of affiliation
At [226], Perram and Downes JJ appeared to suggest that the use of the Hell’s Angels trade mark as “patches” on jackets and the like to indicate exclusive membership of the club would not be use as a trade mark. Pointing out that there may be trade mark use where the sign serves dual purposes, Nicholas, Burely and Rofe JJ at [255] expressly reserved that proposition for future consideration.
Nominal damages?
It is also worth noting that the Full Federal Court rejected Greenwood J’s award of $8,250 as nominal damages (if indeed it was nominal) on the basis that such an amount could never be considered “nominal”, whether it was calculated as $750 per infringement or as $8,250 on a global basis.
After reviewing the amounts that had been awarded in other cases as nominal damages, the Full Federal Court at [127] awarded the sum of $20 per infringement making, in total, $100.
Given the error in calculating the damages, the award of additional damages ($70,000) was also set aside since the amount awarded as damages was relevant to that assessment even if the amount awarded as additional damages did not need to be proportionate.
Most of the factors listed in s 126(2) did not support an award of additional damages and, while there was a ‘mild’ need for general deterrence, the trivial quantum of infringements led to no additional damages being awarded.
Redbubble Ltd v Hells Angels Motorcycle Corporation (Australia) Pty Limited [2024] FCAFC 15
- Most recently confirmed by the High Court in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 171 IPR 120 at [22] to [25]. ?
- See also Christian v Société Des Produits Nestlé SA (No 2) [2015] FCAFC 153; 327 ALR 630 at [78]. An approach recognising that, as a website on a server overseas is accessible by anyone in Australia with an internet connection, the trade mark owner’s rights would be set at nought if infringement could be avoided simply by setting up a website on the internet while at the same time the owner’s rights (and the Court’s powers of enforcement) are territorially limited: Lifestyle Equities CV v Amazon UK Services Ltd [2024] UKSC 8 at [3]. ?
- The emphasis is the Full Federal Court’s at [47]. ?
- I am not aware of any decided cases on the interpretation of this provision. In the meantime, my attempt to understand it can be found in Warwick A Rothnie, ‘Unparalled importing and trademarks in Australia,’ (2020) 21(3) Business Law International 229 (behind a paywall I’m afraid). ?
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