What you need to know
- Redbubble operates a website that allows its users to set up online shops and sell merchandise bearing user-uploaded images.
- The Federal Court found Redbubble liable for copyright infringement and misleading and deceptive conduct, after a number of Redbubble users uploaded unauthorised images of Pokémon characters and sold merchandise bearing those images.
- The Court awarded Pokémon nominal damages and declaratory relief only. The Court declined to award Pokémon compensatory damages, due to insufficient evidence that the products sold via Redbubble’s website had diverted sales that would have been made by Pokémon and its licensees. The Court declined to order an injunction, due to the absence of evidence of a threat of further infringement.
What you need to do
- All businesses should be vigilant and take prompt action to prevent unauthorised merchandise being sold online. Detailed and specific evidence will be required to support a claim for damages and injunctive relief.
- If your business operates a website that displays user-uploaded content or provides an online marketplace, you should consider your legal position in light of this case.
- Copyright owners should consider registering their works in the United States, in order to obtain the benefit of Australian statutory presumptions of publication and ownership of copyright in the work.
Background
Redbubble Ltd (Redbubble) operates an online marketplace enabling its users to set up shops selling a range of merchandise, including clothing and smartphone accessories, bearing images uploaded by users. When an order is placed, Redbubble arranges for the merchandise to be manufactured bearing the user-supplied images then shipped directly to the customer. The products sold on Redbubble’s website are promoted via Google Shopping sponsored links.
Pokémon Company International (Pokémon) sued Redbubble for copyright infringement and misleading and deceptive conduct, after a number of Redbubble’s users uploaded unauthorised images of Pokémon characters and sold merchandise bearing those images. Redbubble disclaimed responsibility for the conduct of its users and argued that it was not liable.
Pokémon based its copyright infringement claim on a drawing of the Pikachu character that Pokémon had registered as a copyright work in the United States. The Court found that:
- Pokémon had established on the evidence that the drawing was an original artistic work first published in a Berne Convention country (ie Japan) by a resident of that country; and
- by tendering the United States certificate of registration, Pokémon was entitled to statutory presumptions of publication and ownership of copyright in the work. Redbubble had not rebutted those presumptions.
Copyright Infringement
The Court found that Pokémon’s copyright had been infringed by Redbubble engaging in the following acts in relation to 29 unauthorised images of Pikachu:
- Communicating the images to the public in Australia by making them available on Redbubble’s website. The Court found that, even though Redbubble’s users had uploaded the infringing images to Redbubble’s website contrary to the terms of their user agreements, Redbubble remained responsible for those images being hosted on its website in the United States and being made available to the public in Australia. Redbubble had thereby infringed Pokémon’s communication right.
- Exhibiting for sale on Redbubble’s website products bearing the infringing images, with knowledge (at least by the date Redbubble had received Pokémon’s letter of demand) that making the products would infringe copyright.
- Authorising manufacturers (or “fulfillers”) to reproduce the infringing images, by arranging for the manufacturers to make products bearing the infringing images in Australia. The Court found that authorisation liability was established because Redbubble had the power to prevent infringements from occurring, but the action taken by Redbubble was insufficient to do so.
Misleading and deceptive conduct
The Court found that Redbubble had contravened the Australian Consumer Law (ACL) by misrepresenting to consumers that products available through Redbubble’s website were supplied, licensed or approved by Pokémon. The representations arose from Redbubble’s use of Pokémon character images and various words (including Pokémon and Pokémon GO) on its website.
The Court also found that Redbubble’s sponsorship of Google Shopping links similarly misrepresented to consumers that products available via Google’s website were supplied, licensed or approved by Pokémon. The Court gave no weight to Redbubble’s argument that the tags, descriptions and images for the advertisements originated from Redbubble’s users and were transmitted to Google via an automated process. The Court held that, notwithstanding the automation, Redbubble still controlled the content of its sponsored links on Google.
Relief
The Court made declarations of copyright infringement and conduct in breach of the ACL, but declined to order a final injunction against Redbubble. The Court was persuaded that Redbubble had sought to comply with its obligations under law and had amended its search engine (for example by blocking the use of keywords such as “Pikachu”), such that there was no evidence before the Court of a threat of further infringement.
The Court awarded Pokémon nominal damages only. The Court was critical of Pokémon’s evidence in support of its damages claim, and found there was insufficient evidence that products sold via Redbubble’s website had diverted sales that would have been made by Pokémon and its licensees. The Court noted that many of the products available via Redbubble’s website were not the kind of items that were available for purchase from Pokémon or its licensees, consisting for example of “mash-ups” of images (eg Pikachu and Homer Simpson).
The Court also declined to make an award of additional (punitive) damages, finding that Redbubble’s conduct did not amount to a flagrant disregard of Pokémon’s rights.
Redbubble has appealed the decision.
Authors: Stuart D'Aloisio, Senior Associate; Peter Chalk, Partner.
