Riding Their Luck: Redbubble again liable but only for nominal damages to Hells Angels

Riding Their Luck: Redbubble again liable but only for nominal damages to Hells Angels

Riding Their Luck: Redbubble again liable but only for nominal damages to Hells Angels

The Federal Court of Australia has found Redbubble, which operates an online marketplace of products featuring content uploaded by users, liable for trade mark infringement in a case brought by the Australian chapter of the Hells Angels motorcycle club (Hells Angels Australia): Hells Angels Motorcycle Corporation (Australia) Pty Ltd v Redbubble Ltd [2019] FCA 355. It was a hollow victory, however, as only nominal damages were awarded.

Redbubble successfully defended a copyright infringement claim Hells Angels Australia also brought in relation to the Hell Angels’ iconic “Death Head” design on a Hells Angels Membership Card from the 1950s and the Hells Angels’ current “Death Head” design (which was based on and derived from the Membership Card image). The court dismissed the claims because Hells Angels Australia did not establish that it was the owner or exclusive licensee in the Membership Card image and because the current “Death Head” design was not a separate original copyright work.

This decision marks the second time that Redbubble has been found by the Australian courts to have infringed a third party’s IP and it has again escaped by paying only nominal damages (in 2018, Pokemon was successful in its copyright infringement case against the online platform but was awarded only $1 in damages).

KEY POINTS

In summary, the most important takeaways from the decision are set out below.

  1. If a party is actively involved in facilitating a transaction concerning infringing content, the party may be liable even if it did not create or make the content available for the first time.
  2. It is not possible to assign legal title to copyright orally. An assignment must be in writing and signed by or on behalf of the assignor.
  3. Online communication of infringing content to users located in Australia can infringe a third party’s copyright even if the content is stored or hosted overseas.
  4. If a trade mark licensee is under “intuitive and complete” control of the licensor, it may be possible to establish authorised use in the absence of written standards and guidelines relating to use although the circumstances in which that could be the case are likely to be very limited.

REDBUBBLE

Redbubble’s business model

Redbubble operates an online marketplace where users upload artwork which consumers can purchase printed on various products such as t-shirts, posters, cushions, and postcards. Redbubble’s business model functions as follows:

  1. Users anywhere in the world upload artwork which is stored on Redbubble’s servers in the United States and select which products consumers can choose to have their artwork printed on.
  2. The artwork is made available on Redbubble’s website <http://redbubble.com> where consumers can view it, search for it based on keywords, and purchase products featuring the artwork.
  3. Upon receiving an order, payments are processed by a third party and Redbubble sends an automatic email to the purchaser.
  4. Redbubble then automatically generates the digital assets required to fulfil the orders (including a copy of the digital artwork file), which are sent to a third party fulfiller which then produces the purchased product (by printing the artwork onto a blank product) and branding the product with Redbubble’s trade marks.
  5. The completed product is then shipped to the purchaser by the fulfiller.
  6. The fulfiller issues an invoice on a monthly basis to Redbubble for the products they have manufactured. Redbubble gives a portion of the sale price to the original artist (which is a baseline of 20%) and makes a profit on each sale.

HELLS ANGELS’ COPYRIGHT CLAIMS

As noted above, Hells Angels Australia made copyright infringement allegations against Redbubble relating to the Membership Card image (left) and the current “Death Head” design (right), shown below.

Allegedly infringing Redbubble designs

Hells Angels Australia claimed that four works (the Redbubble Designs) infringed its copyright, including the following two works.

The copyright claim relating to the Membership Card image

The Membership Card image was allegedly commissioned by the San Francisco chapter of Hells Angels on 2 September 1954. The author was a tattoo artist known as “Sundown” who frequented the pool hall where the San Francisco chapter met.

Hells Angels Australia alleged that the copyright in the Membership Card image was owned by the parent Hells Angels company in the United States, being Hells Angels Motorcycle Corporation (US) (Hells Angels US), and that Hells Angels Australia was an exclusive licensee of the copyright in that work.

Under the Copyright Act 1968 (Cth), the author of a copyright work, subject to certain exceptions, is the owner of the copyright. An assignment of copyright is only valid if it is in writing and signed by the assignor. There was no evidence in this case that these requirements had been complied with. As a result, the court held that Sundown owned the copyright in the Membership Card image. As Hells Angels US was not the owner, Hells Angels Australia was not the exclusive licensee. Hells Angels Australia therefore did not have standing to bring the copyright infringement claim in respect of the Membership Card image.

The copyright claim relating to the current Death Head design

The current Death Head design was created in 1983 by Mr John Makato Fukushima, who had purported to assign copyright in it to Hells Angels US in 2017.

The court held that copyright did not subsist in the current Death Head design because it was not a separate original work. His Honour said that:

  • Mr Fukushima had not given evidence about the skill, effort or work deployed by him in bringing the design into existence;
  • Mr Fukushima had described the work as a “derivative work”, “based upon and derived from” the Membership Card image;
  • Mr Fukushima had said the work was simply to “update” the Membership Card image; and
  • Another witness for Hells Angels Australia, Mr Barger, said “the process involved was a standardisation exercise to avoid natural variations in hand-made patches”.

The court’s findings on this issue are arguably somewhat surprising. Although copyright can only subsist in a work if it is “original”, under Australian copyright law, “originality” does not require novelty or inventiveness. Broadly speaking, all that one must establish is that the work originated with the author (in the sense that it was not copied from another work). An issue arises with derivative works in relation to the degree to which they embody original expression, and if they do, the extent to which that is sufficient for the work to constitute a separate original work in which a separate copyright subsists (relative to the “parent” work). This is a question which will depend on the facts of each case.

The skill, effort or work which had been involved in bringing the current Death Head design into existence were only relevant to the extent they relate to any original expression embodied in the current Death Head design.

At issue in this case were two relatively simple drawings. The case did not concern, for example, a computer program or musical work, which was said to be derived from a “parent” computer program or musical work. In cases such as those, it is likely that technical issues will exist requiring evidence explaining how the derivative work was brought into existence.

In this case, however, the differences in expression between the current Death Head design and the Membership Card image can be appreciated based on simple a visual comparison. The differences include that:

  • the current Death Head design is coloured red and yellow (as opposed to the greyscale of the Membership Card image);
  • differences in the appearance of the skull (beyond simply “cleaning” up the drawing); and
  • the details of the design applied to the surface of the attachment point of the wing device to the skull.

If the court was satisfied on the evidence that Mr Fukushima was the author of the current Death Head design (ie, the author of the relevant differences in expression relative to the Membership Card image), it would follow that his contributions were the result of Mr Fukushima’s independent work. In those circumstances, the court could have held that the current Death Head design is an original work in its own right.

The question of whether copyright subsists is a different question to the scope of protection of the copyright (if it does subsist). If the court had found that copyright subsisted in the current Death Head design, the scope of that protection would be relatively “thin” due to the limited differences in expression compared to the Membership Card image.

Would the court have otherwise held that Redbubble infringed copyright?

Yes. The court found the Redbubble Designs contained substantial reproductions of the Membership Card image and had been displayed on Redbubble’s website where they could be viewed by people located in Australia.

Redbubble argued that:

  1. any act of infringement had not occurred in Australia; and
  2. Redbubble was not responsible for any act of infringement.

In relation to the first argument, although the court accepted the Redbubble Designs were uploaded outside of Australia, they were made available for viewing by persons located in Australia, and that constituted a relevant “communication” of the work.

The court held that Redbubble was responsible for the communication because it was responsible for determining the content of the communication. The court dismissed Redbubble’s argument that the original users who uploaded the artwork, were responsible for the content of the communication. This was because Redbubble:

  1. controlled the content on its website;
  2. conducted a transactional business which relied upon the uploading and communication of images to consumers (including those in Australia);
  3. derived revenue from each transaction;
  4. was involved in every step of the transaction including confirming the sale, facilitating payment, organising fulfillment of orders, sending emails to purchasers, and affixing its trade marks to the goods;
  5. was the reason the transactions and communications could occur; and
  6. used a business model with an “entire focus” of enabling works to be made available online.

Redbubble was not an intermediary akin to an ISP. The court thought it was “difficult to imagine a more directly engaged participant”.

TRADE MARKS

Hells Angels’ registered Trade Marks

Hells Angels Australia relied upon five registered Trade Marks, each of which was for a variation of the Death Head and/or the words HELLS ANGELS (the Trade Marks). The Trade Marks were registered to Hells Angels US in various classes including printed matter and clothing. Hells Angels Australia used the Trade Marks in Australia. 

Did Redbubble infringe the Trade Marks?

It was clear that each of the Redbubble Designs featured marks that were substantially identical or deceptively similar to at least some of the Trade Marks, and these Redbubble Designs had been used on goods in respect of which the Trade Marks were registered (clothing or printed material).

The Trade Marks Act 1995 (Cth) only protects against unauthorised use of a registered trade mark as a trade mark (which means as a badge of origin used to distinguish the goods of one trader from those of another).

The questions which arose were:

  1. Had the marks been used as trade marks?
  2. Had this use been by Redbubble?

Justice Greenwood found that the marks had been used as trade marks where the original “artist” had sought “to engage consumers … with the commercially attractive force of the recognised name and image of Hells Angels”. In combination with the use of “Hells Angels” in the product descriptions, the use was sufficient to give consumers “cause to wonder” whether the goods were associated with the Hells Angels. The court considered that was sufficient to amount to trade mark use because it indicated a connection with the Hells Angels. Goods featuring use of these marks as trade marks in those circumstances were therefore infringing goods.

Redbubble was liable for trade mark infringement because the court held it supplied the infringing goods as it was responsible for the transactional elements of the marketplace, which enabled users to view and purchase the infringing goods.

The court also considered whether Redbubble infringed the Trade Mark by allowing users to search for relevant “artworks” using terms which reflected a Trade Mark, such as “Hells Angels”. The court was not satisfied that was the case because it was not persuaded Redbubble used the search terms alone as “badges of origin”. Use of the Trade Marks at the point of searching did not (at that point) amount to use as a trade mark. 

Non-use cross-claim based on no authorised use

Redbubble unsuccessfully cross-claimed for removal of the Trade Marks on the basis of non-use. For Hells Angels Australia’s use of the Trade Marks to “count” as trade mark use to defeat the non-use application, Hells Angels Australia must have used the trade marks as an authorised user (ie, under the control of Hells Angels US).

While there were no written standards regarding the use of the trade marks by Hells Angels Australia, the circumstances nevertheless indicated that Hells Angels Australia’s use of the Trade Marks had been as an authorised user, because:

  1. the dominant purpose of the Hells Angels was not to make money but rather to function as a private club;
  2. members of the Hells Angels knew the source and origin of goods bearing the Trade Marks;
  3. while the marks were used in the supply of goods to the public, this was “strictly limited”;
  4. the use of the trade marks by Hells Angels had been consistent; and
  5. it was common ground between Hells Angels US and Hells Angels Australia that Hells Angels Australia would use the trade marks in the manner required by Hells Angels US.

In the circumstances, Justice Greenwood found that the obedience of Hells Angels Australia to Hells Angels US was “so intuitive and so complete” that no formal instruction was necessary.

Hells Angels Australia’s use of the Trade Marks therefore constituted authorised use, and Redbubble’s claim of non-use was not successful.

Damages for trade mark infringement

Redbubble was ordered to pay only nominal damages ($5,000) for trade mark infringement as:

  1. there was no basis on which to award exemplary damages (there was no reasoning on this point); and
  2. the designs which infringed the Trade Marks had only been sold a combined total of three times.

The Battle Goes On

The Pokemon and Redbubble decision referred to above was appealed by both parties. Orders were made early last year staying the appeal until the determination of this case, with the intention that, if this decision is appealed, the appeals should be heard together.

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